TCP Capital's CEO Discusses Q4 2013 Results - Earnings Call Transcript

| About: TCP Capital (TCPC)

TCP Capital Corp (NASDAQ:TCPC)

Q4 2013 Results Earnings Conference Call

March 06, 2014, 1:00 pm ET


Jessica Ekeberg -Vice President of Global Investor Relations

Howard Levkowitz -Chairman of the Board, Chief Executive Officer

Paul Davis -Chief Financial Officer

Raj Vig - President, Chief Operating Officer


Chris Kotowski - Oppenheimer

Finian O'Shea - Raymond James

Greg Mason - KBW

Hannah Kim - JMP Securities

Jon Bock - Wells Faro Securities


Ladies and gentlemen, good afternoon. Welcome everyone, to the TCP Capital Corporation fourth quarter 2013 earnings conference call. Today's conference call is being recorded for replay purposes. During the presentation, all participants will be in a listen-only mode. A question-and-answer session will follow the company's formal remarks. (Operator Instructions).

And now, I would like to turn the call over to Jessica Ekeberg, Vice President of the TCP Capital Corporation Global Investor Relations team. Jessica, please proceed.

Jessica Ekeberg

Thank you. Before we begin, I would like to note that this conference call may contain forward-looking statements based on the estimates and assumptions of management, at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties and actual results could differ materially from those projected. Any forward-looking statements made on this call are made as of today and are subject to change without notice.

During today's call, we will refer to a slide presentation which you can access by visiting our website, Click on the Investor Relations link and select Events and Presentations. Our earnings release and 10-K are also available on our site.

I will now turn the call over to Mr. Howard Levkowitz, Chairman and CEO of TCP Capital Corp. Howard?

Howard Levkowitz

Thanks, Jessica. We would like to thank everyone for participating in today's call. I am here with our President and COO, Raj Vig, our Chief Financial Officer, Paul Davis, and other members of the TCPC team.

This morning, we issued our earnings release for the fourth quarter and year ended December 31, 2013 and posted a supplemental earnings presentation to our website which we will refer to throughout this call. We will begin with an overview of TCPC's performance and investment activities, and then, our CFO, Paul Davis will provide more detail on our results. I will resume with some further prospective before we take your questions.

As you can see on slide four. We turned in another year of strong performance. For the fiscal year ended December 31, 2013, we reported earnings per share of $1.91. Our net investment income per share, net of incentive fee and taxes was $1.63, which out earned our dividend run rate by $0.19. In addition, our net asset value per share increased from $14.71 at December 31 2012 to $15.18 at December 31, 2013.

Before discussing our fourth quarter 2013 results, we will list some of our key achievements for 2013.

First, we increased our dividend, issued two special dividends and delivered a total return to our shareholders in excess of 24%.

Second, we completed three follow-on offerings, raising gross proceeds of $233 million. I would like to point out that each one of our follow-on offerings were executed at successively higher prices per share, as you can see on slide five. Through these follow-on offerings, we significantly expanded our shareholder base.

Third, we significantly improved our leverage facilities. Last month, we successfully expanded our Deutsche Bank revolving credit facility to $150 million, extended the maturity to May 15, 2017 and reduced the interest rate by 25 basis points to LIBOR plus 2.5% per annum.

Now on our fourth quarter highlights, summarized on slide seven of our presentation. Our portfolio generated net investment income of $0.40 per share before excise taxes. We declared a regular quarterly dividend of $0.36 per share payable on March 31, 2014 to shareholders of record March 17. We delivered earnings-per-share of $0.46 and increased our net asset value to $15.18 from $15.06 at the end of the third quarter. We deployed $117 million in new investments during the quarter with net deployments of $57 million. Finally, we completed our third follow-on offering of December raising net proceeds $79.9 million.

Now moving on to the market environment in the fourth quarter. Our origination levels remain strong as we saw a number of opportunities that met our disciplined investment criteria. Over the last four quarters, we invested over $471 million on a gross basis and over $235 million on a net basis. As we deployed the proceeds from our recent follow-on offering, we continue to focus on allocating our capital primarily to income producing securities.

For those viewing our presentation, please turn to slide eight. At the end of the fourth quarter, our highly diversified portfolio remained in good shape with a fair value of $766.3 million invested in 67 companies. For the fourth quarter, we maintained our high percentage of both less investments and investments in senior secured debt and floating rate investments.

At quarter end, approximately 95% of the portfolio was invested in debt securities, 98% of which were senior secured debt. 71% of the debt positions were in floating rate debt, 92% of which had interest rate floors. With over 70% of our debt portfolio in floating rate securities, we are well positioned for any meaningful rise in interest rates.

We also continued our high rate of deployment that's approximately $117 million in nine different transactions, comprised of seven new and two existing portfolio company investments. We invested approximately $90 million in senior secured loans and approximately $20 million in senior secured notes. Our five largest investments during the quarter reflect our diversification strategy and include the $20 million investment in Globecall [ph] a satellite communications equipment manufacturer comprised of a $15 million senior secured loan and a $5 million equity investment, a $17 million senior secured loan to OneSky, a private aviation company, issued warrants to us in connection with the financing,, a $16 million senior secured loan to Double Play, an outdoor advertising company, $15 million of senior secured notes to Trade Finance, a finance trade receivable specialist and a $15 million senior secured loan to an existing portfolio of company. New investments made in the fourth quarter had a weighted average effective yield of 10.3% compared to a 9.6% average yield for the investments that we exited during the quarter, netting a 70 basis point improvement.

In Q4, the $59.1 million of investments we exited included a $14 million senior secured loan to Isola, a $13 million senior secured loan to AGS and then $11 million senior secured loan to InterWest. Our overall effective portfolio yield increased to 10.9% at the end of the fourth quarter.

Now, I will turn the call over to Paul for a more detailed report on our fourth quarter financial results. After Paul's comments, I will provide some additional perspective on what we are seeing in the market. Then we will take your questions. Paul?

Paul Davis

Thanks, Howard. We are pleased with our results for the three months ended December 31, 2013. As you can see on slide 12, total investment income was approximately $21 million. Per share total investment income was $0.66 which included peak income of $0.04 per share and prepayment income of $0.06 per share. As we have mentioned in prior calls, it is our general policy to amortize upfront economics on debt investments rather than recognize all the income at the time the investment is made.

Cash income from the aircraft leases of $0.04 per share was offset by depreciation expense of $0.02 per share reducing the company's taxable income.

Total operating expenses for the quarter were approximately $4.7 million, or $0.15 per share. We also accrued dividends on the preferred leverage facility of $0.4 million, or $0.01 per share. Our annualized operating expense ratio, including preferred dividends and excluding incentive compensation, was 4.2% of average net assets.

Incentive compensation, which is subject to a total return hurdle of 8% annually, is calculated by multiplying net investment income after preferred dividends and net realized gains reduced by any net unrealized losses by 20%. Incentive compensation from net investment income for the quarter was approximately $3 million or $0.09 per share and incentive compensation on realized gains was $0.3 million, or $0.01 per share.

For purposes of computing incentive compensation, realized gains on investments acquired before January 1, 2013 are measured by comparing investment disposition proceeds to the fair value of the investments at January 1, 2013 when the incentive compensation period began. For book purposes, our reserve amount is also calculated based on any additional incentive compensation that would have been payable had we liquidated at net asset value on the balance sheet date.

This reserve is not payable unless the associated gains are actually realized and is subject to reversal. At December 31, 2013, this reserve amount was approximately $1.2 million, an increase of $0.3 million, or $0.01 per share from the end of prior quarter.

Net investment income before excise taxes, dividends on the preferred equity facility and incentive compensation was approximately $16.3 million, or $0.51 per share. Excise taxes for the period were just under $1 million, or $0.03 per share. Net investment income after excise taxes, preferred dividends and incentive compensation on net investment income was approximately $11.9 million, or $0.38 per share. The difference between this amount and our net increase in net assets from operations of $0.46 per share was primarily comprised of three items, net realized and unrealized gains of approximately $3.1 million, or $0.10 per share, the change in reserve for incentive compensation of $0.3 million, or $0.01 per share and incentive compensation on realized gains of $0.3 million, or $0.01 per share.

Net realized losses were $44.6 million and net unrealized gains were $47.7 million, primarily due to a charge of $45.1 million from the tender of our equity in Bally Total Fitness. The tender price was slightly higher than the fair value at the beginning of year and had a de minimis impact on net asset value. The initial Bally investment was acquired at a significant discount as part of our legacy distressed debt strategy and generated substantial cash interest income. The Bally realization contributed to our capital loss carry forward and loss deferrals which at year-end were combined $105 million. Basically this means that our shareholders will not be subject to any capital gains tax on our realized gains up to the amount of the deferrals.

As a reminder, when we mark our portfolio at the end of each quarter, substantially all of the portfolio is priced using external sources such as market pricing services or independent valuation services, with only a de minimis amount being priced internally. As of December 31, 2013, the quality of our portfolio remained strong, with no debt investments on non-accrual status. After paying our fourth quarter regular and special dividends, which totaled $12.7 million, we closed the fourth quarter with tax basis undistributed ordinary income of approximately $24.2 million.

Available liquidity at the end of the quarter, which totaled approximately $132.9 million, was comprised of available leverage of $121 million and cash and cash equivalents of $23 million, less net investment commitments of $11.1 million. Net combined leverage at quarter-end was approximately 0.4 times common equity.

TCP capital continues to benefit from an attractive operating expense structure. As noted, total fourth quarter expenses including all costs of leverage and excluding incentive compensation were 4.2% of average net assets on an annualized basis. This is due in part to TCP Capital's low cost of leverage as highlighted on slide 13.

Our total weighted average interest rate on amounts outstanding on our combined leverage facilities was 1.4% at the end of the quarter. Amounts drawn on our preferred equity facility accrued dividends at a rate of LIBOR plus 85 basis points. Amounts drawn on our new supplemental credit facility accrue interest at a rate of LIBOR plus 275 basis points and borrowings on our continuing original credit facility bear interest at a rate of LIBOR plus 44 basis points. n March 15, 2014 and August 1, 2014, the rates of both our new and original credit facilities, respectively will change to LIBOR plus 250 basis points.

Now, I will turn the call back over to Howard.

Howard Levkowitz

Thanks, Paul. I will briefly cover what we are currently seeing in the market and then open the line for questions. Through February 28, 2014, we have invested approximately $45.4 million in four investments plus an additional $6.25 million commitment with a combined effective yield of approximately 10.3%, together with some commitment fees we will receive which is in line with the weighted average yield that we achieved on new investments during the fourth quarter.

As you know, our originations can be lumpy. Our primary focus remains on expanding our earnings by effectively putting our existing liquidity to work and optimizing our portfolio. We continue to evaluate potential options to prudently expand our capital base and liquidity so that we can take advantage of attractive opportunities. So far, in the first quarter of 2014, the pipeline of deal flow remains robust with a wide range of opportunities across a variety of industries. However we do not currently anticipate that our investment pace in Q1 will match our pace at the end of last year. It is currently looking to be a lower quarter for originations.

Looking ahead, we anticipate continued strong demand for capital for middle market companies that meet our requirements. During the past year, we originated almost $500 million of transactions from both our traditional deal partners and from a number of new sponsored and non-sponsored relationships. We remain focused on utilizing our growing platform to lend to established middle market companies with sustainable competitive advantages that generate significant cash flow and/or have significant asset coverage. We are uniquely qualified to capitalize on these opportunities for several reasons.

First, we have the scale and depth of our origination and servicing platform and a highly experienced team to identify investment opportunities from a broad range of sources and to play an integral role in structuring and investing in complex investment opportunities. We believe our robust investment process and highly diversified portfolio will enable us to continue to achieve high risk-adjusted returns over time while preserving capital.

Second, a low cost of capital and diverse funding sources are strong competitive advantages for TCPC. In the fourth quarter, our weighted average cost of capital was significantly below the average for BDCs. TCPC remains well positioned with our attractively priced like bank facilities and we continue to make progress with the SBIC licensing process.

Finally, our interests are closely aligned with our shareholders. Our origination income recognition practices are conservative and we have a shareholder friendly fee structure. We have also voluntarily locked up our own personal pre-IPO holdings of approximately $10 million in investments in TCP Capital for three years from the IPO and members of the management team and the Board of Directors have bought shares in the market on multiple occasions since our IPO.

We are proud of the returns we have delivered and enthusiastic about the opportunities we see. We would like to welcome our new shareholders and to thank all our shareholders for your investment and confidence in us.

With that, operator, please open the call for questions.

Question-and-Answer Session


Thank you. (Operator Instructions). Our first question comes from the line of Chris Kotowski with Oppenheimer. Your line is open.

Chris Kotowski - Oppenheimer

Good afternoon. I was wondering, obviously you can't tell us too much about the SBIC facility but just philosophically, if that came through how you would deploy the assets? And in particular, I guess, would you see that as a replacement for some of the existing funding sources or an addition to it, an addition to the size of the balance sheet?

And then secondly, you can do a higher level of leverage with an SBIC than you can with your traditional bank-based borrowing. Would you use the full 2X leverage that an SBIC facility would afford or would you just naturally be less levered than that?

Raj Vig

Thanks, Chris. It is Raj Vig here. I will day take that one. Just I reiterate the comment that Howard made on, while we can't comment specifically on the process, I think we have made additional progress, qualitatively speaking. Just getting to your questions, I just kind of heard a three pronged question. One is, how do we deploy it, the balance sheet impact, whether it is expansion or replacement and the leverage philosophy.

I will address each of those in turn. On the first one, I think we mentioned a couple of times on prior calls that before we even applied for the SBIC, we did take a look at our business and our investments and just back tested to see if our investments were applicable at a mature level versus looking to change what we do, whether its company size or strategy or segment. And that in fact, many of our investment, our historical investments would have qualified.

So we felt comfortable that the SBIC would be a good extension of our business, but it wouldn't be changing our business versus just moving it, growing it, if you will. So the strategy will stay the same. We don't anticipate doing things differently and many of the companies that we naturally see in our pipeline do qualify, we had qualified for the SBIC.

On the second point, we anticipate this being an expansion of the balance sheet. I think things come in where it's going to set our process up just to make sure we can filter the opportunities and see what qualifies for an SBIC and use it appropriately because of the cost to capital on some of the leverage advantages. However things that do not qualify which, in the event they still fit our strategy and opportunity set, we will have other ways to fund that as we have in the past. So I have view that as an expansion versus a replacement of something.

Then finally on the leverage, there is a leverage advantages to point out. And I think when we compare how our philosophy of leverage on the existing business versus the one-to-one ceiling. We have always maintained some buffer and have no hard and fast rules but look at our business as trying to maintain buffer and risk management versus making our investment returns on leverage versus of being an added benefit. We will apply the same logic to the SBIC. That may mean we take it through one turn of leverage because of leverage ceiling but philosophically we are not looking to max leverage because that is not what is going to make an investment pass or fail for us versus the fundamentals of the investment.

Chris Kotowski - Oppenheimer

Okay. Thank you. That's it for me.


Our next question comes from the line of Finian O'Shea with Raymond James. Your line is open.

Finian O'Shea - Raymond James

Hi, guys. Thanks. Can you just talk a little about where you see others in terms of spreads, in terms of deals, about result and such?

Howard Levkowitz

Sure, Fin. Raj will respond to that one as well.

Raj Vig

Hi, Fin. So I think rather than making this a comment on the quarter versus recent historical comment, we have said this again. So apology if it's an iteration. But we have certainly seen spreads in the broader market than more liquid loan tightened and directionally, that has obviously impacted other segments of the credit market including our own.

I do think and if you look at where we have invested versus where we have exited for three quarters running now, two or three quarters running, we feel like we have been able to preserve better pricing despite that directional influence on the larger cap market. In fact, we have deployed at higher rates when we have exited for two quarters in a row. But they have come down a little bit and in certain cases, that's fine and the risk reward will be something that still fits our mandate and we will underwrite to it for better safety.

In some cases the market will tighten or the opportunity will be to tight for us and people will push too far, not just on spread and other structural protections, i.e., covenants, et cetera, and we will and have just said no and that's a big benefit of our business and of our platform. I think in leverage levels, I would say some of the same comment, again, what we do is we don't take a hard and fast rule to a leverage limit versus trying to look at the business and understanding what the appropriate leverage and cash flow coverage will be. Some will be higher. Some will be lower. But I would say the same qualitative response that people have tried to push to limit more aggressively in the liquid markets directionally its influenced to middle-market, but I believe we have been able to preserve better spread and better leverage ceilings as a qualitative general comment.

Finian O'Shea - Raymond James

Okay. Thank you.


Our next question comes from the line of Greg Mason with KBW. Your line is open.

Greg Mason - KBW

Great. Thanks for taking my questions. First, in the past you have talked about the breakdown of where you are seeing and the deals you have done lead agent versus club and syndicated. Of the seven new portfolios investments you made this last quarter, could you can break, maybe broadly speaking, those down into those three buckets? Your lead agent versus club deals and syndicated?

Howard Levkowitz

Hi, Greg. It is Howard. We are getting that for you. If you will just give us one moment. We are pulling that information. While we are getting that, I am just going to amplify a little bit what Raj said in response to the prior question, which is I think its clear as you listen to the market commentary and the data, there is more pressure on spread in terms of markets and we are seeing it.

I think because of the nature of our platform, our relationships, our ability to still remain selective, we have been able to preserve our yields and our terms but we are just being more cautious in this environment. And in fact, we had a deal that was signed up we thought was going to close this quarter and then the borrower came back and wanted different terms than we agreed. And we had to tell them we weren't going to close the deal, because it is materially different. So we are seeing that in this environment. But I think we are still benefiting from the platform.

In terms of your question, we had 10 deals in which we were the lead. Actually slightly more than 10 where we were the lead. Most of the deals we did in Q4, we would lead on them.

Greg Mason - KBW

Okay, great and then really from credit quality, the portfolio is pretty clean. The only one that's Real Mex has had issues and look like it was in another markdown the $0.43 of cost from $0.69 last quarter. Any commentary around that investment that you could provide?

Howard Levkowitz

Sure. Casual dining is a tough sector. I suspect you have been reading up on a national basis. With the exception of a handful of chains, casual dining has been getting hit and this chain is West Coast-based and it didn't have the same expense of weather issues that a lot of East Coats restaurants did. It still got impacted some as well. So I think that's the big impact that's going on and we are working hard with the company that have management team members seeing progress, but that's the primary reason for the mark down.

Greg Mason - KBW

Great. Thanks, guys.

Howard Levkowitz

Certainly. Thank you.


(Operator Instructions) Our next question comes from the line of Chris York with JMP Securities. Your line is open.

Hannah Kim - JMP Securities

Hi. This is Hannah Kim dialing in for Chris York. Thanks for taking my questions this morning. Most of my questions actually have been answered. But I was wondering if you could comment on what is the breakdown of sponsored versus non-sponsored credit of the portfolio as well as in the quarter?

Raj Vig

Hi, it's Raj Vig again. I don't think we have provided at portfolio level or even in a quarter the exact breakdown. I will tell you that there are several sponsored deals in the quarter and in general they have been repeat clients, which is always a good sign in my mind. We have seen and this is sort of using our question as an extension of an answer, but we have also seen a number of new relationships both on the sponsor side as well as new intermediaries coming in proactively to us to look forward deals and being a deal partner. But for the quarter, there have been several sponsored deals. We can follow-up. I just have to confirm that we can disclose. I will follow up with you, Hannah, but in the portfolio. there is always a good mix, but a material amount, but I don't know that we have broken it out in the past.

Hannah Kim - JMP Securities

Okay, great. Thank you. That is all for me today.


Our next question comes from the line of Jon Bock with Wells Faro Securities. Your line is open.

Jon Bock - Wells Faro Securities

Good morning and thank you for taking my questions. Raj, Howard, real quick. You mentioned the $100 million or $120 million of taxable losses that could be used to offset their capital gains and effectively grow book value. Maybe flipping that a bit, if you look at some of the equity positions in which you have gained, so EPMC or several others, can you talk about more globally your ability to realize some of those equity gains time? In particular, near-term is that something that you have control over or is that something that a private equity sponsor would have to effectuate a transaction for you to get that gain and grow book?

Howard Levkowitz

Jon, it's Howard. Thanks for the question. It really depends on the situation. In some of these situations, we are a participant, a co-investor and dependent on somebody else. In others, we are a control party. In fact, in one of these situations, there is a release on it. ESP, in fact, the company has been sold as that was a situation in which we and really another party effectively controlled the company.

So in some situations, we will control that timing. In others, it will be a function of what others do. In the latter case, where others are controlling it, then we generally have some very strong relationships and influence that's considered when we are making those decisions.

Jon Bock - Wells Faro Securities

Okay, maybe stepping a little closer to the pan. Is now an environment where you would be looking to harvest equity capital gains or do you believe that perhaps there is over time more appreciation left? Just given where the markets are, what's your thought on equity positions if you did have control over them?

Howard Levkowitz

That's an interesting question. In general, I think a number of private equity sponsors have publicly expressed the view and an acted along with it by selling a lot of their portfolio companies in the current environment. Valuations are robust, equity markets are strong and it's a good time to be selling companies in general.

Some of these equity investments, a couple of them are on the newer side. So they aren't necessarily right. A few of them are positions that we obtained through our now deemphasized distressed strategy and those companies tend to sort of their own time and not necessarily following the capital markets because they may need more operating improvements.

So, although in general, I think it is a good time to be selling companies, I wouldn't say that our portfolio is necessarily reflective of a typical private equity type portfolio, given the types of positions that we have and when we made the investment.

Jon Bock - Wells Faro Securities

I appreciate the color. That's helpful. Maybe turning to your new investments this quarter. Obviously in an environment dictated by spread compression, one's ability to earn outside yield brings with it additional question as it relates to risk. And when we think about the new investments that were made, particularly the senior yields between 7% or 9%, it makes sense that there is one more subordinate debt investment in an industry where, as it relates to air transportation, is maybe just generates additional questions. So without talking about the specific company, can you perhaps walk through may be some of the 30,000 foot insight you could provide clients with which why one would that be interested in subordinate positions in the air transportation category?

Howard Levkowitz

Sure. Air transportation is something that we have invested in extensively over time. When we started financing aircraft right after 9/11 and we have financing secured by the underlying planes for many years now, on an opportunistic basis. We like having hard collateral and not all subordinated investments are the same.

The fact that there is debt in front of you is something to be very careful about and take into consideration. What we look to have is adequate collateral, and particularly when you have, say, a traditional lender in front of you, that subordinate debt may in effect looks like the bottom piece of a unit tranche or some of the structures you commonly see when people structure alone and then take the second out piece.

So we focus on, when we do the plane deals in general, is having hard asset coverage. And doing a lot of work to make sure that there is enough collateral there in the event that the earnings don't pan out as management projects because aviation is a historically very volatile industry and our approach has always been to focus on the collateral first, because although the industries probably going though its best period that it has had in many years, you always need to be cautious in this industry.

Jon Bock - Wells Faro Securities

I appreciate that. Then maybe just one last question as it relates to leveraging capacity. It's a common complaint that the BDCs ties to issue equity, and on all-in and cost of capital basis find that that equity issuance, it is extremely hard to deploy at asset yields that are above the all-in cost of capital and we do have to include fees as part of that process. Maybe just as a quick update as you start to approach higher ends of leverage levels, which is appreciated, maybe you will walk through your thoughts on raising equity capital and accretion and how you try to look at the your cost of capital relative to what you are deploying in the market? That's it for me.

Howard Levkowitz

Sure. We try and focus on raising capital in a way that benefits our shareholders and also helps us effectively grow the platform. If you look at our issuances last year, we did our first issuance during the first half of last year and we waited actually to the point where we had to sell some assets. They were lower yielding assets, but we have gotten to the point where we didn't really have quite enough capacity.

So I think that made us think about it a little bit differently when we raised equity during the second half of the year. And when we did our second raise, we were at0.7. When we did the third raise, which was towards year-end on a pro forma basis, we were north of 0.7 times as well. And so we try to balance deploying our capital in the way that maximizes earnings and still having enough liquidity and capital to be able to do all the deals that you are coming in.

And our business isn't linear. As we noted before, it's lumpy. Quarter-to-quarter, our originations changes and they are not always predictable and so what we really try and do is maximize both, adding enough capital where we can run the business and expand the business in a sensible way but also raising capital in a way that benefits the shareholders.

So that's really our overall approach.

Jon Bock - Wells Faro Securities

Thank you very much.

Howard Levkowitz



Our next question is from the line of Chris Kotowski from Oppenheimer. Your line is open.

Chris Kotowski - Oppenheimer

Just a follow-up. When you said you had 10 lead transactions this quarter, can you disclose or is there a way for us to figure out from your disclosures how much in deferred fess that generated that will accrete into income over the next couple years?

Howard Levkowitz

We do not have that disclosure. Chris. I think, as you know, we elect to use the accounting method where we defer those fees, but not all of that is missed. You can where the idea is booked but what you can't necessarily see is what the prepayment premiums maybe on any given investment and/or when those will hit. So that's just not a level of detail or disclosure we provided and frankly might be inconsistent with some of our arrangements with some of our borrowers if we did.

Chris Kotowski - Oppenheimer

Okay, fair enough. I understand. Thank you.

Howard Levkowitz

Sure. Thanks for the question.


And I am not showing any further questions at this time. I would like to turn the call back over to management for closing remarks.

Howard Levkowitz

We appreciate your questions in our dialogue today. I would like to thank our experienced, dedicated and talented team of professionals at TCP Capital Corp. Thanks again for joining us. This concludes today's call.


Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a good day.

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