Overview

Franklin BSP Capital Corporation (FBCC) is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a Business Development Company (BDC) and treated as a Regulated Investment Company (RIC) for U.S. federal income tax purposes. FBCC is managed by Franklin BSP Capital Adviser L.L.C., an affiliate of Benefit Street Partners.

FBCC’s investment objective is to generate both current income and capital appreciation through debt and equity investments. The company primarily invests in first and second lien senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S. middle market companies.

Financial and Operating Highlights

As of December 31, 2024:

• Investment Portfolio: $3,966,075,000
• Net assets attributable to common stock: $1,910,377,000
• Debt (net of deferred financing costs): $2,054,738,000
• Secured borrowings: $30,758,000
• Net asset value per share attributable to common stock: $14.10

Portfolio Activity for the Year Ended December 31, 2024:

• Purchases during the year: $1,102,120,000
• Sales, repayments, and other exits during the year: $651,176,000
• Number of portfolio companies at end of year: 144

Operating Results for the Year Ended December 31, 2024:

• Net investment income (loss) per share: $1.47
• Net increase (decrease) in net assets resulting from operations attributable to common stockholders and participating securities: $0.70
• Net investment income (loss): $188,389,000
• Net realized and unrealized gain (loss): $(99,126,000)
• Net increase (decrease) in net assets resulting from operations attributable to common stockholders: $81,989,000

Portfolio and Investment Activity

FBCC’s portfolio composition as of December 31, 2024 was as follows:

Asset Type	Percentage of Total Portfolio	Weighted Average Current Yield
Senior Secured First Lien Debt	74.7%	10.5%
Senior Secured Second Lien Debt	3.1%	15.3%
Subordinated Debt	5.0%	11.9%
Collateralized Securities	0.3%	14.6%
Equity/Other	6.7%	8.9%
FBLC Senior Loan Fund LLC	10.2%	9.0%
Total	100.0%	10.5%

During the year ended December 31, 2024, FBCC made $1.1 billion of investments in new portfolio companies and had $651.2 million in aggregate sales and repayments, resulting in net investments of $450.9 million for the period, excluding any impact from the Mergers.

Portfolio Asset Quality

The weighted average risk rating of FBCC’s investments based on fair value was 2.2 as of December 31, 2024. As of December 31, 2024, FBCC had eight portfolio companies on non-accrual with a total amortized cost of $105.1 million and fair value of $65.5 million, which represented 2.6% and 1.7% of the investment portfolio’s total amortized cost and fair value, respectively.

FBLC Senior Loan Fund, LLC

As a result of the Mergers, FBCC became party to the joint venture formed between FBLC and Cliffwater Corporate Lending Fund, FBLC Senior Loan Fund, LLC (SLF). As of December 31, 2024, FBCC’s investment in SLF consisted of equity contributions of $404.9 million.

Results of Operations

FBCC’s total investment income increased from $94.7 million for the year ended December 31, 2023 to $413.3 million for the year ended December 31, 2024, primarily driven by the Mergers with FBLC.

Operating expenses, net of incentive fee waiver, increased from $40.8 million for the year ended December 31, 2023 to $223.9 million for the year ended December 31, 2024, also primarily due to the Mergers.

FBCC recorded a net realized and unrealized loss of $99.1 million for the year ended December 31, 2024, compared to a net realized and unrealized loss of $8.8 million for the year ended December 31, 2023.

Liquidity and Capital Resources

As of December 31, 2024, FBCC had $130.8 million of cash and $240.1 million of availability under its credit facilities. The company expects to have sufficient liquidity for its investing activities and to conduct its operations for the next 12 months.

Distributions

FBCC’s Board of Directors intends to declare and pay distributions on a quarterly basis. During the year ended December 31, 2024, FBCC paid $144.9 million in distributions to common stockholders and $7.3 million in distributions to preferred stockholders.

Taxation as a RIC

FBCC has elected to be treated as a Regulated Investment Company (RIC) under Subchapter M of the Internal Revenue Code. As a RIC, the company generally will not be subject to corporate-level U.S. federal income taxes on any income that it distributes as dividends for U.S. federal income tax purposes to its stockholders.

Conclusion

FBCC’s financial and operating performance in 2024 was significantly impacted by the Mergers with FBLC, which resulted in a substantial increase in the company’s investment portfolio, investment income, and operating expenses. The company maintained a diversified portfolio focused on senior secured loans to middle market companies and generated net investment income to support its quarterly distributions to stockholders.