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): July 30, 2019

_________________________________________________________
Barings BDC, Inc.
(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.)
 
 
300 South Tryon Street, Suite 2500
Charlotte, North Carolina
 
28202
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (704) 805-7200

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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐





Item 2.02.    Results of Operations and Financial Condition.    
On July 30, 2019, the Company issued a press release announcing its financial results for the quarter ended June 30, 2019. 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 this Item 2.02 and Item 7.01 of this Current Report on 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, 2019.
In accordance with General Instruction B.2 of Form 8-K, the information included in this Item 2.02 and Item 7.01, and Exhibit 99.1 attached hereto, 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.
Item 7.01.    Regulation FD Disclosure.
The disclosure contained in Item 2.02 of this Current Report on Form 8-K is hereby incorporated in this Item 7.01 by reference.
Item 9.01.    Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No.
  
Description
99.1
  






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.
 
 
 
 
 
 
 
 
Barings BDC, Inc.
 
 
 
Date: July 30, 2019
 
By:
 
/s/ Jonathan Bock
 
 
 
 
Jonathan Bock
 
 
 
 
Chief Financial Officer




Exhibit


Exhibit 99.1    
 

BARINGS BDC, INC. REPORTS SECOND QUARTER 2019 RESULTS
AND ANNOUNCES QUARTERLY CASH DIVIDEND OF $0.14 PER SHARE

CHARLOTTE, N.C., July 30, 2019 - Barings BDC, Inc. (NYSE: BBDC) ("Barings BDC" or the "Company") today reported its financial and operating results for the second quarter of 2019 and announced that the Company's Board of Directors declared a quarterly cash dividend of $0.14 per share.
Highlights
Income Statement
Three Months Ended
June 30, 2019
Three Months Ended
March 31, 2019
(dollars in millions, except per share data)
Total Amount
Per
Share(1)
Total Amount
Per
Share(2)
Net investment income
$
7.4

$
0.15

$
8.0

$
0.16

Net realized gains (losses)
$
0.1

$

$
(0.1
)
$

Net unrealized appreciation
$
1.9

$
0.04

$
25.4

$
0.50

Net increase in net assets resulting from operations
$
9.2

$
0.18

$
33.2

$
0.65

Dividends paid
 
$
0.13

 
$
0.12

(1) Based on weighted average shares outstanding during the period of 50,473,640.
(2) Based on weighted average shares outstanding during the period of 51,157,646.
Investment Portfolio and Balance Sheet
 
 
 
(dollars in millions, except per share data)
As of
June 30, 2019
As of
March 31, 2019
As of
December 31, 2018
Investment portfolio at fair value
$1,200.6
$1,189.4
$1,121.9
Weighted average yield on debt investments, excluding short-term investments (at principal amount)
6.2
%
6.3
%
6.2
%
 
 
 
 
Total assets
$1,226.2
$1,211.2
$1,167.6
Debt outstanding (principal)
$633.8
$620.0
$570.0
Total net assets (equity)
$583.1
$584.2
$563.0
Net asset value per share
$11.59
$11.52
$10.98
Debt-to-equity ratio
1.09
x
1.06
x
1.01x
Second Quarter 2019 Results
Commenting on the quarter, Eric Lloyd, Chief Executive Officer, stated, "We are pleased with our performance and the solid quarter of growth we had in our middle-market investment portfolio. Investment activity for the quarter was highlighted by seven new senior secured private debt investments totaling $67.1 million and the $5.2 million initial investment in Joccasee Partners, the joint venture we entered into with South Carolina Retirement Systems Group Trust. In addition, we earned net investment income of $0.15 per share, which exceeded our second quarter dividend by $0.02 per share. These earnings, along with our share repurchase plan, have contributed to our second quarter positive results."
During the three months ended June 30, 2019, the Company reported total investment income of $19.6 million, net investment income of $7.4 million, or $0.15 per share, and a net increase in net assets resulting from operations of $9.2 million, or $0.18 per share.





Net asset value ("NAV") per share as of June 30, 2019 was $11.59, as compared to $11.52 as of March 31, 2019. The increase in NAV per share from March 31, 2019 to June 30, 2019 was primarily attributable to net unrealized appreciation on the Company's investment portfolio of approximately $0.04 per share, net investment income exceeding the second quarter dividend by $0.02 per share and the impact of accretive share repurchases of $0.01 per share.
Share Repurchase Plan
On February 25, 2019, the Company adopted a share repurchase plan, pursuant to Board approval, for the purpose of repurchasing shares of the Company's common stock in the open market (the "Share Repurchase Plan"). The Board authorized the Company to repurchase in 2019 up to a maximum of 5.0% of the amount of shares outstanding under the following targets:
a maximum of 2.5% of the amount of shares of the Company's common stock outstanding if shares trade below NAV per share but in excess of 90% of NAV per share; and
a maximum of 5.0% of the amount of shares of the Company's common stock outstanding if shares trade below 90% of NAV per share.
As of July 29, 2019, the Company had repurchased a total 969,789 shares of its common stock in the open market under the Share Repurchase Plan at an average price of $9.95 per share, including broker commissions. The shares of common stock purchased under the Share Repurchase Plan represent approximately 1.9% of the Company's issued and outstanding shares as of February 25, 2019.
Liquidity and Capitalization
On May 9, 2019, the Company completed a term debt securitization (the "Debt Securitization") through a private placement of eight-year notes, with $348.25 million issued to third parties. Proceeds from the Debt Securitization were primarily used to repay borrowings under the Barings BDC Senior Funding I, LLC credit agreement (the "BSF Credit Agreement"). In addition, total commitments under the BSF Credit Agreement were reduced from $600.0 million to $250.0 million during the second quarter.
As of June 30, 2019, the Company had cash of $12.9 million, short-term money market fund investments of $34.4 million, $210.5 million of borrowings outstanding under the BSF Credit Agreement, $75.0 million of borrowings outstanding under its $800.0 million senior secured revolving credit agreement and $348.25 million outstanding under the Debt Securitization.
Dividend Information
The Board has declared a quarterly cash dividend of $0.14 per share. This represents a $0.01 increase from the second quarter dividend of 2019 and a dividend yield of approximately 6%.
The Company’s third quarter dividend will be payable as follows:
Third Quarter 2019 Dividend:
Amount per share:         $0.14
Record date:             September 11, 2019
Payment date:         September 18, 2019
Dividend Reinvestment Plan
Barings BDC has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of dividends and distributions on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, when the Company declares a cash dividend or distribution, stockholders who have not opted out of the DRIP will have their cash dividends or distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving cash.
When the Company declares and pays dividends and distributions, it determines the allocation of the distribution between current income, accumulated income and return of capital on the basis of accounting principles generally accepted in the United States (“GAAP”). At each year end, the Company is required for tax purposes to determine the allocation based on tax accounting principles. Due to differences between GAAP and tax accounting principles, the portion of each dividend distribution that is ordinary income, capital gain or return of capital may differ for GAAP and tax purposes. The tax status of the Company’s distributions can be found on the Investor Relations page of its website.





Recent Portfolio Activity
During the three months ended June 30, 2019, the Company purchased $2.9 million in syndicated senior secured loans, made seven new senior secured private middle-market debt investments totaling $67.1 million, made one joint venture equity investment totaling $5.2 million and made additional debt investments in four existing portfolio companies totaling $5.2 million. In addition, the Company sold $28.0 million, net, in money market fund investments during the three months ended June 30, 2019. The Company had four portfolio company loans repaid at par totaling $26.6 million, received $15.3 million of principal payments and sold $0.3 million of syndicated secured loans, recognizing a net realized loss on these transactions of $0.1 million. In addition, the Company received a $0.2 million escrow distribution from one portfolio company, which was recognized as a realized gain.
Subsequent Events
From July 1, 2019 through July 29, 2019, Barings BDC made approximately $70.1 million of new middle-market private debt and equity commitments, of which approximately $33.0 million have closed. The $33.0 million of middle-market investments consists of first lien senior secured debt with a weighted average yield of 8.9%. In addition, as of July 29, 2019, Barings North American Private Finance group had a probability weighted pipeline of approximately $419.7 million, in which Barings BDC may have the ability to participate. Not all deals may be suitable for Barings BDC and the Company's allocations will be determined in accordance with the Barings Global Private Finance allocation policy.
Conference Call to Discuss Second Quarter 2019 Results
Barings BDC has scheduled a conference call to discuss second quarter 2019 financial and operating results for Wednesday, July 31, 2019, at 9:00 a.m. ET.
To listen to the call, please dial 877-407-8831 or 201-493-6736 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 14, 2019. To access the replay, please dial 877-660-6853 or 201-612-7415 and enter conference ID 13691940.
Barings BDC's quarterly results conference call will also be available via a live webcast on the investor relations section of its website at https://ir.barings.com/ir-calendar. 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 14, 2019.
Forward-Looking Statements
Statements included herein or on the webcast/conference call may constitute “forward-looking statements,” which relate to future events or Barings BDC’s future performance or financial condition. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management’s current estimates, projections, expectations or beliefs, and which are subject to risks and uncertainties that may cause actual results to differ materially. Forward-looking statements include, but are not limited to, the ability of Barings LLC to manage Barings BDC and identify investment opportunities, are subject to change at any time based upon economic, market or other conditions, and may not be relied upon as investment advice or an indication of the Company's trading intent. More information on these risks and other potential factors that could affect the Company’s financial results, including important factors that could cause actual results to differ materially from plans, estimates or expectations included herein or on the webcast/conference call, is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. In addition, there is no assurance that Barings BDC or any of its affiliates will purchase additional shares of Barings BDC at any specific discount levels or in any specific amounts. There is no assurance that the market price of Barings BDC’s shares, either absolutely or relative to net asset value, will increase as a result of any share repurchases, or that any repurchase plan will enhance stockholder value over the long term. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.
About Barings BDC
Barings BDC, Inc. (NYSE: BBDC) is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Barings BDC seeks to invest primarily in senior secured loans to private U.S. middle market companies that operate across a wide range of industries. Barings BDC's investment activities are managed by its investment adviser, Barings LLC, a leading global asset manager based in Charlotte, NC with over $325 billion* of AUM firm-wide. For more information, visit www.baringsbdc.com.





About Barings LLC
Barings is a $325+ billion* global financial services firm dedicated to meeting the evolving investment and capital needs of our clients and customers. Through active asset management and direct origination, we provide innovative solutions and access to differentiated opportunities across public and private capital markets. A subsidiary of MassMutual, Barings maintains a strong global presence with business and investment professionals located across North America, Europe and Asia Pacific.

*As of June 30, 2019
Media Contact:
Kelly Smith, Media Relations, Barings, (980) 417-5648, kelly.smith@barings.com
Investor Relations:
BDCinvestorrelations@barings.com, (888) 401-1088







Barings BDC, Inc.
Consolidated Balance Sheets
 
June 30, 2019
 
December 31, 2018
 
(Unaudited)
 
 
Assets:
 
 
 
Investments at fair value:
 
 
 
Non-Control / Non-Affiliate investments (cost of $1,185,840,891 and $1,128,694,715 as of June 30, 2019 and December 31, 2018, respectively)
$
1,161,189,262

 
$
1,076,631,804

Affiliate investments (cost of $5,162,299 as of June 30, 2019)
5,000,210

 

Short-term investments (cost of $34,423,491 and $45,223,941 as of June 30, 2019 and December 31, 2018, respectively)
34,423,491

 
45,223,941

Total investments at fair value
1,200,612,963

 
1,121,855,745

Cash
12,926,602

 
12,426,982

Interest and fees receivable
5,208,059

 
6,008,700

Prepaid expenses and other assets
1,318,240

 
4,123,742

Deferred financing fees
6,001,589

 
251,908

Receivable from unsettled transactions
115,302

 
22,909,998

Total assets
$
1,226,182,755

 
$
1,167,577,075

Liabilities:
 
 
 
Accounts payable and accrued liabilities
$
5,852,451

 
$
5,327,249

Interest payable
2,339,146

 
749,525

Payable from unsettled transactions
2,970,000

 
28,533,014

Borrowings under credit facilities
285,500,000

 
570,000,000

Debt securitization
346,441,453

 

Total liabilities
643,103,050

 
604,609,788

Commitments and contingencies
 
 
 
Net Assets:
 
 
 
Common stock, $0.001 par value per share (150,000,000 shares authorized, 50,314,275 and 51,284,064 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively)
50,314

 
51,284

Additional paid-in capital
875,245,919

 
884,894,249

Total distributable earnings (loss)
(292,216,528
)
 
(321,978,246
)
Total net assets
583,079,705

 
562,967,287

Total liabilities and net assets
$
1,226,182,755

 
$
1,167,577,075

Net asset value per share
$
11.59

 
$
10.98









Barings BDC, Inc.
Unaudited Consolidated Statements of Operations
 
Three Months
Ended
 
Three Months
Ended
 
Six Months Ended
 
Six Months Ended
 
June 30,
2019
 
June 30,
2018
 
June 30,
2019
 
June 30,
2018
Investment income:
 
 
 
 
 
 
 
Interest income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
$
18,823,480

 
$
17,507,637

 
$
36,684,799

 
$
36,513,687

Affiliate investments

 
2,250,311

 

 
4,910,498

Control investments

 
278,091

 

 
553,127

Short-term investments
251,344

 

 
424,039

 

Total interest income
19,074,824

 
20,036,039

 
37,108,838

 
41,977,312

Dividend income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
4,711

 
66,657

 
4,711

 
252,369

Affiliate investments

 
334,575

 

 
339,125

Total dividend income
4,711

 
401,232

 
4,711

 
591,494

Fee and other income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
519,970

 
2,627,353

 
821,027

 
3,921,070

Affiliate investments

 
134,407

 

 
528,680

Control investments

 
7,819

 

 
107,819

Total fee and other income
519,970

 
2,769,579

 
821,027

 
4,557,569

Payment-in-kind interest income:
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments

 
1,141,549

 

 
2,448,130

Affiliate investments

 
403,337

 

 
825,477

Total payment-in-kind interest income

 
1,544,886

 

 
3,273,607

Interest income from cash
2,183

 
721,755

 
6,870

 
1,149,596

Total investment income
19,601,688

 
25,473,491

 
37,941,446

 
51,549,578

Operating expenses:
 
 
 
 
 
 
 
Interest and other financing fees
7,027,040

 
7,344,335

 
12,871,212

 
14,934,883

Base management fee
3,130,955

 

 
5,581,950

 

Compensation expenses
108,646

 
3,842,656

 
227,090

 
7,935,508

General and administrative expenses
1,922,165

 
4,224,631

 
3,891,025

 
5,893,140

Total operating expenses
12,188,806

 
15,411,622

 
22,571,277

 
28,763,531

Net investment income
7,412,882

 
10,061,869

 
15,370,169

 
22,786,047

Realized and unrealized gains (losses) on investments and foreign currency borrowings:
 
 
 
 
 
 
 
Net realized gains (losses):
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
50,024

 
(29,369,826
)
 
(79,751
)
 
(41,309,310
)
Affiliate investments

 
(904,686
)
 

 
2,352,512

Control investments

 
(6,630,547
)
 

 
(6,626,547
)
Net realized gains (losses) on investments
50,024

 
(36,905,059
)
 
(79,751
)
 
(45,583,345
)
Foreign currency borrowings

 
(341,915
)
 


 
1,081,211

Net realized gains (losses)
50,024

 
(37,246,974
)
 
(79,751
)
 
(44,502,134
)
Net unrealized appreciation (depreciation):
 
 
 
 
 
 
 
Non-Control / Non-Affiliate investments
2,014,096

 
22,220,521

 
27,411,284

 
32,152,905

Affiliate investments
(162,089
)
 
17,629,966

 
(162,089
)
 
19,085,297

Control investments

 
3,040,908

 

 
1,670,033

Net unrealized appreciation on investments
1,852,007

 
42,891,395

 
27,249,195

 
52,908,235

Foreign currency borrowings

 
99,435

 

 
(863,980
)
Net unrealized appreciation
1,852,007

 
42,990,830

 
27,249,195

 
52,044,255

Net realized and unrealized appreciation on investments and foreign currency borrowings
1,902,031

 
5,743,856

 
27,169,444

 
7,542,121

Loss on extinguishment of debt
(85,356
)
 

 
(129,751
)
 

Benefit from (provision for) taxes
17,493

 
(488,845
)
 
(499
)
 
(539,635
)
Net increase in net assets resulting from operations
$
9,247,050

 
$
15,316,880

 
$
42,409,363

 
$
29,788,533

Net investment income per share—basic and diluted
$
0.15

 
$
0.21

 
$
0.30

 
$
0.48

Net increase in net assets resulting from operations per share—basic and diluted
$
0.18

 
$
0.32

 
$
0.83

 
$
0.62

Dividends/distributions per share:
 
 
 
 
 
 
 
Total dividends/distributions per share
$
0.13

 
$

 
$
0.25

 
$
0.30

Weighted average shares outstanding—basic and diluted
50,473,640

 
48,041,540

 
50,813,753

 
47,970,594









BARINGS BDC, INC.
Unaudited Consolidated Statements of Cash Flows 
 
Six Months Ended
 
Six Months Ended
 
June 30, 2019
 
June 30, 2018
Cash flows from operating activities:
 
 
 
Net increase in net assets resulting from operations
$
42,409,363

 
$
29,788,533

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
 
 
 
Purchases of portfolio investments
(171,350,190
)
 
(29,087,262
)
Repayments received/sales of portfolio investments
104,431,586

 
196,625,451

Purchases of short-term investments
(317,480,389
)
 

Sales of short-term investments
328,280,839

 

Loan origination and other fees received
2,420,157

 
292,999

Net realized loss on investments
79,751

 
45,583,345

Net realized gain on foreign currency borrowings

 
(1,081,211
)
Net unrealized appreciation of investments
(27,249,195
)
 
(53,257,297
)
Net unrealized depreciation of foreign currency borrowings

 
863,980

Payment-in-kind interest accrued, net of payments received

 
623,880

Amortization of deferred financing fees
558,712

 
1,333,044

Loss on extinguishment of debt
129,751

 

Accretion of loan origination and other fees
(543,501
)
 
(2,890,048
)
Amortization/accretion of purchased loan premium/discount
(114,594
)
 
(12,131
)
Depreciation expense

 
27,414

Stock-based compensation

 
2,933,454

Changes in operating assets and liabilities:
 
 
 
Interest and fees receivables
800,641

 
(3,588,400
)
Prepaid expenses and other assets
2,805,502

 
(75,446
)
Accounts payable and accrued liabilities
525,202

 
(1,628,061
)
Interest payable
1,589,621

 
(270,034
)
Net cash provided by (used in) operating activities
(32,706,744
)
 
186,182,210

Cash flows from financing activities:
 
 
 
Borrowings under credit facilities
120,000,000

 
4,100,000

Repayments of credit facilities
(404,500,000
)
 
(149,953,253
)
Proceeds from debt securitization
348,250,000

 

Financing fees paid
(8,246,691
)
 

Purchases of shares in repurchase plan
(9,649,300
)
 

Common stock withheld for payroll taxes upon vesting of restricted stock

 
(1,283,484
)
Cash dividends/distributions paid
(12,647,645
)
 
(14,407,384
)
Net cash provided by (used in) financing activities
33,206,364

 
(161,544,121
)
Net increase in cash
499,620

 
24,638,089

Cash, beginning of period
12,426,982

 
191,849,697

Cash, end of period
$
12,926,602

 
$
216,487,786

Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest
$
9,451,297

 
$
12,690,524