GlobeNewswire Inc | Nov 4, 2020 04:01PM EST

November 04, 2020

NEW YORK, Nov. 04, 2020 (GLOBE NEWSWIRE) -- TCG BDC, Inc. (together with its consolidated subsidiaries, we, us, our, TCG BDC or the Company) (NASDAQ: CGBD) today announced its financial results for its third quarter endedSeptember30, 2020.

Linda Pace, TCG BDCs Chief Executive Officer said, "Our portfolio continued to perform well with no new non-accruals during the third quarter and we are delivering on our goal to provide attractive income generation for our shareholders. Our loan book and our balance sheet are both well positioned for us to successfully navigate a highly uncertain macroeconomic landscape in the year ahead.

Selected Financial Highlights

(dollar amounts in thousands, except per September 30, June 30, 2020share data) 2020Total investments, at fair value $ 1,948,173 $ 1,907,555 Total assets 2,008,387 1,958,634 Total debt 1,074,806 1,035,799 Total net assets $ 895,222 $ 883,304 Net assets per common share $ 15.01 $ 14.80

Forthethreemonthperiods ended September June 30, 30, 2020 2020Total investment income $ 42,784 $ 45,275 Net investment income (loss) 21,234 21,692 Net realized gain (loss) and net change inunrealized appreciation (depreciation) 12,374 34,466 oninvestments and non-investment assets andliabilitiesNet increase (decrease) in net assets resulting $ 33,608 $ 56,158 from operations Per weighted-average common share?Basic: Net investment income (loss), net of preferred $ 0.36 $ 0.38 dividendNet realized gain (loss) and net change inunrealized appreciation (depreciation) 0.22 0.61 oninvestments and non-investment assets andliabilitiesNet increase (decrease) in net assets resultingfrom operations attributable to common $ 0.58 $ 0.99 stockholdersWeighted-average shares of common stock 56,308,616 56,308,616 outstanding?BasicRegular dividends declared per common share $ 0.32 $ 0.37 Special dividends declared per common share $ 0.05 $ ?

Third Quarter 2020 Highlights(dollar amounts in thousands, except per share data)

-- Net investment income for the three month period endedSeptember30, 2020was $21,234, or$0.38per share, ($20,378, or $0.36 per common share, net of the preferred dividend) as compared to $21,692, or$0.39per share ($21,138, or $0.38 per common share, net of the preferred dividend), for the three month period ended June 30, 2020; -- Net realized gain (loss) and net change in unrealized appreciation (depreciation) oninvestments and non-investment assets and liabilities for the three month period ended September30, 2020was$12,374, or$0.22per share, as compared to $34,466, or$0.61per share, for the three month period endedJune 30, 2020; -- Net increase (decrease) in net assets resulting from operations for the three month period endedSeptember30, 2020was$33,608, or$0.58per common share, as compared to$56,158, or$0.99per share, for the three month period endedJune 30, 2020; and -- On November 2, 2020, the Board of Directors declared a regular quarterly common dividend of $0.32 plus a special dividend of $0.04, which are payable on January 15, 2021 to common stockholders of record on December 31, 2020.

Portfolio and Investment Activity(dollar amounts in thousands, except per share data, unless otherwise noted)

As of September30, 2020, the fair value of our investments was approximately $1,948,173, comprised of 146 investments in 114 portfolio companies/investment fund across 28 industries with 63 sponsors. This compares to the Companys portfolio as ofJune 30, 2020, as of which datethe fair value of our investments was approximately $1,907,555, comprised of 142 investments in 111 portfolio companies/investment fund across 28 industries with 63 sponsors.

As of September30, 2020 and June 30, 2020, investments consisted of the following:

September 30, 2020 June 30, 2020Type?% of Fair Value FairValue % of FairValue % of FairValue FairValueFirst Lien Debt(excluding First Lien/ $ 1,344,575 69.01 % $ 1,316,786 69.03 %Last Out)First Lien/Last Out 78,616 4.04 78,127 4.10 Second Lien Debt 287,659 14.77 278,623 14.61 Equity Investments 32,987 1.69 31,756 1.66 Investment Fund 204,336 10.49 202,263 10.60 Total $ 1,948,173 100.00 % $ 1,907,555 100.00 %

The following table shows our investment activity for the three month period endedSeptember30, 2020:

Funded Sold/RepaidPrincipal amount of investments: Amount % of Amount % of Total TotalFirst Lien Debt (excluding First $ 60,468 99.41 % $ (36,191 ) 99.31 %Lien/Last Out)First Lien/Last Out ? ? (246 ) 0.68 Second Lien Debt ? ? (4 ) 0.01 Equity Investments 358 0.59 ? ? Investment Fund ? ? ? ? Total $ 60,826 100.00 % $ (36,441 ) 100.00 %

Overall, total investments at fair value increased by 2.1%, or $40,618, during the three month period endedSeptember30, 2020after factoring in repayments, sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation).

As ofSeptember30, 2020, the weighted average yieldsfor our first and second lien debt investments on an amortized cost basis were 7.08% and 9.23%, respectively, with a total weighted average yield of 7.44%. Weighted average yields include the effect of accretion of discounts and amortization of premiums and are based on interest rates as of September30, 2020. As of September30, 2020, on a fair value basis, approximately 0.9% of our debt investments bear interest at a fixed rate and approximately 99.1% of our debt investments bear interest at a floating rate, which primarily are subject to interest rate floors.

Total investments at fair value held by Middle Market Credit Fund, LLC (Credit Fund), which is not consolidated with the Company, increased by 2.7%, or $33,412, during the three month period endedSeptember30, 2020after factoring in repayments, sales, net fundings on revolvers and delayed draws and net change in unrealized appreciation (depreciation). As of September30, 2020, Credit Fund had total investments at fair value of $1,291,412, which comprised 97.7% of first lien senior secured loans and 1.8% of second lien senior secured loans at fair value. As of September30, 2020, approximately 1.7% of Credit Fund's debt investments bear interest at a fixed rate and approximately 98.3% of investments in the portfolio were floating rate debt investments, which primarily are subject to interest rate floors.

As part of the monitoring process, our Investment Adviser has developed risk policies pursuant to which it regularly assesses the risk profile of each of our debt investments and rates each of them based on the following categories, which we refer to as Internal Risk Ratings:

Internal Risk Ratings Definitions

Rating Definition1 Borrower is operating above expectations, and the trends and risk factors are generally favorable. Borrower is operating generally as expected or at an acceptable level2 of performance. The level of risk to our initial cost bases is similar to the risk to our initial cost basis at the time of origination. This is the initial risk rating assigned to all new borrowers. Borrower is operating below expectations and level of risk to our cost3 basis has increased since the time of origination. The borrower may be out of compliance with debt covenants. Payments are generally current although there may be higher risk of payment default. Borrower is operating materially below expectations and the loan?s risk has increased materially since origination. In addition to the4 borrower being generally out of compliance with debt covenants, loan payments may be past due, but generally not by more than 120 days. It is anticipated that we may not recoup our initial cost basis and may realize a loss of our initial cost basis upon exit. Borrower is operating substantially below expectations and the loan?s risk has increased substantially since origination. Most or all of the5 debt covenants are out of compliance and payments are substantially delinquent. It is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit.

Our Investment Adviser monitors and, when appropriate, changes the investment ratings assigned to each debt investment in our portfolio. Our Investment Adviser reviews our investment ratings in connection with our quarterly valuation process. The following table summarizes the Internal Risk Ratings of our debt portfolio as of September30, 2020 and June 30, 2020:

September 30, 2020 June 30, 2020 FairValue % of Fair FairValue % of Fair Value Value(dollar amounts in millions)Internal Risk $ 38.8 2.27 % $ 37.3 2.23 %Rating 1Internal Risk 1,201.4 70.22 1,145.7 68.46 Rating 2Internal Risk 380.8 22.26 412.4 24.65 Rating 3Internal Risk 48.9 2.86 36.8 2.20 Rating 4Internal Risk 40.9 2.39 41.3 2.47 Rating 5Total $ 1,710.9 100.00 % $ 1,673.5 100.00 %

As of September30, 2020 and June 30, 2020, the weighted average Internal Risk Rating of our debt investment portfolio was 2.3 and 2.3, respectively.

Consolidated Results of Operations(dollar amounts in thousands, except per share data)

Total investment income for the three month periods ended September30, 2020 and June 30, 2020 was $42,784 and $45,275, respectively. This $2,491 net decrease during the three month period ended September30, 2020 was primarily due to a decrease in interest income from a lower investment balance during the third quarter, and lower income recognized from amendment activity.

Total expenses for the three month periods ended September30, 2020 and June 30, 2020 were $21,550 and $23,583, respectively. This $2,033 net decrease during the three month period ended September30, 2020 was primarily attributable to a decrease in interest expense.

During the three month period ended September30, 2020, the Company recorded a net realized and unrealized gain on investments of $14,831, primarily driven by tightening market yields resulting in increases in fair value.

Liquidity and Capital Resources(dollar amounts in thousands, except per share data)

As ofSeptember30, 2020, the Company had cash and cash equivalents of$37,088, secured notes payable (before debt issuance costs) of $449,200,secured borrowings outstanding of $513,332, senior unsecured notes of $115,000, and convertible preferred equity of $50,000. As ofSeptember30, 2020, the Company had $449,668 of remaining unfunded commitments and $244,952 available for additional borrowings under its revolving credit facilities, subject to leverage and borrowing base restrictions.

Dividends

On November 2, 2020, the Board of Directors declared a regular quarterly common dividend of $0.32 plus a special dividend of $0.04, which are payable on January 15, 2021 to common stockholders of record on December 31, 2020.

On September 30, 2020, the Company declared and paid a cash dividend on the Preferred Stock for the period from July 1, 2020 through September 30, 2020 in the amount of $0.423 per preferred share to the holder of record on September 30, 2020.

Conference Call

The Company will host a conference call at 11:00 a.m. EST on Thursday, November5, 2020 to discuss these quarterly financial results. The call and webcast will be available on the TCG BDC website at tcgbdc.com. The call may be accessed by dialing +1 (866) 394-4623 (U.S.) or +1 (409) 350-3158 (international) and referencing TCG BDC Financial Results Call. The conference call will be webcast simultaneously via a link on TCG BDCs website and an archived replay of the webcast also will be available on the website soon after the live call for 21 days.

TCG BDC, INC.CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES(dollar amounts in thousands, except per share data)

September 30, June 30, 2020 2020 (unaudited) (unaudited)ASSETS Investments, at fair value Investments?non-controlled/non-affiliated, atfair value (amortized cost of $1,840,796 and $ 1,737,044 $ 1,692,073 $1,808,731, respectively)Investments?controlled/affiliated, at fairvalue (amortized cost of $233,131 and 211,129 215,482 $239,618, respectively)Total investments, at fair value (amortizedcost of $2,073,927 and $2,048,349, 1,948,173 1,907,555 respectively)Cash and cash equivalents 37,088 29,916 Receivable for investment sold 74 53 Deferred financing costs 3,651 3,749 Interest receivable from non-controlled/ 12,791 10,873 non-affiliated investmentsInterest and dividend receivable from 5,754 5,589 controlled/affiliated investmentsPrepaid expenses and other assets 856 899 Total assets $ 2,008,387 $ 1,958,634 LIABILITIES Secured borrowings $ 513,332 $ 474,386 2015-1 Notes payable, net of unamortized debtissuance costs of $2,726 and $2,788, 446,474 446,413 respectivelySenior Notes 115,000 115,000 Payable for investments purchased ? 61 Interest and credit facility fees payable 3,405 4,532 Dividend payable 20,830 21,379 Base management and incentive fees payable 11,473 11,572 Administrative service fees payable 85 129 Other accrued expenses and liabilities 2,566 1,858 Total liabilities 1,113,165 1,075,330 NET ASSETS Cumulative convertible preferred stock, $0.01par value; 2,000,0000 shares authorized; 50,000 50,000 2,000,000 shares issued and outstanding as ofSeptember 30, 2020 and June 30, 2020Common stock, $0.01 par value; 200,000,000shares authorized; 56,308,616 shares issued 563 563 and outstanding at September 30, 2020 andJune 30, 2020Paid-in capital in excess of par value 1,093,250 1,093,250 Offering costs (1,633 ) (1,633 ) Total distributable earnings (loss) (246,958 ) (258,876 ) Total net assets $ 895,222 $ 833,304 NET ASSETS PER COMMON SHARE $ 15.01 $ 14.80

TCG BDC, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(dollar amounts in thousands, except per share data)(unaudited)

Forthethreemonthperiods ended September 30, June 30, 2020 2020Investment income: From non-controlled/non-affiliated investments:Interest income $ 34,789 $ 36,036 Other income 2,110 3,547 Total investment income from non-controlled/ 36,899 39,583 non-affiliated investmentsFrom controlled/affiliated investments: Interest income 135 192 Dividend income 5,750 5,500 Total investment income from controlled/ 5,885 5,692 affiliated investmentsTotal investment income 42,784 45,275 Expenses: Base management fees 7,134 7,065 Incentive fees 4,322 4,667 Professional fees 937 678 Administrative service fees 167 266 Interest expense 7,291 9,443 Credit facility fees 728 788 Directors? fees and expenses 86 121 Other general and administrative 498 455 Total expenses 21,163 23,483 Net investment income (loss) before taxes 21,621 21,792 Excise tax expense 387 100 Net investment income (loss) 21,234 21,692 Net realized gain (loss) and net change inunrealized appreciation (depreciation) on investments and non-investment assets andliabilities:Net realized gain (loss) from: Non-controlled/non-affiliated investments (209 ) (47,784 ) Currency gains (losses) on non-investment (11 ) 635 assets and liabilitiesNet change in unrealized appreciation (depreciation) on investments:Non-controlled/non-affiliated 12,906 64,082 Controlled/affiliated 2,134 18,174 Net change in unrealized currency gains(losses) on non-investment assets and (2,446 ) (641 ) liabilitiesNet realized and unrealized gain (loss) oninvestments and non-investment assets and 12,374 34,466 liabilitiesNet increase (decrease) in net assets 33,608 56,158 resulting from operationsPreferred stock dividend 856 554 Net increase (decrease) in net assetsresulting from operations attributable to $ 32,752 $ 55,604 Common StockholdersBasic and diluted earnings per common share: Basic $ 0.58 $ 0.99 Diluted $ 0.55 $ 0.94 Weighted-average shares of common stock outstanding:Basic 56,308,616 56,308,616 Diluted 61,571,773 59,547,482

About TCG BDC, Inc.

TCG BDC is an externally managed specialty finance company focused on lending to middle-market companies. TCG BDC is managed by Carlyle Global Credit Investment Management L.L.C., an SEC-registered investment adviser and a wholly owned subsidiary of The Carlyle Group Inc. Since it commenced investment operations in May 2013 through September30, 2020, TCG BDC has invested approximately $6.0 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. TCG BDCs investment objective is to generate current income and capital appreciation primarily through debt investments in U.S. middle market companies. TCG BDC has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended.

Web: tcgbdc.com

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements that involve substantial risks and uncertainties, including the impact of COVID-19 on the business. You can identify these statements by the use of forward-looking terminology such as anticipates, believes, expects, intends, will, should, may, plans, continue, believes, seeks, estimates, would, could, targets, projects, outlook, potential, predicts and variations of these words and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There may be events in the future, however, that we are not able to predict accurately or control. You should not place undue reliance on these forward-looking statements, which speak only as of the date on which we make it. Factors or events that could cause our actual results to differ, possibly materially from our expectations, include, but are not limited to, the risks, uncertainties and other factors we identify in the sections entitled Risk Factors and Cautionary Statement Regarding Forward-Looking Statements in filings we make with the Securities and Exchange Commission, and it is not possible for us to predict or identify all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contacts:

Investors: Media:Daniel Harris Brittany Berliner+1-212-813-4527 +1-212-813-4839daniel.harris@carlyle.com brittany.berliner@carlyle.com