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): February 9, 2021
BAIN CAPITAL SPECIALTY FINANCE, INC.
(Exact name of Registrant as Specified
in Its Charter)
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DELAWARE
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814-01175
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81-2878769
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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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200
Clarendon Street, 37th Floor, Boston, MA
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02116
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s telephone number,
including area code: (617) 516-2000
_____N/A_____
(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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of
the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ¨
Securities registered pursuant to Section 12(b) of
the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $.001 par value
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BCSF
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New York Stock Exchange
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Item 1.01. Entry into a Material Definitive Agreement.
On February 9, 2021, Bain Capital
Specialty Finance, Inc. (the “Company”), and certain entities and managed accounts of Pantheon Ventures (US) LP
(“Pantheon”), a global alternative private markets asset manager, entered into an amended and restated limited liability
company agreement (the “LLC Agreement”) to co-manage a newly-formed joint venture, International Senior
Loan Program, LLC (“ISLP”). ISLP will seek to invest primarily in middle market borrowers
primarily across Europe and Australia. Middle-market companies are those with between $10.0 million and $150.0 million in annual
earnings before interest, taxes, depreciation, and amortization, with a focus on senior investments with a first or second lien
on collateral (including “unitranche” loans, which are loans that combine both first lien and second lien debt). Investment
decisions, including providing new loans, and all other decisions in respect of ISLP must be approved by representatives
of the Company and Pantheon.
The description above is only a summary
of the material terms included in the LLC Agreement and is qualified in its entirety by reference to a copy of the LLC Agreement,
a copy of which will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31,
2020.
Item 2.02. Results of Operations and
Financial Condition.
On February 11, 2021, the Company
issued a press release (the “Preliminary Financials Press Release”) providing certain preliminary estimates of its
results for the fourth quarter and fiscal year ended December 31, 2020.
The information in Item 2.02 of this Current
Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed”
for any purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise
subject to the liabilities of such Section.
Item 7.01. Regulation FD Disclosure.
On February 11, 2021, the Company
issued the Preliminary Financials Press Release, a copy of which is attached as Exhibit 99.1
In addition, on February 11, 2021,
the Company issued a press release announcing the launch of ISLP, a copy of which is attached as Exhibit 99.2.
The information in Item 7.01 of this Current
Report on Form 8-K, including Exhibits 99.1 and 99.2 furnished herewith, is being furnished and shall not be deemed “filed”
for any purpose of Section 18 of the Exchange Act or otherwise subject to the liabilities of such Section.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
FORWARD-LOOKING STATEMENTS
Certain information contained herein may
constitute “forward-looking statements,” which can be identified by the use of forward-looking terminology such as
“may,” “will,” “should,” “seek,” “expect,” “anticipate,”
“project,” “estimate,” “intend,” “continue,” “target,” or “believe”
or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual
events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking
statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors,
some of which are beyond the control of the Company and are difficult to predict, that could cause actual results to differ materially
from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and
other factors identified in the Company’s filings with the Securities and Exchange Commission. Investors should not place
undue reliance on these forward-looking statements, which apply only as of the date made. The Company does not undertake any obligation
to update or revise any forward-looking statements or any other information contained herein, except as required by applicable
law.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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BAIN CAPITAL SPECIALTY FINANCE, INC.
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Date: February 11, 2021
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By:
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/s/ Michael Treisman
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Name:
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Michael Treisman
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Title:
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Secretary
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Exhibit 99.1
Bain Capital Specialty Finance, Inc. Announces Preliminary
December 31, 2020 Financial Results
BOSTON – February 11, 2021
– Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the “Company”, “our” or “we”)
today announced its preliminary financial results for the fourth quarter and fiscal year December 31, 2020.
“We are pleased that our fourth
quarter results are expected to produce strong earnings for our shareholders as demonstrated by the continued stable performance
across our well-diversified, primarily first lien senior secured portfolio,” said Michael Ewald, Chief Executive Officer
of BCSF. “As we start 2021, we believe that the Company is well-positioned to successfully navigate forward with a stronger
balance sheet to continue to invest in attractive middle market, senior secured investment opportunities as a result of the ISLP
partnership.”
PRELIMINARY QUARTERLY
HIGHLIGHTS
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Net
investment income per share is estimated to be between $0.33 and $0.35, as compared to
$0.33 for the quarter ended September 30, 2020;
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Net
income per share is estimated to be between $0.58 and $0.64, as compared to $0.80 for
the quarter ended September 30, 2020;
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Net
asset value per share as of December 31, 2020 is estimated to be between $16.51
and $16.57, as compared to $16.27 as of September 30, 2020;
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Gross
and net new investment fundings are estimated to be $172.6 million and $(15.5) million,
respectively;
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The
investment portfolio yield at amortized cost is expected to increase quarter-over-quarter
to approximately 7.3%, up from 7.1% as of September 30, 2020(1);
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Credit
quality is expected to remain stable as demonstrated by no change to non-accrual investments
quarter-over-quarter and net realized gains across the Company’s investments during
the fourth quarter. Non-accrual investments are estimated to represent approximately
0.2% of the total investment portfolio at both cost and fair value as of December 31,
2020;
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Ending
debt-to-equity (net of cash) ratio is estimated to be approximately 1.3x; and
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Subsequent
to quarter-end, the Company announced a strategic partnership with the private credit
investment business of Pantheon (“Pantheon”) to create International Senior
Loan Program, LLC (“ISLP”), a joint venture formed to provide direct lending
solutions to middle market borrowers primarily across Europe and Australia. ISLP’s
investment portfolio is expected initially to consist of approximately $320 million in
investment principal of senior secured loans contributed by BCSF (the “Initial
Portfolio”). The strategic partnership is expected to provide BCSF with enhanced
balance sheet flexibility to expand its global capabilities, higher portfolio yields
to drive greater net investment income and greater capacity to continue to invest in
new senior secured loan investments to middle market companies. Giving effect to BCSF’s
expected transfer of the Initial Portfolio to ISLP, BCSF’s pro forma ending debt-to-equity
(net of cash) ratio is expected to decrease to approximately 1.1x as of December 31,
2020(2).
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SELECTED PRELIMINARY
FINANCIAL HIGHLIGHTS
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($ in millions, unless otherwise noted)
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Preliminary Results
Q4 2020
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Q3 2020
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Net investment income per share
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$0.33 - $0.35
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$0.33
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Net investment income
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$21.3 - $22.6
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$21.5
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Earnings per share
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$0.58 - $0.64
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$0.80
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Dividends per share declared and payable
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$0.34
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$0.34
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($ in millions, unless otherwise noted)
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Preliminary
Results as of
December 31,
2020
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As
of
September 30,
2020
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Total fair value of investments
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$2,484.2 –
$2,504.2
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$2,459.7
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Total assets
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$2,603.2 – $2,623.2
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$2,621.1
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Total net assets
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$1,065.9 – $1,069.8
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$1,050.5
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Net asset value per share
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$16.51 - $16.57
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$16.27
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CONFERENCE CALL INFORMATION
A conference call to discuss the Company’s
financial results will be held live at 9:00 a.m. Eastern Time on February 25, 2021. Please visit BCSF’s webcast
link located on the Events & Presentations page of the Investor Resources section of BCSF’s website at http://www.baincapitalbdc.com
for a slide presentation that complements the Earnings Conference Call.
Participants are also invited to access
the conference call by dialing one of the following numbers:
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Domestic:
1-877-300-8521
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International:
1-412-317-6026
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Conference
ID: 10151833
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All participants will need to reference
“Bain Capital Specialty Finance - Fourth Quarter and Fiscal Year Ended December 31, 2020 Earnings Conference Call”
once connected with the operator. All participants are asked to dial in 10-15 minutes prior to the call.
Replay Information:
An archived replay will be available approximately
three hours after the conference call concludes through March 4, 2021 via a webcast link located on the Investor Resources
section of BCSF’s website, and via the dial-in numbers listed below:
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Domestic:
1-844-512-2921
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International:
1-412-317-6671
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Conference
ID: 10151833#
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Endnotes
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(1)
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The weighted average yield is computed
as (a) the annual stated interest rate or yield earned on the relevant accruing
debt and other income producing securities plus amortization of fees and discounts on
the performing debt and other income producing investments, divided by (b) the total
relevant investments at amortized cost. The weighted average yield does not represent
the total return to our stockholders.
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(2)
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On February 9, 2021, BCSF and Pantheon approved the transfer
of the Initial Portfolio to ISLP, subject to certain closing conditions. Based on BCSF's
preliminary balance sheet and BCSF's expected contribution to ISLP of the Initial Portfolio,
each as of quarter ended December 31, 2020. Net leverage represents principal debt
outstanding less cash to equity.
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About International Senior Loan Program
BCSF and Pantheon formed the ISLP joint
venture on February 9, 2021. ISLP’s principal purpose is to invest in middle market direct lending opportunities across
Europe and Australia. BCSF and Pantheon have agreed to contribute capital up to (subject to the terms of their agreement) approximately
$255 million in aggregate to purchase equity interests in ISLP, with BCSF and Pantheon contributing up to approximately $180 million
and $75 million, respectively. Investment decisions of ISLP require the consent of both BCSF and Pantheon.
About Bain Capital Specialty Finance, Inc.
Bain Capital Specialty Finance, Inc.
is an externally managed specialty finance company focused on lending to middle market companies. BCSF is managed by BCSF Advisors,
LP, an SEC-registered investment adviser and a subsidiary of Bain Capital Credit, LP. Since commencing investment operations on
October 13, 2016, and through September 30, 2020, BCSF has invested approximately $3,712.9 million in aggregate principal
amount of debt and equity investments prior to any subsequent exits or repayments. BCSF’s investment objective is to generate
current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien,
first lien/last out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser
extent, corporate bonds. BCSF has elected to be regulated as a business development company under the Investment Company Act of
1940, as amended.
Preliminary Financial Highlights
Actual results may differ materially from
these estimates as a result of the completion of our financial closing procedures, final adjustments and other developments arising
between now and the time that financial quarterly results for the three months ended December 31, 2020 are finalized. The
preliminary financial data included herein has been prepared by, and is the responsibility of the Company's management. PricewaterhouseCoopers
LLP has not audited, reviewed, compiled, or applied agreed-upon procedures with respect to the preliminary financial data. Accordingly,
PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.
Forward-Looking Statements
This letter may contain “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements
of historical facts included in this letter may constitute forward-looking statements and are not guarantees of future performance
or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking
statements as a result of a number of factors, including those described from time to time in filings with the U.S. Securities
and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking
statements speak only as of the date of this letter.
Investor Contact:
Katherine Schneider
Tel. +1 212 803 9613
investors@baincapitalbdc.com
Media Contact:
Charlyn Lusk
Tel. +1 646 502 3549
clusk@stantonprm.com
Exhibit 99.2
Bain Capital Specialty Finance, Inc.
Forms Strategic Partnership with Pantheon
Joint Venture Further Expands BCSF’s
Global Reach and Capabilities
BOSTON – February 11, 2021
– Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the “Company”) today announced the formation of a joint
venture with the private credit business of Pantheon (“Pantheon”), a leading global alternative private markets manager,
to provide private direct lending solutions to middle market borrowers primarily across Europe and Australia.
The joint venture will invest through the
International Senior Loan Program, LLC (“ISLP”). BCSF and Pantheon have agreed to contribute capital, subject to the
terms of their agreement, to purchase equity interests in ISLP. The equity ownership of ISLP is expected to be approximately 70.5%
for BCSF and approximately 29.5% for Pantheon, with investment decisions requiring approval by representatives of both BCSF and
Pantheon. ISLP’s investment portfolio is expected initially to consist of approximately $320 million in investment principal
of senior secured loans contributed by BCSF (the “Initial Portfolio”)(1).
The strategic partnership is expected to
provide BCSF with enhanced balance sheet flexibility to expand its global capabilities and greater capacity to continue to invest
in new senior secured loan investments to middle market companies. Giving effect to BCSF’s expected transfer of the Initial
Portfolio to ISLP, BCSF’s pro forma ending debt-to-equity (net of cash) ratio is expected to be approximately 1.1x, down
from approximately 1.3x as of December 31, 2020(2).
Bain Capital Credit has a global team dedicated
to providing complete financing solutions to middle market companies across North America, Europe, and Australia. The team has
been an active investor across Europe since 2007 and has been investing in Australia for nearly a decade. In total, the team has
deployed over $13 billion in over 300 companies across its global direct lending strategy since 1999.
“Bain Capital Credit has had a global
lending presence for over 15 years. Our partnership with Pantheon is a natural extension of our middle market lending expertise
and scale and will allow us to further expand BCSF’s reach and capabilities into Europe and Australia -- markets where we
continue to see attractive growth opportunities -- while driving long-term value to our shareholders,” said Michael Ewald,
Chief Executive Officer of BCSF.
“The international reach of this
partnership further strengthens Pantheon’s credit coverage and highlights our expertise and leading presence in private credit
secondaries,” said Rakesh Jain, Partner and Global Head of Private Credit at Pantheon. “We have known Bain Capital
Credit for many years and look forward to collaborating closely with them through this new joint venture.”
Key Transaction Highlights
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Increased Scale to Expand Global Capabilities:
ISLP will allow BCSF to expand its global capabilities through investing primarily in non-U.S. domiciled middle market borrowers;
BCSF’s total equity commitment to ISLP allows for this investment to grow, with the potential for BCSF to increase its investment
commitment over time;
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Initial Diversified Portfolio of Senior
Secured Loans: ISLP’s Initial Portfolio is expected to consist of a diversified portfolio across 18 companies with geographic
exposure across 10 countries and operating across nine industries. 100% of the investment portfolio is expected to be comprised
of senior secured loans;
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Higher Portfolio Yields: BCSF’s
investment in ISLP is expected to produce a low double digit yield to BCSF, resulting in higher portfolio yields on balance sheet
to drive greater net investment income to BCSF; BCSF’s investment portfolio yield is expected to increase by approximately
0.2% on a pro forma basis based on the investment portfolio as of December 31, 2020;(2)(3)
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Improved Balance Sheet: The transaction
is expected to meaningfully de-leverage BCSF’s balance sheet. Giving effect to BCSF’s expected transfer of the Initial
Portfolio to ISLP, BCSF’s pro forma debt-to-equity (net of cash) ratio is expected to be approximately 1.1x, down from approximately
1.3x as of December 31, 2020(2); and
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Greater Capacity for New Investments:
BCSF is expected to have greater balance sheet capacity to invest in new middle market loan investments and drive accretion to
net investment income after giving effect to BCSF’s expected transfer of the Initial Portfolio to ISLP.
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The transfer of the Initial Portfolio to
ISLP is expected to occur by the end of February 2021, subject to certain conditions and final approval of the Company and
Pantheon.
Please visit BCSF’s website located
on the Events & Presentations page of the Investor Resources section of BCSF’s website at http://www.baincapitalbdc.com
for an accompanying investor presentation.
Endnotes
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(1)
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On February 9, 2021, BCSF and Pantheon approved the transfer of the Initial Portfolio to ISLP,
subject to certain closing conditions.
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(2)
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Based on BCSF’s preliminary balance sheet and BCSF’s expected contribution to ISLP
of the Initial Portfolio, each as of quarter ended December 31, 2020. Net leverage represents principal debt outstanding less
cash to equity.
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(3)
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The weighted average yield is computed as (a) the annual stated interest rate or yield earned
on the relevant accruing debt and other income producing securities plus amortization of fees and discounts on the performing debt
and other income producing investments, divided by (b) the total relevant investments at amortized cost. The weighted average
yield does not represent the total return to our stockholders.
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About International Senior Loan Program
BCSF and Pantheon formed the ISLP joint
venture on February 9, 2021. ISLP’s principal purpose is to invest in middle market direct lending opportunities across
Europe and Australia. BCSF and Pantheon have agreed to contribute capital up to (subject to the terms of their agreement) approximately
$255 million in aggregate to purchase equity interests in ISLP, with BCSF and Pantheon contributing up to approximately $180 million
and $75 million, respectively. Investment decisions of ISLP require the consent of both BCSF and Pantheon.
About Bain Capital Specialty Finance, Inc.
Bain Capital Specialty Finance, Inc.
is an externally managed specialty finance company focused on lending to middle market companies. BCSF is managed by BCSF Advisors,
L.P., an SEC-registered investment adviser and a subsidiary of Bain Capital Credit, L.P. Since commencing investment operations
on October 13, 2016, and through September 30, 2020, BCSF has invested approximately $3,712.9 million in aggregate principal
amount of debt and equity investments prior to any subsequent exits or repayments. BCSF’s investment objective is to generate
current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien,
first lien/last out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser
extent, corporate bonds. BCSF has elected to be regulated as a business development company under the Investment Company Act of
1940, as amended.
About Pantheon
Pantheon Group* (“Pantheon”)
is a leading global private equity, infrastructure, real assets and debt investor that currently invests on behalf of over 660
institutional investors, including public and private pension plans, insurance companies, endowments and foundations. Founded in
1982, Pantheon has developed an established reputation in primary, co-investment and secondary private asset solutions across all
stages and geographies. Our investment solutions include customized separate account programs, regional primary fund programs,
secondaries, co-investment, infrastructure and real assets programs. Pantheon has four decades’ experience of investing in
private markets.
Preliminary Financial Highlights
Actual results may differ materially from
these estimates as a result of the completion of our financial closing procedures, final adjustments and other developments arising
between now and the time that financial quarterly results for the three months ended December 31, 2020 are finalized.
Forward-Looking Statements
Certain information contained herein may
contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements
other than statements of historical facts included herein may constitute forward-looking statements and are not guarantees of future
performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the
forward-looking statements as a result of a number of factors, including those described from time to time in filings with the
U.S. Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All
forward-looking statements speak only as of the date of this press release.
Investor Contact:
Katherine Schneider
Tel. +1 212 803 9613
investors@baincapitalbdc.com
Media Contact:
Charlyn Lusk
Tel. +1 646 502 3549
clusk@stantonprm.com