BlackRock TCP Capital Corp. (TCPC) Q1 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, good afternoon. Welcome, everyone, to BlackRock TCP Capital Corp.'s First Quarter 2020 Earnings Conference Call. Today's conference call is being recorded for replay purposes. During the presentation, all participants will be in a listen-only mode. A question-and-answer session will follow the company's formal remarks. [Operator Instructions]And now I would like to turn the call over to, Katie McGlynn, Director of BlackRock TCP Capital Corp. Global Investor Relations team. Katie, please proceed.

Thank you, Shannon. Before we begin, I'll note that this conference call may contain forward-looking statements based on the estimates and assumptions of management at the time of such statements, and are not guarantees of future performance.Forward-looking statements involve risks and uncertainties and actual results could differ materially from those projected. Any forward-looking statements made on this call are made as of today and are subject to change without notice.This morning, we issued our earnings release for the third quarter ended March 31, 2020. We also posted a supplemental earnings presentation to our website at tcpcapital.com. To view the slide presentation, which we will refer to on today's call, please click on the Investor Relations link and select Events & Presentations. These documents should be reviewed in conjunction with the Company's Form 10-Q, which was filed with the SEC this morning.I will now turn the call over to our Chairman and CEO, Howard Levkowitz.

Thank you, Katie. First and foremost, we hope that everyone is staying healthy and safe. Thank you for taking the time to participate on our call today. There are several members of the TCPC team on the call with me, including our President and COO, Raj Vig and our CFO Paul Davis.I will start with a few comments on, how our team is operating in the current environment. I will then provide an update on our portfolio and financial position, as well as comments on our first quarter performance and activity. Paul, will then provide a detailed review of our financial results and our capital and liquidity.After Paul's comments, I will provide some closing comments on the current environment and our outlook, before opening the call to your questions. The health and safety of our team has been a priority, since the start of the pandemic. In early March, BlackRock implemented firm-wide business continuity procedures. And we are pleased to report, that our team has been fully operational as we work remotely.BlackRock's robust technology platform has allowed us to work securely from home, without interruption. We have also been leveraging the extensive resources of the BlackRock platform to gain insights on the evolving environment, across industries and asset classes.Our team has been lending to middle market companies for over 20 years, through multiple market cycles and our underwriting process incorporates downside risk analysis. Our team is aligned by industry and the same team members who underwrite and manage direct lending investments for TCPC, also underwrite special situations investments.As a result, all of our team members have experience working through challenging situations and are well prepared, to navigate the current situation. It is clear however, that the nature of the COVID-19 crisis is unique in its broad impact, including significant limitations on economic activity and mobility, across the world.Middle market companies serve a vital role in our economy. And we have been working closely with our borrowers and other stakeholders to help these companies sustain their businesses throughout the dislocation caused by the pandemic. This work has included additional detailed reviews of our entire portfolio, to proactively identify companies that could be materially affected.While our portfolio is generally invested in less cyclical industries and we have limited direct exposure to industries that have been most impacted. We have been actively working with management teams to facilitate information and assistance. We have a strong balance sheet with diversified funding sources and sufficient liquidity and a well-diversified portfolio.We had no new non-accruals during the first quarter. Additionally, given stock price volatility during the first quarter, we opportunistically repurchased one million shares of our stock, resulting in an NAV contribution of $0.09 per share. Turning to slide 5 and an update on our portfolio, at quarter end, our portfolio had a market value of approximately $1.6 billion, 93% of which is in senior secured debt.Our investments are spread across a wide variety of range of industries. And while the impacts of the global pandemic are likely to be pervasive, we have limited direct exposure to sectors that have been most severely affected by the global downturn. Furthermore, our loans to companies in directly impacted industries are supported by strong collateral protections.For example, our investments categorized as textile, apparel and luxury goods are primarily brand licensing businesses. And our loans are collateralized by intellectual property and/or inventory. Our airline exposure was limited to 3.3%. And our loans in this industry are collateralized by planes and engines designed to have a higher value retention in a downturn.Additionally, all payments on interest and amortization are current. Our investments in energy, equipment and services were limited to 1.8% of the portfolio, the majority of which is an investment, in a company that provides environmental compliance software, to large diversified energy companies.Our diverse portfolio includes 108 companies. Our largest position represented only 4% of the portfolio and taken together our five largest positions represented 16%. Furthermore, as the chart on the left side of Slide 6 illustrates, our recurring income is not reliant on income from any one portfolio company. In fact, well over half of our individual portfolio companies contribute less than 1% to our recurring income.As of March 31, 92% of our debt investments were floating rate and 66% of these investments were subject to interest rate floors. Additionally, 83% consisted of first lien exposure as demonstrated on Slide 7.Moving to our portfolio performance during the first quarter. The broadly syndicated loan market experienced significant volatility in March, ultimately ending the quarter down 1,100 basis points from the start of the year. And while the private loan market experienced less volatility than traded markets, wider spreads and markdowns in our portfolio led to a 5.5% decline in the fair value of our portfolio and an 11% decrease in net asset value net of share repurchases. Substantially all of our investments are valued every quarter using third-party sources consistent with the process used for over two decades.Turning to our capital and liquidity as of March 31, we had a diverse leverage program with no near-term maturities. 53% of our outstanding liabilities were unsecured, 33% were bank facilities and 14% were from our SBA facility. Additionally, we had $259 million of remaining capacity on our credit facilities, all of which was available. This liquidity is nearly five times the level of outstanding unfunded commitments to portfolio companies.I would now like to discuss our deployment activity in the first quarter. Gross deployments in the quarter totaled $143 million and included 13 new loans, seven of which were with existing borrowers. Follow-on investments in existing portfolio companies continue to be an important source of opportunities. From a risk management perspective, these are credits we know and understand well. We believe these opportunities reflect the strength of our borrower relationships and the value we delivered to them beyond just capital.We also continue to focus on investments where we co-lead negotiations. In the first quarter, we were either sole lender or part of a small club of lenders on 10 of 13 of our new investments. This allows us to set deal terms with solid creditor protections and take a more active role in helping companies manage through periods of dislocation.Dispositions in the quarter totaled $77 million and include the payoff of our $31 million loan to First Advantage and the sale of our related equity. We initially provided a first lien financing solution to First Advantage in 2001. We subsequently led a second lien financing, leveraging our deal team's industry experience and experience with technology services companies.Over the course of our investment First Advantage improved its operating platform and cost structure, launched new technology solutions and meaningfully expanded its client base. The company's improved performance led to its successful sale in the first quarter of this year and our loan was refinanced. The sale of the equity from our warrants resulted in a realized gain of $4.9 million.Other paydowns in the quarter included an $11 million pay down of our loan to authentic brands and a $5 million paydown of our loan to Kenneth Cole. New investments during the quarter had a weighted average effective yield of 9.5%. Investments we exited had a weighted average effective yield of 10.1%. The overall effective yield on our debt portfolio was unchanged at 10.3%.As of March 31, 2020 LIBOR had declined 135 basis points since the end of 2018 or 48%. This has put pressure on our portfolio yield and has resulted in an $0.08 per share degradation in recurring investment income over this period. However, we have limited exposure to any further declines in interest rates as the majority of our loans are structured with LIBOR floors as demonstrated on Slide 10 of the presentation. And our portfolio is well positioned for when interest rates rise.As we analyze new investment opportunities, we continue to emphasize seniority industry diversity and transactions where we lead our co-lead negotiations on deal terms. Our investment activity in the second quarter-to-date has included incremental financing to existing portfolio companies and a modest amount of draws on unfunded commitments.Turning to the dividend. Our Board declared a second quarter dividend of $0.36 per share payable on June 30 to shareholders of record on June 16. We understand the importance of maintaining a consistent dividend that is achievable based on the long-term earnings power of the company.As part of the evaluation of our dividend policy, we are in continuous dialogue with our Board regarding the current environment and the impacts on our portfolio including changes in interest rates, the potential for realized and unrealized gains or losses and loan performance.Now I will turn the call over to Paul who will discuss our financial results in more detail. Paul?

Thanks, Howard and hello, everyone. Starting on Slide 15. Net investment income for the first quarter was $0.38 per share, exceeding our dividend of $0.36 per share. On a cumulative basis we've outearned our dividends by an aggregate $45 million or $0.78 per share based on total shares outstanding at quarter end.Investment income for the first quarter was $0.70 per share, substantially all of which was interest income. This included recurring cash interest of $0.61, recurring discount and fee amortization of $0.04 and PIK income of $0.04.We had a modest amount of prepayments in the quarter that contributed $0.01 per share, including both prepayment fees and unamortized OID. Investment income in the first quarter also included $0.01 from dividend income.Our income recognition follows our conservative policy of generally amortizing upfront economics over the life of an investment rather than recognizing all of it at the time the investment is made.Operating expenses for the first quarter were $0.33 per share and included interest and other debt expenses of $0.19 per share for net investment income of $0.38 per share. We did not accrue any incentive fees in the first quarter as the reduction in asset valuations reduced our total return below our cumulative hurdle.Our net decrease in net assets for the quarter was $69.5 million or $1.18 per share driven by spread widening and volatility across our portfolio related to the market impact of COVID-19.As we've done consistently substantially all investments are priced using marks provided by third party sources every quarter, including reputable quotation services and best in class independent valuation services. And our process is subject to rigorous oversight including back testing of every disposition against our valuations.Despite the markdowns our portfolio continued to perform well, and we had no new loans on non-accrual during the quarter. Our loans to two portfolio companies AGY and Avanti remained a non-accrual and together represented 0.2% of the portfolio at fair value and 0.8% at cost.Turning back to slide 8, we had total liquidity of $263 million at quarter end. This included available leverage of $259 million, cash of $9 million and net pending settlements of $4 million.In contrast, our investments in unfunded credit facilities and delayed draw term loans to portfolio companies totaled just $53 million at quarter end or 3% of total investments.Our seasoned team has managed loan portfolios for two decades including through the downturn of 9/11 and the global financial crisis of 2008, providing us with significant experience managing the fund's capital and liquidity.Drawing from that experience, we have continued to increase the diversity and flexibility of our financing sources over the years, which as of March 31 included two low-cost credit facilities; one, convertible note issuance; two, straight unsecured note issuances and an SBA program.Given the modest size of each of these issuances, we are not overly reliant on any single source of financing and our debt issuances are well laddered with no near-term maturities. Our nearest maturity is March of 2022 and represented just 14% of outstanding liabilities.In April, we successfully extended our SVCP credit facility to May 2024, maintaining both the size of the facility and our attractive rate of LIBOR plus 200 basis points. Combined our outstanding liabilities had a weighted average interest rate of 3.73%, which was down from 3.84% at the end of 2019.We are also pleased to note that both Moody's and Fitch reaffirmed our investment-grade ratings in April. Net regulatory leverage, which is net of SBIC debt cash and outstanding trades, was 1.22 times common equity as of March 31, well within our 2:1 expense -- 2:1 leverage limitation.Given the significant volatility in our share price at the end of the first quarter, we opportunistically repurchased one million shares or 1.7% of shares outstanding at an average purchase price of $6.10, resulting in a NAV contribution of $0.09 per share.I'll now turn the call back over to Howard.

Thanks, Paul. I'll conclude with a few additional comments on the market environment and our outlook before opening the call to questions. These are unprecedented times for everyone.When we mentioned the risks associated with the coronavirus as one of the several potential disruptions on our last quarterly earnings call, I'm not sure anyone fully appreciated the impact of pandemic would have on the global economy. We do not have certainty about what the remainder of 2020 will look like, but the global pandemic is likely to continue to challenge many business models.Given most sectors and companies, are being impacted directly or indirectly, our portfolio will not be immune to these challenges. However, our entire team is working every day alongside our borrowers just as we did during prior financial crisis to help ensure the long-term health of our portfolio companies while preserving capital for our shareholders.In some cases, this may include providing temporary flexibility in credit terms for certain borrowers. We seek to invest in good companies with strong management teams and these companies collectively employ thousands of individuals and provide necessary goods and services to their customers. We are focused on helping these businesses manage through this period of dislocation and emerge as strong as they were going into the crisis.Before opening up the call to your questions, a comment on our Annual Shareholder Meeting scheduled for May 27. Consistent with prior years and in line with many of our BDC peers, we have included in our proxy a proposal for shareholder approval to issue up to 25% of our common shares on any given date over the next 12 months at a price below net asset value.The purpose of the below NAV issuance proposed on our proxy is to provide flexibility. This is essentially an insurance policy which would provide access to capital markets during periods when access would otherwise be limited. Our shareholders have approved this proposal every year since we went public and our Board has recommended the shareholders do so again this year.In closing while these are challenging times for everyone our entire team is focused on ensuring the well-being of our constituents and we remain focused on generating strong risk-adjusted returns for shareholders.And with that operator please open the call for questions.

[Operator Instructions] Our first question comes from Finian O'Shea with Wells Fargo. Your line is open.

Hi, good morning everyone. Thanks for having me on and I hope all as well. Forgive me I don't think I've ever got first question on TCP. So I'm a bit blindsided. So I just want to start on the not retail, but textile and apparels book. I think these are cash flow loans correct me if I'm wrong there.Understand, it's the manufacturing the product and not the retailing. They've still nonetheless held up pretty well obviously a challenging environment for retail. I think the exception is Anne Klein was just marked down to 95%. So I guess first how do these hold up so well in this environment? And second with Anne Klein what's the difference there? How does that one get marked down? Any context you can provide on sort of what happened?

Fin, thanks for joining us today and for your question. Textiles apparel and luxury goods is a broad category developed by S&P. As I think you know we use S&P categorizations for our industries. Each one of these companies in here is engaged in selling retail consumer products. They all have a commonality in that they are not just ordinary retail stores they're secured by assets and/or intellectual property licensing streams.So in the case of Anne Klein it's a very well capitalized strongly-backed strong management team that is the licensor of various international brands that are sold multichannel Internet through stores around the globe. And so as we think about how we've been underwriting the sector, really going back now for about a dozen years we've been involved in retail and consumer for over two decades.But coming out of the last financial crisis as we saw the evolution and pressure on bricks and mortar, we focused on hard asset coverage, liquidation values and/or licensing streams for each one of our investments in this sector. And so the fact that it is marked a little bit differently is a function of several things that we use all third-party marks.We've done this for two decades. They determine the marks every quarter and they do it off of a series of things, spreads, comparables, LIBOR floors maturity and also a comparable assessment. So there's a series of things that go into the valuation of that instrument that may be distinct from some of the others and including the yield and maturity.

That's very helpful. Thank you. I'll just -- I'll do a follow-on on the third-party marks. You mentioned a few times that you value 100% of your book third-party marks. This is high level and not aimed at TCP individually. But across the space we're getting a lot of questions on all these calls about valuation and there's a challenge because there are likely financials.But we can also see in many industries these companies are clearly going to face pressure. And if the valuation doesn't incorporate that more or less, is it really worth shareholders' money to pay for value in the book 100% every quarter?

Fin, that's a great question. Appreciate it. This is Paul. Our valuation process is rigorous. We look to third-party sources as you noted for every name. The important thing to note about valuations is that valuations are forward-looking. As the markets are pricing in, securities -- as we look at re-underwriting analysis and places where investments are trading in places where investments are being issued, we're relying on markets to price in their expectations of future performance.And so, we believe that to be very important as we're looking at the prices of assets. I would also note that in addition to look using third-party pricing sources for substantially every name, we rigorously test all of our assets on an asset basis on a back testing basis. of 2008. We've done so historically and found our valuation process to be very accurate and are very proud of the sources we use.

All right. Thank you for the color. That’s all from me.

Thank you, Fin.

Thank you. Our next question comes from Robert Dodd with Raymond James. Your line is open.

Hi, guys. Hopefully, everybody's well. Just one follow-up to Fin first and then I've got a couple of other questions. On the underlying asset values, obviously, not just textile and brands, but brand value -- but airlines where you've got planes and engines. Obviously, as you said in your prepared remarks out, I mean, this is an unprecedented period. The number of planes for example then in our part is up substantially. Let's just put that way.What -- how much of that of the collateral has been revalued so to speak in a market where potentially some of those end markets could be flooded with similar assets over the next 6 to just 12 months maybe not so much on the brand side, but on the airline side. But also, I mean, is the environment -- has the environment put a haircut on how much overcollateralization you think you have in some of these asset-backed loans?

Yes. So Robert, thank you for the question. It's an excellent one. And I think, the airline business in particular is getting a lot of scrutiny from those of us who used to fly frequently -- all of us who are taxpayers who are now paying to fund the industry. And as we think about what's going to happen with it. We'll address specifically the two primary investments we have in this area, which is OneSky, which is the second largest provider of private jet services in the countryWe've invested in the company since 2013. It's very well run. They have significant liquidity. We believe our loans are overcollateralized. We would note that private jet volumes are actually going back up as more people are flying private and they also have payment streams that are distinct in that they have fractional owners who pay them on these planes.So as you think about that business, I think, it's distinct from maybe wondering whether these large double wide aisle planes are going to be in the air or not. Our other primary investment in the sector Mesa company, we financed since 2014 is current on their debt and amortization. They've gotten money from the government. There are minimum service obligations from their counterparties.We think we are well situated in that our planes are lower dollar values and they're owned if not leased so they're more likely to keep them. Having said all of that, we know that it's an industry that's going through a tremendous amount of change in turmoil, but we are comfortable with these valuations as of now.

Got it. Got it. Appreciate that color. Thank you. On another one in your final prepared remarks you didn't touch. Did you say could be temporarily changes to credit terms for some borrowers. I mean, obviously, everybody was current at the end of March. Can you give us any color of what you've seen so far? I mean, obviously, I would expect amendment activity et cetera, et cetera to be up in Q2 and we're six weeks in. So can you give us any color on what the approaches have been? How the discussions have gone? How sponsors are stepping up? Any color on that front would be appreciated?

Yes. Robert, it's Raj. I'll try to take that one and others can add on as appropriate. But it's across the board. I mean it's a pretty wide gamut of requests. And I think the general sense -- there's two things I would say. One is the operating philosophy for us is our credit and the protection of it its value and its coverage is the northern -- the guiding light. That is ultimately what we're most focused on protecting our downside and our returns in terms of where we sit in the capital structure and what we're entitled to by contract and by seniority.With that in this environment, which is unprecedented as I think everyone would agree with it really for us is about the defensibility of the portfolio by composition and at an asset-by-asset level and the ongoing viability and positioning of the businesses and that translates to balance sheet, strength, liquidity and ability to withstand whatever length of downturn we're facing.To the extent people are coming to us for requests and that has happened, we first look to how does that request impact our position? And what does that request do for the ability for the business to extend its own position in the market. That has involved as you said additional equity from sponsors and that is obviously of huge value in this environment.It has, in certain cases, where we don't feel it's putting us at further risk, some relief whether it's a little bit of covenant relief. It may be tied to a sale of an asset and the use of proceeds and so on and so forth. And they vary from very benign things that we don't feel at all impair us or compromise us. In fact, it probably enhances the overall enterprise value.Two things where we normally wouldn't do it without additional skin in the game from people, so they're essentially buying their relief and as the downturn extends and the nature of those change or increase or the severity of an increase, we obviously will always revert back to how does it impact us in our capital, which is our primary focus. And what is it do for the overall position of the business? And to the extent, it's enhancing it, as uncertainty continues we will be constructive, because enhancing the value of the business and the preservation of it is in our own interest as well.

I appreciate that and thank you for that color there. I mean, one last one if I can, again, kind of, read through prepared remarks. On the dividend, congrats on maintaining the dividend for June. Just want to get a -- not a clarification really, but Howard you said that, you believe that's achievable long term.So to be clear and, obviously, it's a board decision and things are changing rapidly. But that dividend that you're going to pay in June right now as the board understand the environment, the position of the portfolio, that would be expected to be sustainable long-term rather than it's June and everything is up in the air again later. Is that fair?

The Board is continuing to analyze the environment, the earnings, our portfolio companies and the interest rate environment. As we noted at the beginning of the call, there's been a dramatic change in LIBOR over the last five quarters. It has decreased the net investment income on a run rate basis of TCPC by $0.08 a share.We've out-earned our dividend historically and we've had prepayment fees, which were also much lower than normal this past quarter in Q1, but this is something that the Board is looking at in terms of its sustainability. And that will go, not only -- although, there's not much further LIBOR can go down.And as we show, I think, very clearly in the slide deck, we don't have much more downward exposure there. We're also looking at our portfolio companies and the appropriate amount of assets to have in a volatile period in our books and what may happen with those companies. So each quarter we're going to be assessing what is the appropriate dividend going forward.

All right. Thank you. And that’s it for me. Thanks a lot.

Thank you. Our next question comes from Ryan Lynch with KBW. Your line is open.

Hey, good morning. Thanks for taking my questions and I hope you all are doing well. First one I just wanted to hit on was, obviously, leverage ticked higher for you guys in most BDCs, but because of your diversified liability structure with a lot of unsecured debt, you guys actually have a fair amount of additional liquidity. So, can you just kind of, from a high level talk through how you guys are thinking about, allocation of capital in these times?You can obviously retain it, given the uncertainty that we have going on in this environment to retain on your balance sheet and hold it to kind of see what occurs over the next coming months and quarters. You can invest in your existing companies; you guys did some share repurchases, make new investments. Just how are you guys thinking about the liquidity you guys currently hold on your balance sheet today?

Yes. Thanks for the question. I hope you are well -- as well. It's Raj. I'll try to take that one. So I would say, overall, in any market, certainly in the current one, liquidity is a scarce capital resource and we want to be very judicious with it. In the first wave of assessing the impact of the crisis, we were really focused on making sure we had liquidity -- making sure we understood everything in the portfolio in the current environment, we literally re-underwrote the portfolio and that included where and when we would need additional liquidity to protect their assets in the ground, if you will.Fortunately the way we -- I think how you are able to operate through a crisis is effectively driven by how you've underwritten before it. And fortunately our approach of staying very defensive by capital structure and by industry, I think, left us in a position where we were relatively in decent shape. That ties to the dividend stability for this quarter.And also understanding that we can be and are open for business with our liquidity, so there is an amount that we thought would be needed to defend the portfolio. We realize we have sufficient amount, given the health of the portfolio, to be looking at new investments. And in the current environment, in any environment, but in the current environment for us, those investments are going to be very, very -- going to be very judicious with the capital we have and making sure that, as we extend through this downturn, we don't compromise the liquidity of the company either to protect the existing portfolio on an ongoing basis, but also to be open for business and to be maintaining our position as a reliable funding counterparty for folks in the market which we think has a value that shows up in premium pricing and structures.So, we are looking for new opportunities. I don't expect that we'll be going at the pace just because more from the environment -- the market environment itself that you've seen in some of the other quarters. But we do expect to be deploying and we've done so through this early part of this quarter. But it's a combination of playing defense and playing offense. And fortunately, we're in a position to keep doing that even with the severity of the crisis we've seen.

Okay. That makes sense. I wanted to -- my next question I just had was on the incentive fee. The total return hurdle kicked in and eliminated the incentive fee payment in Q1. I'm just curious, assuming that there's no positive or negative fair value marks to your portfolio in the second or third quarters, can you just give an outlook? Do you expect to earn a full partial or no incentive fee in the upcoming quarters based on kind of how that total return hurdle kicking in?

Yes. Great question. This is Paul. We did fall below the hurdle in the quarter. We're not very far below it. So, a lot of that does depend on when where valuations come out. Hard to say, what happens going forward, it depends on valuations. As you noted, this is a total return hurdle. It looks back cumulatively includes the entire performance of the fund. We're pleased with we've been able to exceed it so far. We're pleased also that even with the downturn we're not that far below it. But I think, it's kind of hard to say where -- going forward, again it depends really on asset values going forward.

Okay. Fair enough. Those were all my questions. I appreciate the time today.

Thank you, Ryan.

Thank you. Our next question comes from George Bahamondes with Deutsche Bank. Your line is open.

Hi, good morning everyone and thank you for taking my questions. I had a follow-up on the prior question. In your response, you mentioned that you've received requests across the board. Some of them are more benign than others. Can you quantify, maybe the percentage of loans that may be have asked or requested some formal relief that isn't necessarily benign and maybe a bit more involved? Just we get a sense for maybe some companies that are having more issues than others to date?

Yes, George, thanks for the question. Let me clarify my comment, my across the board phrase wasn't to be interpreted as a quantifying a large percentage of request, it was the nature of the request themselves. So, we did not receive a large amount relative to the number of companies in the portfolio and we're not -- we don't quantify that. I was more responding to the question of the types that have come in. And I would say none of them have been really severe. They just been varied and tight. So it's -- generally speaking, the portfolio is very healthy. Companies are -- given the nature of industries we're in, having very good predictability in their businesses. But I would just clarify that it wasn't to be interpreted as a high percentage of request.

I see. So, great. Thank you for clarifying that. Just no way for us to quantify what amount of borrowers may have asked for some formal relief to date?

I don't think we disclose that. Let me -- yes I don't think we disclosed that but it's -- I would not -- it's a small percentage.

Okay. Thanks for the additional color. That’s it from me this morning.

Thank you. [Operator Instructions] Our next question comes from Chris Kotowski with Oppenheimer. Your line is open.

Yes. Good morning. Thanks. Most of mine were asked, but just on the incentive fees, can you -- we were trying to calculate it out exactly how much you'd need to catch up to be eligible to earn it again. Can you phrase it in terms of how much NAV would have to increase before you cross the hurdle?

Good question. This is Paul. Fortunately, not much. We dipped below it here in the first quarter. We can earn that back through a combination of NAV increases and net investment income. It's really not that far, but again we'll see how Q2 goes out and whether it's earned in the second quarter.

Okay. And then on the share repurchases, refresh my memory, you have an outstanding authorization. How much is left on that? And obviously purchases in the sixes were good. And is there a yes, how do you look at that versus maintaining the capital and investing? And how price-sensitive are you there?

Chris, it's Howard. Thanks for the question. Historically, our share repurchases have functioned as you note under a $50 million program on an algorithm, whereby just happened automatically at certain levels. Given the unprecedented disruption in the market, early on we were able to pull that program and actively go into the market when stocks sold off so significantly mid and end of March. And so it was a -- we thought a unique opportunity to be able to create shareholder value, it's something we've had in place for many years. Clearly, the environment we're in is unusual. And so we're also thinking very carefully about maintaining the strong balance sheet that we have and how we use our capital going forward. The program does exist. We will -- perhaps we don't have a disclosure out there, but we will consider on our next call maybe giving you a number of how much we've spent on the program in aggregate.

Okay. All right. That's it for me. Thank you.

Thank you.

Thank you. Our next question comes from Christopher Nolan with Ladenburg Thalmann. Your line is open.

Hey. I apologize. I joined the call late, but your aircraft and airline exposure given the difficulties of that market, I mean, what are your thoughts in terms of the trajectory of your credit exposure there?

Chris, thanks for the question. We actually had a detailed question-and-answer on that one. And so it might be more appropriate for others, if you'd like to just follow-up with you off-line on what we said to others previously on that, so that we don't repeat what we've said earlier in the call we addressed our major positions in there. But happy to take any additional questions that you have.

No, that's it for me, Howard. Thank you for taking my question.

Okay. Thank you.

Thank you. And I'm currently showing no further questions at this time. I will turn the call back over to Howard Levkowitz for closing remarks.

Thank you for joining us today. We appreciate your questions and our dialogue I'd like to thank you -- for your confidence and your continued support and our experienced and talented team of professionals at BlackRock TCP Capital Corp for your continued hard work and dedication in this challenging times. We hope that everybody is healthy and safe. Thanks again for joining us. This concludes today's call.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.