Slide 1: TICC Capital Corp. Investor Presentation, August 2016
August 2016 TICC Capital Corp. Investor Presentation
Slide 2: Additional Information and Where to Find It
2 Additional Information and Where to Find It TICC has filed a definitive proxy statement on Schedule 14A and a WHITE proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the solicitation of proxies for TICC’s 2016 annual stockholder meeting (the “Annual Meeting
Slide 3: TICC Capital Corp. History
3 ▪ Completed IPO in November 2003 as Technology Investment Capital Corp . (“TICC”) – Newly formed Business Development Company (“ BDC ”) – Initially created to invest in the debt and/or equity securities of technology - related companies – Raised $ 150 million initial IPO ▪ TICC Capital Corp. today
Slide 4: Recent Background
4 Recent Background Aug 2015 Sept. 2015 Nov. 2015 Dec. 2015 Feb. 2016 April 2016 Sept. 2016 TICC announced that an affiliate of Benefit Street Partners L.L.C. (“BSP”) had entered into an acquisition agreement with TICC Management, LLC, which required approval by TICC shareholders. Subsequently, NexP
Slide 5: 2016 Shareholder Meeting – To Be Held on Sept. 2, 2016
5 ▪ TICC is seeking to re - elect Tonia Pankopf as an independent director ▪ TICC is seeking shareholder approval to adopt majority vote standard (in uncontested situations) for election of directors ▪ TPG Specialty Lending, Inc. has nominated its own candidate for the same board seat on TICC’s 5 -
Slide 6: TICC Board Is Responsive to Shareholder Feedback
6 ▪ After 2015 Special Meeting, Board reached out to top 20 investors and had dialogue with nine ▪ Significant Reduction in Advisory Fees – In March 2016 , TICC Management agreed to a series of ongoing fee waivers (effective April 1 , 2016 ) with respect to its management fee and income incentive fe
Slide 7: TICC Board Is Responsive to Shareholder Feedback (contd.)
7 ▪ Independent Chairman − Steve Novak, independent director and Chair of Special Committee formed in 2015, was appointed Chairman of the Board in March 2016 ▪ Comprehensive Review of Alternatives − Special Committee of TICC's board considered wide range of alternatives from January to April 2016. T
Slide 8: Updated Investment Strategy Is Yielding Results
8 ▪ Invest in higher - yielding corporate debt securities that are held on a less levered basis short term ▪ De - emphasize TICC’s exposure to CLO investments over the long term ▪ Rotate out of more broadly - syndicated loans into a combination of middle market and narrowly - syndicated loans throug
Slide 9: Vote Against Terminating the Investment Advisory Agreement
9 – A vote to terminate the investment advisory agreement is NOT a vote for TSLX – If investment advisory agreement is terminated, TICC would have to either sign a new investment advisory agreement, hire an internal management team, merge or liquidate – High Investment Company Act stockholder approv
Slide 10: Financial and Stock Price Performance
Financial and Stock Price Performance
Slide 11: TICC has Delivered on its Investment Objectives
11 ▪ Strong relative performance – TICC’s Total Shareholder Return (TSR) has dramatically outperformed its peer median since the 2008 credit crisis which coincides with adoption of its current investment strategy ▪ Valuation multiple is consistent with the peer group – Contrary to TSLX assertion, TI
Slide 12: TICC has Delivered on its Investment Objectives (contd.)
12 ▪ Advisory fee is below peer median – LTM Advisory Fee as % of Avg . Assets and Total Investments is below Peer Group* . – Advisory Fee as % of NII is lower than the Peer Group* TICC has Delivered on its Investment Objectives – (contd.) *Peer Group: AINV, ARCC, BKCC, FSC, GAIN, GLAD, GSBD, MCC, M
Slide 13: TICC's TSR Has Outperformed Its Peers Since 2008
13 TICC’s TSR Has Outperformed Its Peers Since 2008 Source: SNL Financial. Data as of 8/5/2016 Notes: Peers include externally - managed BDCs with >$100MM market capitalization and pre - 2009 IPOs, and externally - managed BDCs with $250 - 750MM market capitalization; peers include AINV, ARCC, BKCC,
Slide 14: TICC Has Traded at a Price/NAV Consistent With Its Peers
14 TICC Has Traded at a Price/NAV Consistent With Its Peers 0.87 0.87 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun
Slide 15: TICC's Advisory Fee as % of Avg. Assets Is Below Peer Median
15 TICC’s Advisory Fee as % of Avg. Assets Is Below Peer Median 3.4 3.3 3.1 3.0 2.7 2.7 2.7 2.6 2.5 2.5 2.3 2.2 2.0 1.7 1.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 PSEC TSLX PNNT MCC AINV TCRD FSC ARCC GSBD GAIN SLRC GLAD TICC BKCC TCPC LTM Advisory Fees (ending 2Q2016*)/Average Assets Peer Median (excl
Slide 16: TICC's Fees to External Advisor Are Consistent With Peer Median
16 TICC’s Fees to External Advisor Are Consistent With Peer Median 28.0 27.8 27.2 26.6 26.5 25.4 23.7 23.7 23.5 23.4 22.2 20.9 18.6 14.7 12.6 0.0 5.0 10.0 15.0 20.0 25.0 30.0 SLRC PSEC TSLX PNNT FSC MCC ARCC GAIN AINV TICC TCRD GSBD GLAD BKCC TCPC LTM Advisory Fees (ending 2Q2016*)/Total Investment
Slide 17: Distributions and Net Asset Value (NAV)
Distributions and Net Asset Value (NAV)
Slide 18: TICC's Investment in CLOs Resulted in High Cash Returns
18 TICC’s Investment in CLOs Resulted in High Cash Returns 9.2% 8.5% 8.7% 8.7% 8.4% 8.2% 8.1% 7.8% 7.7% 7.6% 7.2% 7.1% 7.1% 7.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Portfolio Yield vs. CLO Equity Cash Yield W
Slide 19: Widening Gap between Core NII and GAAP NII
19 Widening Gap between Core NII and GAAP NII $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Net Investment Income (NII) Comparison (per share) GAAP NII Core NII Source: SEC filings. TICC Investor Presentations.
Slide 20: Distributions to Shareholders Have Largely Come from Core NII
20 Distributions to Shareholders Have Largely Come from Core NII $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Source of Distributions (per share) Core NII GAAP NII Distributions declared and paid Core NII % of Distributio
Slide 21: NAV Has Been Impacted by Unrealized Losses
21 NAV Has Been Impacted by Unrealized Losses 6.54 (4.04) (1.97) (0.43) 9.90 3.06 0.02 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 Beginning FY2013 NAV Cum. GAAP NII Others Distributions Unrealized Gains/(Losses) Realized Gains/(Losses) 2Q'16 NAV TICC NAV Per Share Bridge Source: SEC filings.
Slide 22: Our Nominee
Our Nominee
Slide 23: Tonia Pankopf – TICC Nominee
23 – Director since 2003 – Managing Partner of Pareto Advisors, LLC, an investment management consulting business, since 2005 – Member of the Board of Directors of Landec Corporation (NASDAQ : LNDC), and serves on its Corporate Governance and Nominating Committee and chairs its Audit Committee – Ext
Slide 24: T. Kelley Millet - TSLX Nominee; Director Recruitment/Succession Matrix
24 T. Kelley Millet - TSLX Nominee – TICC’s independent directors interviewed Mr . Millet on April 22 , 2016 , their views are presented below : Tonia Pankopf T. Kelley Millet 1940 Act/ BDC Experience x FASB ASC 820 Fair Valuation of Illiquid Investments x Portfolio Origination Experience Broad Cred
Slide 25: Appendix
cyl CC Appendix
Slide 26: December 2015 Special Meetings
26 December 2015 Special Meetings ▪ TICC Capital sought shareholder approval for a new investment advisory agreement in connection with proposed majority acquisition of TICC Management, LLC (TICC’s external advisor) by Benefit Street Partners L.L.C. ▪ Transaction would have resulted in Benefit Stree
Slide 27: Distribution Requirements for TICC
27 As a business development company, TICC Capital has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code, beginning with our 2003 taxable year. As a RIC, TICC generally will not have to pay corporate - level U.S. federal income taxes on any income that i
Slide 28: Investment Portfolio
28 22.0% 14.4% 13.8% 8.7% 6.2% 4.4% 3.7% 3.6% 3.6% 3.1% 2.5% 2.2% 2.2% 2.1% 2.1% 1.9% 1.3% 1.0% 1.0% telecommunication services printing and publishing business services financial intermediaries consumer services software utilities diversified insurance healthcare chemicals logistics radio and telev
Slide 29: Quality Portfolio
29 Quality Portfolio TICC’s debt portfolio has a weighted - average internal credit grade of 2 . 2 1 Closer monitoring is required. Full repayment of the outstanding amount of TICC’s cost basis and interest is expected for the specific tranche. A reduction of interest income has occurred or is expec
Slide 30: Reconciliation of Core Net Investment Income (Per Share)
30 Reconciliation of Core Net Investment Income (Per Share) Note: Certain numbers may not tie to financial statements due to rounding. On a supplemental basis, we provide information relating to core net investment income, which is a non - GAAP measure. This measur e is provided in addition to, but
Slide 31: TICC - Selected Peers Are More Comparable
31 TICC - Selected Peers Are More Comparable Ticker Market Value Total Assets (M) TICC $ 288 $ 667 ACAS 1,736$ 5,515$ MAIN 1,300$ 1,901$ GBDC 968$ 1,665$ HTGC 993$ 1,332$ NMFC 855$ 1,572$ TCAP 792$ 1,016$ ARCC $ 4,832 $ 9,208 PSEC $ 2,969 $ 6,246 SLRC $ 865 $ 1,639 FSC $ 806 $ 2,422 BKCC $ 607 $ 1,1