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Form 8-K Triangle Capital CORP For: Aug 03

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August 3, 2016 4:25 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 3, 2016 (August 3, 2016)

_________________________________________________________
Triangle Capital Corporation
(Exact name of registrant as specified in its charter)
 _________________________________________________________
 
 
 
 
 
Maryland
 
814-00733
 
06-1798488
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
3700 Glenwood Avenue, Suite 530, Raleigh, North Carolina
 
27612
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (919) 719-4770
Not Applicable
(Former name or former address, if changed since last report.)
_________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02.    Results of Operations and Financial Condition.    
On August 3, 2016, Triangle Capital Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2016. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in these Items 2.02 and 7.01 of Form 8-K, and Exhibit 99.1 attached hereto, are being furnished by the Company in satisfaction of the public disclosure requirements of Regulation FD and Item 2.02 of Form 8-K, insofar as they disclose historical information regarding the Company’s results of operations or financial condition as of and for the quarter ended June 30, 2016.
In accordance with General Instructions B.2 and B.6 of Form 8-K, the information included in these Items 2.02 and 7.01, and Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference into any filing made by the Company under the Exchange Act or the Securities Act of 1933, as amended.

Item 7.01.
Regulation FD Disclosure.
The disclosure contained in Item 2.02 is incorporated herein by reference.
 
Item 9.01.
Financial Statements and Exhibits.
(d) Exhibits

The following exhibit 99.1 is being furnished herewith to this Current Report on Form 8-K:
Exhibit
No.
  
Description
99.1
  
Press Release dated August 3, 2016 of the Company





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
Triangle Capital Corporation
 
 
 
Date: August 3, 2016
 
By:
 
/s/ Steven C. Lilly
 
 
 
 
Steven C. Lilly
 
 
 
 
Chief Financial Officer







EXHIBIT INDEX
 
Exhibit
No.
  
Description
99.1
  
Press Release dated August 3, 2016 of the Company








Exhibit 99.1    
3700 Glenwood Ave., Ste. 530 Raleigh, NC 27612

TRIANGLE CAPITAL CORPORATION REPORTS SECOND QUARTER 2016 RESULTS


RALEIGH, NC - August 3, 2016, Triangle Capital Corporation (NYSE: TCAP) (“Triangle” or the “Company”), a leading provider of capital to lower middle market companies, today announced its financial and operating results for the second quarter of 2016.
 

Highlights

•
Total Investment Portfolio: $930.8 million
•
Total Net Assets (Equity): $498.3 million
•
$617.9 million including proceeds from July, 2016 equity offering
•
Net Asset Value Per Share (Book Value): $14.82
•
Weighted Average Yield on Debt Investments: 12.3%
•
Efficiency Ratio (G&A Expenses/Total Investment Income): 18.7%
•
Investment Portfolio Activity for the Quarter Ended June 30, 2016
•
Cost of investments made during the period: $63.6 million
•
Principal repayments (excluding PIK interest repayments) during the period: $59.6 million
•
Proceeds related to the sale of equity investments during the period: $6.3 million
•
Non-Accrual Assets as a Percentage of Total Portfolio Cost and Fair Value: 5.6% and 2.2%, respectively
•
Financial Results for the Quarter Ended June 30, 2016
•
Total investment income: $28.4 million
•
Net investment income: $16.3 million
•
Net investment income per share: $0.49
•
Net realized gains: $3.9 million
•
Net increase in net assets resulting from operations: $6.7 million
•
Net increase in net assets resulting from operations per share: $0.20

In commenting on the Company’s second quarter investment activity and near- to medium-term outlook, E. Ashton Poole, President and CEO, stated, “Second quarter investment activity was highlighted by three new platform investments as well as a marked improvement in our investment pipeline. After a seasonally slow start of the year we have recently experienced a significant increase in the quantity and quality of our investment pipeline. This increased activity was the primary impetus for our recent equity offering, the proceeds of which will provide the foundation for Triangle’s investment activity over the next two to three quarters.”

Second Quarter 2016 Results

Total investment income during the second quarter of 2016 was $28.4 million, compared to total investment income of $27.8 million for the second quarter of 2015, representing an increase of 2.1%. The increase in investment income was primarily attributable to a $0.3 million increase in non-recurring fee income and a $0.3 million increase in non-recurring dividend income.

Net investment income during the second quarter of 2016 was $16.3 million, compared to net investment income of $16.2 million for the second quarter of 2015, representing an increase of 1.1%. Net investment income per share during the second quarter of 2016 was $0.49, based on weighted average shares outstanding during the quarter of 33.6 million,




compared to $0.49 per share during the second quarter of 2015, based on weighted average shares outstanding of 33.2 million.

The Company’s net increase in net assets resulting from operations was $6.7 million during the second quarter of 2016, compared to a $12.2 million increase during the second quarter of 2015. The Company’s net increase in net assets resulting from operations was $0.20 per share during the second quarter of 2016, based on weighted average shares outstanding of 33.6 million, compared to a net increase in net assets resulting from operations of $0.37 per share during the second quarter of 2015, based on weighted average shares outstanding of 33.2 million.

The Company’s net asset value, or NAV, at June 30, 2016, was $14.82 per share as compared to $15.23 per share at December 31, 2015. As of June 30, 2016, the Company’s weighted average yield on its outstanding, currently yielding debt investments was approximately 12.3%.

Liquidity and Capital Resources

Commenting on the Company’s liquidity position, Steven C. Lilly, Chief Financial Officer, stated, “Triangle further strengthened its balance sheet and liquidity position in recent months with the issuance of additional SBA-guaranteed debentures, including $25 million under the recently passed SBA expansion legislation, and approximately $120 million of net proceeds from our July equity offering.  Including the effects of the equity offering, we have over $390 million of available liquidity to support new investment opportunities.”

At June 30, 2016, the Company had cash and cash equivalents totaling $124.9 million and $147.9 million of remaining borrowing capacity under its $300.0 million senior credit facility.

In June, 2016, the Company borrowed $32.8 million in SBA-guaranteed debentures, including $25.0 million pursuant to recently-enacted legislation which increased the maximum total debenture limit for SBICs under common control. As of June 30, 2016, the Company had outstanding SBA-guaranteed debentures totaling $250.0 million.

On July 29, 2016, the Company closed a public offering of 6.25 million shares of common stock with net proceeds of approximately $119.6 million. The underwriters have been granted an option, exercisable until August 25, 2016, to purchase up to 937,500 additional shares of common stock to cover overallotments, if any.

Dividend Information

On May 4, 2016, Triangle announced that its board of directors had declared a cash dividend of $0.45 per share. This was the Company’s 38th consecutive quarterly dividend since its initial public offering in February, 2007. The record date for the dividend was June 8, 2016, and the payment date was June 22, 2016.

Recent Portfolio Activity

During the quarter ended June 30, 2016, the Company made three new investments totaling approximately $46.3 million, debt investments in five existing portfolio companies totaling $15.8 million and equity investments in seven existing portfolio companies totaling $1.6 million. The Company had four portfolio company loans repaid at par totaling $48.2 million and received normal principal repayments and partial loan prepayments totaling $11.3 million. The Company wrote-off an equity investment in one portfolio company and recognized a realized loss on the write-off of $2.0 million. In addition, the Company received proceeds related to the sales of certain equity securities totaling $6.3 million and recognized net realized gains on such sales totaling $5.9 million.

New portfolio investments which occurred during the second quarter of 2016 are summarized as follows:

In April, 2016, the Company made a $12.9 million investment in Halo Branded Solutions (“Halo”) consisting of subordinated debt and equity. Halo is a supply chain service provider in the promotional products industry.

In April, 2016, the Company made a $12.5 million subordinated debt investment in TK USA Enterprises, Inc. (“TK”). TK is a leading manufacturer of decorative hardware for the professional market.

In May, 2016, the Company made a $20.9 million investment in Travelpro Products, Inc. and TP - Holiday Group Limited (collectively, “Travelpro”) consisting of second lien debt and equity. Travelpro is a marketer and supplier of luggage, assorted bags, and travel accessories sold predominantly in the United States and Canada.





Conference Call to Discuss Second Quarter 2016 Results

Triangle has scheduled a conference call to discuss second quarter 2016 operating and financial results for Thursday, August 4, 2016, at 9:00 a.m. (Eastern Time).

To listen to the call, please dial 877-312-5521 or 253-237-1143 approximately 10 minutes prior to the start of the call. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available until August 8, 2016. To access the replay, please dial 855-859-2056 or 404-537-3406 and enter the passcode 45062595.

Triangle’s quarterly results conference call will also be available via a live webcast on the investor relations section of its website at http://ir.tcap.com/events.cfm. Access the website 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the Company's website until August 31, 2016.

Triangle will post a brief, pre-recorded on-demand podcast on the investor relations section of the Company’s website after 4:00 p.m. (Eastern Time) on Wednesday, August 3, 2016, in conjunction with the filing of Triangle’s Form 10-Q. The purpose of the podcast is to provide interested analysts and investors with meaningful statistical and financial information in advance of the participatory earnings call on Thursday, August 4, 2016, at 9:00 a.m. (Eastern Time).

About Triangle Capital Corporation

Triangle Capital Corporation (www.TCAP.com) invests capital in established companies in the lower middle market to fund growth, changes of control and other corporate events. Triangle offers a wide variety of investment structures with a primary focus on mezzanine financing with equity components. Triangle’s investment objective is to seek attractive returns by generating current income from debt investments and capital appreciation from equity related investments. Triangle’s investment philosophy is to partner with business owners, management teams and financial sponsors to provide flexible financing solutions. Triangle typically invests $5.0 million - $35.0 million per transaction in companies with annual revenues between $20.0 million and $200.0 million and EBITDA between $3.0 million and $35.0 million.

Triangle has elected to be treated as a business development company under the Investment Company Act of 1940 ("1940 Act"). Triangle is required to comply with a series of regulatory requirements under the 1940 Act as well as applicable NYSE, federal and state laws and regulations. Triangle has elected to be treated as a regulated investment company under the Internal Revenue Code of 1986. Failure to comply with any of the laws and regulations that apply to Triangle could have a material adverse effect on Triangle and its stockholders.




Forward Looking Statements

This press release may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such statements, other than statements of historical fact, are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under the Company's control, and that the Company may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from these estimates and projections of the future and some of these uncertainties are enumerated in Triangle’s filings with the Securities and Exchange Commission. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, each as filed with the Securities and Exchange Commission. Copies are available on the SEC’s website at www.sec.gov and stockholders may receive a hard copy of the completed audited financial statements free of charge upon request to the Company at 3700 Glenwood Avenue, Suite 530, Raleigh, NC 27612. Such statements speak only as of the time when made, and the Company undertakes no obligation to update any such statement now or in the future.

Contacts

Sheri Blair Colquitt
Vice President, Investor Relations
919-719-4784

Steven C. Lilly
Chief Financial Officer
919-719-4789








TRIANGLE CAPITAL CORPORATION
Consolidated Balance Sheets 
 
June 30, 2016
 
December 31, 2015
 
(Unaudited)
 
 
Assets:
 
 
 
Investments at fair value:
 
 
 
Non-Control / Non-Affiliate investments (cost of $750,833,116 and $795,244,907 as of June 30, 2016 and December 31, 2015, respectively)
$
717,643,399

 
$
774,238,518

Affiliate investments (cost of $175,702,230 and $171,486,103 as of June 30, 2016 and December 31, 2015, respectively)
183,475,354

 
177,581,965

Control investments (cost of $44,418,113 and $40,618,113 as of June 30, 2016 and December 31, 2015, respectively)
29,704,233

 
25,456,233

Total investments at fair value
930,822,986

 
977,276,716

Cash and cash equivalents
124,929,733

 
52,615,418

Interest, fees and other receivables
9,425,610

 
4,892,146

Prepaid expenses and other current assets
1,903,714

 
947,068

Deferred financing fees
3,093,052

 
3,480,444

Property and equipment, net
119,520

 
105,698

Total assets
$
1,070,294,615

 
$
1,039,317,490

Liabilities:
 
 
 
Accounts payable and accrued liabilities
$
3,374,178

 
$
7,463,514

Interest payable
3,841,477

 
3,714,470

Taxes payable
—

 
735,498

Deferred income taxes
5,375,894

 
4,988,317

Borrowings under credit facility
152,070,309

 
131,256,669

Notes
162,444,085

 
162,142,478

SBA-guaranteed debentures payable
244,938,000

 
220,648,789

Total liabilities
572,043,943

 
530,949,735

Commitments and contingencies
 
 
 
Net Assets:
 
 
 
Common stock, $0.001 par value per share (150,000,000 shares authorized, 33,630,195 and 33,375,126 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively)
33,630

 
33,375

Additional paid-in capital
553,234,755

 
549,242,439

Investment income in excess of distributions
8,851,309

 
16,127,141

Accumulated realized losses
(21,289,719
)
 
(25,813,329
)
Net unrealized depreciation
(42,579,303
)
 
(31,221,871
)
Total net assets
498,250,672

 
508,367,755

Total liabilities and net assets
$
1,070,294,615

 
$
1,039,317,490

Net asset value per share
$
14.82

 
$
15.23






TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Operations
 
Three Months
Ended
 
Three Months
Ended
 
Six Months Ended
 
Six Months Ended
 
June 30,
2016
 
June 30,
2015
 
June 30,
2016
 
June 30,
2015
Investment income:
 
 
 
 
 
 
 
Interest income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
$
17,486,022

 
$
16,982,885

 
$
35,668,676

 
$
33,941,585

Affiliate investments
3,356,738

 
4,199,380

 
6,741,107

 
8,390,729

Control investments
267,298

 
49,481

 
460,914

 
49,481

Total interest income
21,110,058

 
21,231,746

 
42,870,697

 
42,381,795

Dividend income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
48,589

 
45,689

 
(1,198,171
)
 
1,634,394

Affiliate investments
302,207

 
281,369

 
462,262

 
537,622

Control investments
300,000

 
—

 
300,000

 
—

Total dividend income
650,796

 
327,058

 
(435,909
)
 
2,172,016

Fee and other income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
2,452,792

 
835,092

 
4,076,678

 
4,072,438

Affiliate investments
226,551

 
1,500,096

 
536,566

 
1,997,053

Control investments
100,000

 
100,000

 
200,000

 
200,000

Total fee and other income
2,779,343

 
2,435,188

 
4,813,244

 
6,269,491

Payment-in-kind interest income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
2,731,689

 
2,613,528

 
5,653,293

 
5,341,851

Affiliate investments
1,094,522

 
1,150,008

 
2,083,735

 
2,319,009

Total payment-in-kind interest income
3,826,211

 
3,763,536

 
7,737,028

 
7,660,860

Interest income from cash and cash equivalents
55,452

 
67,376

 
92,670

 
120,312

Total investment income
28,421,860

 
27,824,904

 
55,077,730

 
58,604,474

Operating expenses:
 
 
 
 
 
 
 
Interest and other financing fees
6,764,654

 
7,325,340

 
13,283,224

 
13,757,795

Compensation expenses
4,096,472

 
3,516,492

 
13,546,965

 
8,925,115

General and administrative expenses
1,221,821

 
816,887

 
2,310,545

 
1,985,800

Total operating expenses
12,082,947

 
11,658,719

 
29,140,734

 
24,668,710

Net investment income
16,338,913

 
16,166,185

 
25,936,996

 
33,935,764

Realized and unrealized gains (losses) on investments and foreign currency borrowings:
 
 
 
 
 
 
 
Net realized gains (losses):
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
5,621,127

 
3,178,433

 
6,205,914

 
6,415,102

Affiliate investments
(1,683,731
)
 
238,806

 
(1,682,304
)
 
266,508

Control investments
—

 
(20,483,644
)
 
—

 
(20,483,644
)
Net realized gains (losses)
3,937,396

 
(17,066,405
)
 
4,523,610

 
(13,802,034
)
Net unrealized appreciation (depreciation):
 
 
 
 
 
 
 
Investments
(13,529,964
)
 
14,782,147

 
(10,445,641
)
 
1,066,307

Foreign currency borrowings
(59,268
)
 
(312,322
)
 
(911,791
)
 
861,385

Net unrealized appreciation (depreciation)
(13,589,232
)
 
14,469,825

 
(11,357,432
)
 
1,927,692

Net realized and unrealized losses on investments and foreign currency borrowings
(9,651,836
)
 
(2,596,580
)
 
(6,833,822
)
 
(11,874,342
)
Loss on extinguishment of debt
—

 
(1,394,017
)
 
—

 
(1,394,017
)
Benefit (provision) for taxes
(250
)
 
—

 
10,911

 
(137,875
)
Net increase in net assets resulting from operations
$
6,686,827

 
$
12,175,588

 
$
19,114,085

 
$
20,529,530

Net investment income per share—basic and diluted
$
0.49

 
$
0.49

 
$
0.77

 
$
1.02

Net increase in net assets resulting from operations per share—basic and diluted
$
0.20

 
$
0.37

 
$
0.57

 
$
0.62

Dividends/distributions per share:
 
 
 
 
 
 
 
Regular quarterly dividends/distributions
$
0.45

 
$
0.54

 
$
0.99

 
$
1.08

Supplemental dividends/distributions
—

 
0.05

 
—

 
0.10

Total dividends/distributions per share
$
0.45

 
$
0.59

 
$
0.99

 
$
1.18

Weighted average shares outstanding—basic and diluted
33,584,466

 
33,234,532

 
33,532,406

 
33,166,865






TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Cash Flows 
 
Six Months Ended
 
Six Months Ended
 
June 30, 2016
 
June 30, 2015
Cash flows from operating activities:
 
 
 
Net increase in net assets resulting from operations
$
19,114,085

 
$
20,529,530

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
 
 
 
Purchases of portfolio investments
(75,444,437
)
 
(163,270,565
)
Repayments received/sales of portfolio investments
119,484,196

 
154,211,535

Loan origination and other fees received
1,622,991

 
2,819,164

Net realized loss (gain) on investments
(4,523,610
)
 
13,802,034

Net unrealized depreciation (appreciation) on investments
10,058,066

 
(1,820,140
)
Net unrealized depreciation (appreciation) on foreign currency borrowings
911,791

 
(861,385
)
Deferred income taxes
387,577

 
753,833

Payment-in-kind interest accrued, net of payments received
(1,993,156
)
 
23,501

Amortization of deferred financing fees
1,069,711

 
1,107,207

Loss on extinguishment of debt
—

 
1,394,017

Accretion of loan origination and other fees
(2,550,623
)
 
(3,202,668
)
Accretion of loan discounts
(199,697
)
 
(238,229
)
Accretion of discount on SBA-guaranteed debentures payable
31,899

 
92,784

Depreciation expense
33,432

 
29,225

Stock-based compensation
5,886,490

 
3,412,181

Changes in operating assets and liabilities:
 
 
 
Interest, fees and other receivables
(4,533,464
)
 
574,544

Prepaid expenses and other current assets
(956,646
)
 
(207,411
)
Accounts payable and accrued liabilities
(4,089,336
)
 
(3,726,899
)
Interest payable
127,007

 
212,193

Taxes payable
(735,498
)
 
(2,451,879
)
Payable from unsettled transaction
—

 
16,961,500

Net cash provided by operating activities
63,700,778

 
40,144,072

Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(47,254
)
 
(37,091
)
Net cash used in investing activities
(47,254
)
 
(37,091
)
Cash flows from financing activities:
 
 
 
Borrowings under SBA-guaranteed debentures payable
32,800,000

 
—

Repayments of SBA-guaranteed debentures payable
(7,800,000
)
 
—

Borrowings under credit facility
68,901,849

 
83,000,000

Repayments of credit facility
(49,000,000
)
 
(56,000,000
)
Proceeds from notes
—

 
83,372,640

Redemption of notes
—

 
(69,000,000
)
Financing fees paid
(1,123,400
)
 
(2,740,049
)
Net expenses related to public offering of common stock
—

 
(54,967
)
Common stock withheld for payroll taxes upon vesting of restricted stock
(3,484,074
)
 
(2,400,352
)
Cash dividends/distributions paid
(31,633,584
)
 
(37,496,240
)
Net cash provided by (used in) financing activities
8,660,791

 
(1,318,968
)
Net increase in cash and cash equivalents
72,314,315

 
38,788,013

Cash and cash equivalents, beginning of period
52,615,418

 
78,759,026

Cash and cash equivalents, end of period
$
124,929,733

 
$
117,547,039

Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest
$
11,625,782

 
$
11,673,774

Summary of non-cash financing transactions:
 
 
 
Dividends/distributions paid through DRIP share issuances
$
1,590,155

 
$
1,695,423






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