497 1 v463603_497.htm 497

Filed pursuant to Rule 497
Securities Act File No. 333-202672

PROSPECTUS SUPPLEMENT
(to Prospectus dated January 13, 2017)

$57,500,000

[GRAPHIC MISSING]

TICC Capital Corp.

6.50% Notes due 2024

We operate as a closed-end, non-diversified management investment company and have elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to maximize our portfolio’s total return. Our primary focus is to seek an attractive risk-adjusted return by investing primarily in corporate debt securities pursuant to or following a syndication process and collateralized loan obligation (“CLO”) structured finance investments that own corporate debt securities. CLO investments may also include warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle. The types of portfolio companies in which we invest, however, will generally be considered below investment grade, and their debt securities may in turn be referred to as “junk.” A substantial portion of our investment portfolio consists of debt investments for which issuers are not required to make significant principal payments until maturity, which could result in a substantial loss for us if such issuers are unable to refinance or repay their debt at maturity. In addition, many of the debt securities we hold typically contain interest reset provisions that may make it more difficult for a borrower to repay the loan, which heightens the risk that we may lose all or part of our investment.

We are offering $57.5 million in aggregate principal amount of 6.50% notes due 2024, which we refer to as the “Notes.” The Notes will mature on March 30, 2024. We will pay interest on the Notes on March 30, June 30, September 30, and December 30 of each year, beginning on June 30, 2017. We may redeem the Notes in whole or in part at any time, or from time to time, on or after March 30, 2020, at the redemption price of par, plus accrued interest, as discussed under the caption “Description of the Notes—Optional Redemption” in this prospectus supplement. The Notes will be issued in minimum denominations of $25 and integral multiples of $25 in excess thereof.

The Notes will be our direct unsecured obligations and rank pari passu, which means equal to, all outstanding and future unsecured unsubordinated indebtedness issued by us, including our 7.50% convertible notes due 2017 (the “Convertible Notes”). Because the Notes will not be secured by any of our assets, they will be effectively subordinated to all of our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness. The Notes will be structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, CLO vehicles in which we hold an equity interest (including TICC CLO 2012-1 LLC) and financing vehicles since the Notes are obligations exclusively of TICC Capital Corp. and not of any of our subsidiaries. None of our subsidiaries is a guarantor of the Notes and the Notes will not be required to be guaranteed by any subsidiary we may acquire or create in the future. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes, and any assets of our subsidiaries will not be directly available to satisfy the claims of our creditors, including holders of the Notes.

As of the offering date of the Notes, the Notes will rank pari passu, which means equal to, approximately $94.5 million principal amount of our Convertible Notes, plus accrued interest. The Notes will also rank pari passu, which means equal to, our general liabilities. In total, these general liabilities were approximately $6.5 million as of December 31, 2016. We currently do not have outstanding debt that is subordinated to the Notes and do not currently intend to issue indebtedness that expressly provides that it is subordinated to the Notes. Therefore, the Notes will not be senior to any indebtedness or obligations.

We intend to list the Notes on the NASDAQ Global Select Market and we expect trading to commence thereon within 30 days of the original issue date under the trading symbol “TICCL.” The Notes are expected to trade “flat.” This means that purchasers will not pay, and sellers will not receive, any accrued and unpaid interest on the Notes that is not included in the trading price. Currently, there is no public market for the Notes and there can be no assurance that one will develop.

Please read this prospectus supplement and the accompanying prospectus before investing in the Notes and keep each for future reference. This prospectus supplement and the accompanying prospectus contain important information about us that a prospective investor ought to know before investing in the Notes. We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. This information is available free of charge by contacting us at 8 Sound Shore Drive, Suite 255, Greenwich, CT 06830 or by telephone at (203) 983-5275, or on our website at http://www.ticc.com . Information contained on our website is not incorporated by reference into this prospectus supplement or the accompanying prospectus, and you should not consider information contained on our website to be part of this prospectus supplement or the accompanying prospectus. The Securities and Exchange Commission (“SEC”) also maintains a website at http://www.sec.gov that contains information about us.

Investing in the Notes involves a high degree of risk and should be considered speculative. For more information regarding the risks you should consider, including the risk of leverage, please see “Supplementary Risk Factors” beginning on page S-15 of this prospectus supplement and “Risk Factors” on page 20 of the accompanying prospectus.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or determined if either this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

   
  Per Note   Total
Public offering price     100.0 %    $ 57,500,000  
Underwriting discount (sales load)     3.125 %    $ 1,796,875  
Proceeds to us before expenses(1)     96.875 %    $ 55,703,125  

(1) We estimate that we will incur approximately $238,500 in offering expenses in connection with this offering. See “Underwriting.”

The underwriters may exercise an option to purchase up to an additional $8,625,000 total aggregate principal amount of Notes offered hereby, within 30 days of the date of this prospectus supplement. If this option is exercised in full, the total public offering price will be $66,125,000, the total underwriting discount (sales load) paid by us will be $2,066,406, and total proceeds, before expenses, will be $64,058,594.

THE NOTES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.

Delivery of the Notes in book-entry form only through The Depository Trust Company will be made on or about April 12, 2017.

Joint Book-Running Managers

     
Ladenburg Thalmann   BB&T Capital Markets   Compass Point   William Blair

Lead Managers

   
BTIG   Maxim Group LLC   National Securities Corporation

The date of this prospectus supplement is April 4, 2017


 
 

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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. NEITHER WE NOR THE UNDERWRITERS HAVE AUTHORIZED ANY DEALER, SALESMAN, OR OTHER PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE REGISTERED SECURITIES TO WHICH THEY RELATE, NOR DO THEY CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH JURISDICTION. THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS ACCURATE ONLY AS OF THE DATES ON THEIR RESPECTIVE COVERS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS OR ANY SALES OF THE SECURITIES. OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THOSE DATES. TO THE EXTENT REQUIRED BY LAW, WE WILL AMEND OR SUPPLEMENT THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS TO REFLECT ANY MATERIAL CHANGES SUBSEQUENT TO THE DATE OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND PRIOR TO THE COMPLETION OF ANY OFFERING PURSUANT TO THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

 
  Page
About this Prospectus Supplement     S-iii  
Prospectus Supplement Summary     S-1  
Summary of the Specific Terms of the Notes and the Offering     S-10  
Supplementary Risk Factors     S-15  
Cautionary Statement Regarding Forward-Looking Statements     S-24  
Use of Proceeds     S-26  
Capitalization     S-27  
Ratio of Earnings to Fixed Charges     S-28  
Selected Financial and Other Data     S-29  
Management’s Discussion and Analysis of Financial Condition and Results of Operations     S-31  
Senior Securities     S-70  
Description of the Notes     S-72  
Additional Material U.S. Federal Income Tax Considerations     S-82  
Description of Our Capital Stock     S-86  
Underwriting     S-92  
Legal Matters     S-95  
Experts     S-95  
Where You Can Find Additional Information     S-95  
Index to Financial Statements     SF-1  

PROSPECTUS

 
  Page
Summary     1  
Offerings     11  
Fees and Expenses     14  

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  Page
Selected Financial and Other Data     17  
Selected Quarterly Financial Data     19  
Risk Factors     20  
Cautionary Statement Regarding Forward-Looking Statements     50  
Use of Proceeds     51  
Price Range of Common Stock and Distributions     52  
Management’s Discussion and Analysis of Financial Condition and Results of Operations     54  
Senior Securities     104  
Business     106  
Portfolio Companies     118  
Determination of Net Asset Value     125  
Management     127  
Portfolio Management     137  
Investment Advisory Agreement     140  
Administration Agreement     146  
Certain U.S. Federal Income Tax Considerations     147  
Regulation as a Business Development Company     154  
Distribution Reinvestment Plan     158  
Control Persons and Principal Stockholders     159  
Certain Relationships and Transactions     161  
Description of Securities     162  
Description of Our Capital Stock     162  
Description of Our Preferred Stock     168  
Description of Our Subscription Rights     169  
Description of Our Warrants     171  
Description of Our Debt Securities     172  
Plan of Distribution     185  
Legal Matters     187  
Custodian, Transfer and Distribution Paying Agent and Registrar     187  
Experts     187  
Brokerage Allocation and Other Practices     187  
Where You Can Find Additional Information     188  
Index to Financial Statements     F-1  

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ABOUT THIS PROSPECTUS SUPPLEMENT

We have filed a registration statement on Form N-2 (File No. 333-202672) utilizing a shelf registration process relating to the securities described in this prospectus supplement, which registration statement was declared effective on January 13, 2017.

This document is in two parts. The first part is the prospectus supplement, which describes the terms of this offering of Notes and also adds to and updates information contained in the accompanying prospectus. The second part is the accompanying prospectus, which gives more general information and disclosure about the securities which we may offer from time to time, some of which may not apply to the Notes offered by this prospectus supplement. For information about the Notes, see “Summary of the Specific Terms of the Notes and the Offering” and “Description of the Notes” in this prospectus supplement and “Description of Our Debt Securities” in the accompanying prospectus.

To the extent the information contained in this prospectus supplement differs from or adds to the information contained in the accompanying prospectus, you should rely only on the information contained in this prospectus supplement. The information contained in this prospectus supplement supersedes any inconsistent information included in the accompanying prospectus. In various places in this prospectus supplement and the accompanying prospectus, we refer you to other sections of such documents for additional information by indicating the caption heading of such other sections. The page on which each principal caption included in this prospectus supplement and the accompanying prospectus can be found is listed in the table of contents above. All such cross references in this prospectus supplement are to captions contained in this prospectus supplement and not in the accompanying prospectus, unless otherwise stated.

Please carefully read this prospectus supplement and the accompanying prospectus together with the additional information described under the headings “Where You Can Find Additional Information” and “Supplementary Risk Factors” included in this prospectus supplement and under “Where You Can Find Additional Information” and “Risk Factors” in the accompanying prospectus before investing in the Notes.

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SUMMARY

The following summary contains basic information about the offering of our Notes pursuant to this prospectus supplement and the accompanying prospectus. It is not complete and may not contain all the information that is important to you. For a more complete understanding of the offering of our Notes pursuant to this prospectus supplement, we encourage you to read this entire prospectus supplement and the accompanying prospectus, and the documents to which we have referred in this prospectus supplement and the accompanying prospectus. Together, these documents describe the specific terms of the Notes we are offering. You should carefully read the sections entitled “Supplementary Risk Factors,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements included in this prospectus supplement and the accompanying prospectus. Except as otherwise noted, all information in this prospectus supplement and the accompanying prospectus assumes no exercise of the underwriters’ option to purchase additional Notes.

Except where the context requires otherwise, the terms “TICC,” “Company,” “we,” “us” and “our” refer to TICC Capital Corp. together with its subsidiaries, TICC CLO 2012-1 LLC (“2012 Securitization Issuer” or “TICC CLO 2012-1”) and TICC Funding, LLC (“TICC Funding”) for the periods for which they were held; “TICC Management” and “investment adviser” refer to TICC Management, LLC; and “BDC Partners” and “administrator” refer to BDC Partners, LLC.

Overview

We are a closed-end, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Our investment objective is to maximize our portfolio’s total return. Our primary focus is to seek an attractive risk-adjusted total return by investing primarily in corporate debt securities pursuant to or following a syndication process and collateralized loan obligation (“CLO”) structured finance investments that own corporate debt securities. CLO investments may also include warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle. As a BDC, we may not acquire any asset other than “qualifying assets” unless, at the time we make the acquisition, the value of our qualifying assets represents at least 70% of the value of our total assets.

Our capital is generally used by our corporate borrowers to finance organic growth, acquisitions, recapitalizations and working capital. Our investment decisions are based on analysis of potential portfolio companies’ business operations supported by an understanding of the quality of their revenues and cash flow and variability of costs. In making our CLO investments, we consider the indenture structure for that vehicle, its operating characteristics and compliance with its various indenture provisions, as well as its corporate loan-based collateral pool.

We generally expect to invest between $5.0 million and $50.0 million in each of our portfolio investments, although this investment size may vary as the size of our capital base changes and market conditions warrant, and to accrue interest at fixed or variable rates. We expect that our investment portfolio will be diversified among a large number of investments, with few investments, if any, exceeding 5% of the total portfolio.

The structures of our investments will vary and we seek to invest across a wide range of different industries. We seek to invest in corporate borrowers that, as a general matter, have been operating for at least one year prior to the date of our investment and that will, at the time of our investment, have employees and revenues, and which are cash flow positive. Many of these companies are expected to have financial backing provided by other financial or strategic sponsors at the time we make an investment. The portfolio companies in which we invest, however, will generally be considered below investment grade, and their debt securities may in turn be referred to as “junk.” Many of our investments consist of debt investments for which issuers are not required to make significant principal payments until the maturity of the senior loans, which could result in a substantial loss to us if such issuers are unable to refinance or repay their debt at maturity. In addition, many of the debt securities we hold typically contain interest reset provisions that may make it more difficult for a borrower to repay the loan, heightening the risk that we may lose all or part of our investment.

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We also purchase portions of equity and junior debt tranches of CLO vehicles. Substantially all of the CLO vehicles in which we may invest would be deemed to be investment companies under the 1940 Act but for the exceptions set forth in section 3(c)(1) or section 3(c)(7). Other than CLO vehicles, we do not intend to invest, and we would be limited to 15% of our net assets if we did invest, in any types of entities that rely on the exceptions set forth in section 3(c)(1) or section 3(c)(7) of the 1940 Act. Structurally, CLO vehicles are entities that were formed to originate and manage a portfolio of loans. The loans within the CLO vehicle are limited to loans which meet established credit criteria and are subject to concentration limitations in order to limit a CLO vehicle’s exposure to a single obligor or industry. A CLO vehicle is formed by raising various classes or “tranches” of debt (with the most senior tranches being rated “AAA” to the most junior tranches typically being rated “BB” or “B”) and equity. The tranches of CLO vehicles rated “BB” or “B” may be referred to as “junk.” The equity of a CLO vehicle is generally required to absorb the CLO’s losses before any of the CLO’s other tranches, yet it also has the lowest level of payment priority among the CLO’s tranches; therefore, the equity is typically the riskiest of CLO investments which, if it were rated, may also be referred to as “junk.” We primarily focus on investing in the junior tranches and the equity of CLO vehicles. The CLO vehicles which we focus on are collateralized primarily by senior secured loans made to companies whose debt is unrated or is rated below investment grade, and generally have very little or no direct exposure to real estate, mortgage loans or to pools of consumer-based debt, such as credit card receivables or auto loans. However, there can be no assurance that the collateral securing such senior secured loans would satisfy all of the unpaid principal and interest of our investment in the CLO vehicle in the event of default and the junior tranches, especially the equity tranches, of CLO vehicles are the last tranches to be paid, if at all, in the event of a default. Our investment strategy may also include warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle.

We have borrowed funds to make investments and may continue to do so. As a result, we are exposed to the risks of leverage, which may be considered a speculative investment technique. Borrowings, also known as leverage, magnify the potential for gain and loss on amounts invested and therefore increase the risks associated with investing in our securities. In addition, the costs associated with our borrowings, including any increase in the management fee payable to our investment adviser, TICC Management, will be borne by our common stockholders.

Debt Securitization

On August 23, 2012, we completed a $160.0 million debt securitization financing transaction, consisting of $120.0 million in secured notes issued in four classes (“class A-1”, “class B-1”, “class C-1”, and “class D-1”) and $40.0 million of subordinated notes (the “2012 Subordinated Notes”). On February 25, 2013 and May 28, 2013, TICC CLO 2012-1 (“2012 Securitization Issuer”) issued additional secured notes totaling an aggregate of $120.0 million and 2012 Subordinated Notes totaling an aggregate of $40.0 million, which 2012 Subordinated Notes were purchased by us, under the “accordion” feature of the debt securitization which allowed, under certain circumstances and subject to the satisfaction of certain conditions, for an increase in the amount of secured and subordinated notes.

On August 25, 2016, November 25, 2016 and February 27, 2017, the 2012 Securitization Issuer repaid $36.0 million, approximately $74.7 million and approximately $24.5 million, respectively, of the class A-1 notes. As of March 30, 2017, the secured notes of the 2012 Securitization Issuer have an aggregate face amount of approximately $104.8 million and were issued in four classes. As of March 30, 2017, the class A-1 notes have a face amount of approximately $40.8 million, are rated AAA(sf)/Aaa(sf) by Standard & Poor’s Ratings Services (S&P) and Moody’s Investors Service, Inc (Moody’s), respectively, and bear interest at three-month London Interbank Offered Rate (“LIBOR”) plus 1.75%. As of March 30, 2017, the class B-1 notes have a face amount of $20.0 million, are rated AAA(sf)/Aaa(sf) by S&P and Moody’s, respectively, and bear interest at three-month LIBOR plus 3.50%. As of March 30, 2017, the class C-1 notes have a face amount of $23 million, are rated AA+(sf)/Aa2(sf) by S&P and Moody’s, respectively, and bear interest at three-month LIBOR plus 4.75%. As of March 30, 2017, the class D-1 notes have a current face amount of $21 million, are rated A+(sf)/A3(sf) by S&P and Moody’s, respectively, and bear interest at three-month LIBOR plus 5.75%. We presently own all of the 2012 Subordinated Notes, which as of March 30, 2017 have a face amount of $80 million. The Notes will be structurally subordinated to the secured notes of the 2012 Securitization Issuer with respect to the specific assets in TICC CLO 2012-1.

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Convertible Notes

On September 26, 2012, we completed a private placement of 5-year unsecured 7.50% Convertible Notes Due 2017 (the “Convertible Notes”). A total of $105.0 million aggregate principal amount of the Convertible Notes were issued at the closing. An additional $10.0 million aggregate principal amount of the Convertible Notes were issued on October 22, 2012 pursuant to the exercise of the initial purchasers’ option to purchase additional Convertible Notes. On December 2, 2016 and December 16, 2016, we repurchased $12.0 million and approximately $8.5 million, respectively, of outstanding Convertible Notes. As of March 30, 2017, approximately $94.5 million of Convertible Notes remained issued and outstanding. The Convertible Notes are convertible into shares of our common stock based on an initial conversion rate of 87.2448 shares of our common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $11.46 per share of common stock. The conversion price for the Convertible Notes will be reduced for quarterly cash distributions paid to common shares to the extent that the quarterly distribution exceeds $0.29 cents per share, subject to adjustment. The Convertible Notes mature on November 1, 2017, unless previously converted in accordance with their terms. The Company does not have the right to redeem the Convertible Notes prior to maturity. The Convertible Notes are our general unsecured obligations, rank equally in right of payment with our future senior unsecured debt, including the Notes, and rank senior in right of payment to any potential subordinated debt, should any be issued in the future.

Organizational and Regulatory Structure

Our investment activities are managed by TICC Management. TICC Management is an investment adviser registered under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). TICC Management is owned by BDC Partners, its managing member, and Charles M. Royce, a member of our Board of Directors who holds a minority, non-controlling interest in TICC Management. Jonathan H. Cohen, our Chief Executive Officer, and Saul B. Rosenthal, our President and Chief Operating Officer, directly or indirectly own or control all of the outstanding equity interests of BDC Partners. Under the Investment Advisory Agreement, we have agreed to pay TICC Management an annual base management fee based on our gross assets as well as an incentive fee based on our performance.

We were founded in July 2003 and completed an initial public offering of shares of our common stock in November 2003. We are a Maryland corporation and a closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the 1940 Act. As a BDC, we are required to meet certain regulatory tests, including the requirement to invest at least 70% of our total assets in eligible portfolio companies. In addition, we have elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

Our consolidated operations include the activities of our wholly-owned subsidiaries, TICC CLO 2012-1 and TICC Funding for the periods during which they were held. These subsidiaries were formed for the purpose of enabling the Company to obtain debt financing and are operated solely for the investment activities of the Company, and the Company has substantial equity at risk. TICC Funding was formed on September 17, 2014, for the purpose of entering into a credit and security agreement with Citibank, N.A. (the “Facility”). During the fourth quarter of 2015, the Company liquidated portions of the TICC Funding portfolio and, as of December 31, 2015, the Facility had been fully repaid. During the quarter ended September 30, 2016, the Company, as collateral manager of TICC Funding, dissolved TICC Funding pursuant to Delaware law by filing a certificate of cancellation with the Secretary of State in Delaware.

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Set forth below is a chart detailing our current organizational structure.

[GRAPHIC MISSING]

Our Corporate Information

Our headquarters are located at 8 Sound Shore Drive, Suite 255 Greenwich, Connecticut and our telephone number is (203) 983-5275.

Market Overview and Opportunity

2016 represented a period of sustained strength in the markets in which we participate. From January 1, 2016 to December 31, 2016, the LSTA Corporate Loan index rose from 91.29% to 98.08%, an increase of 7.4%. At the same time, corporate loan default rates remained at low levels, providing investors with a generally lower-risk, lower-return corporate debt environment. Both our corporate loan and CLO portfolios had strong performance during 2016, with higher loan prices leading to increased CLO equity Net Asset Values (“NAVs”) and significantly higher CLO equity market values. During the second half of 2016 and into 2017, tighter leveraged loans credit spreads reduced the weighted average spreads of the loan assets in our CLO investments. This reduction in credit spreads on CLO collateral coupled with a meaningful increase in 3-month LIBOR during the 2016 year has led to lower current and projected cash flow distribution payments from many CLO equity tranches. This reduction in cash flow payments also had the effect of increasing the prospective duration of our CLO equity investments (i.e. tilting the balance towards a less front-end loaded CLO equity return profile) than had existed in recent years. This dynamic has concurrently created various opportunities for us, with higher NAVs presenting us with greater possibilities for CLO calls (and for opportunistic investments in CLO junior debt at discounted prices). The current market environment has also resulted in tighter CLO liability spreads presenting us with ongoing refinancing as well as resetting opportunities. A “reset” is a refinancing that includes an extension of the reinvestment period of the CLO. With both CLO collateral and liability spreads at nearly the tightest levels since the 2008 credit crisis, and with 3-month LIBOR now at approximately 1.2%, we believe that the CLO asset class is currently well positioned for any widening of spreads and/or dislocation in the market.

As we executed our strategy of rotating out of more broadly-syndicated corporate loans into a combination of club deals and narrowly-syndicated loans through purchases in both the primary and secondary markets, we remained mindful of maintaining overall portfolio liquidity. We believe this strategy has allowed us to maintain corporate debt investments which have sufficient liquidity to be sold (if necessary) in order to pay down leverage at TICC and to take advantage of market opportunities, as reflected by the significant reduction in our overall corporate debt level during 2016 and by higher yields on new corporate loan investments in 2016. We ended 2016 with approximately $8.3 million of cash on our balance sheet, after the

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partial repurchase of approximately $20.5 million of Convertible Notes in December 2016 and we expect that our cash on balance sheet will increase during 2017 in anticipation of the maturity of our Convertible Notes in November 2017. As of March 30, 2017, our balance sheet cash balance was approximately $67.9 million.

We continue to view our mandate as maximizing the risk-adjusted return on our shareholders’ investment in TICC. As such, we have and continue to focus on portfolio-management strategies designed to maximize our total return, as opposed to generating a certain level of income over a particular timeframe. We view the market opportunity currently available to us as strong and, as a permanent capital vehicle, we have historically been able to take a longer-term view towards our investments. We believe this perspective served us well in 2016.

Competitive Advantages

We believe that we are well positioned to provide financing to corporate borrowers and structured finance vehicles that, in turn, provide capital to corporate borrowers for the following reasons:

Expertise in credit analysis and monitoring investments; and
Established transaction sourcing network.

Expertise in credit analysis and monitoring investments

Our primary focus is investing in debt securities of privately-owned middle market companies and in CLO vehicles that own debt securities. We believe our experience in analyzing many types of companies and CLO investment structures, as detailed in the biographies of TICC Management’s senior investment professionals, affords us a sustainable competitive advantage over lenders with limited experience in investing in these structures and corresponding markets. In particular, we have expertise in evaluating the investment merits of a wide variety of companies as well as the structural features of CLO investments, and monitoring the credit risk of such investments after closing until full repayment.

Jonathan H. Cohen, our Chief Executive Officer, has more than 25 years of experience in debt and equity research and investment. Mr. Cohen has also served as the Chief Executive Officer and a Director of Oxford Lane Capital Corp. (NasdaqGS: OXLC), a registered closed-end fund, and as Chief Executive Officer of its investment adviser, Oxford Lane Management, LLC (“Oxford Lane Management”), since 2010. Mr. Cohen has also served since 2015 as the Chief Executive Officer of Oxford Bridge Management, LLC (“Oxford Bridge Management”), the investment adviser to Oxford Bridge, LLC, a private investment fund. Mr. Cohen previously managed technology equity research groups at Wit Capital, Merrill Lynch, UBS and Smith Barney. Mr. Cohen is a member of the Board of Trustees of Connecticut College. Mr. Cohen received a B.A. in Economics from Connecticut College and an M.B.A. from Columbia University.
Saul B. Rosenthal, our President and Chief Operating Officer, has 20 years of experience in the capital markets, with a focus on middle-market transactions. In addition, Mr. Rosenthal has served as President and a Director of Oxford Lane Capital Corp. (NasdaqGS: OXLC), a registered closed-end fund, and as President of Oxford Lane Management, since 2010. Mr. Rosenthal has also served since 2015 as President of Oxford Bridge Management, the investment adviser to Oxford Bridge, LLC, a private investment fund. Mr. Rosenthal was previously an attorney at the law firm of Shearman & Sterling LLP. Mr. Rosenthal serves on the boards of Lift Forward, Inc., the National Museum of Mathematics and YPO New York City. Mr. Rosenthal received a B.S., magna cum laude, from the Wharton School of the University of Pennsylvania, a J.D. from Columbia University Law School, where he was a Harlan Fiske Stone Scholar, and a LL.M. (Taxation) from New York University School of Law.
Darryl Monasebian is the Executive Vice President and head of risk and portfolio management of TICC Management, and also holds those same positions at Oxford Lane Management, the investment adviser to Oxford Lane Capital Corp. and at Oxford Bridge Management, the investment adviser to Oxford Bridge, LLC. Prior to joining TICC Management, Mr. Monasebian was a director in the Merchant Banking Group at BNP Paribas, and prior to that he was a director at Swiss Bank Corporation and a senior account officer at Citibank. He began his business career at Metropolitan Life Insurance Company as an investment analyst in the Corporate Investments

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Department. Mr. Monasebian received a B.S. in Management Science/Operations Research from Case Western Reserve University and a Masters of Business Administration from Boston University’s Graduate School of Management.
Debdeep Maji is a Senior Managing Director of TICC Management, and also holds the same position at Oxford Lane Management, the investment adviser to Oxford Lane Capital Corp. and at Oxford Bridge Management, the investment adviser to Oxford Bridge, LLC. Mr. Maji graduated from the Jerome Fisher Program in Management and Technology at the University of Pennsylvania where he received a Bachelor of Science degree in Economics from the Wharton School (and was designated a Joseph Wharton Scholar) and a Bachelor of Applied Science from the School of Engineering.
Kevin Yonon is a Managing Director of TICC Management, and also holds the same position at Oxford Lane Management, the investment adviser to Oxford Lane Capital Corp. and at Oxford Bridge Management, the investment adviser to Oxford Bridge, LLC. Previously, Mr. Yonon was an Associate at Deutsche Bank Securities and prior to that he was an Analyst at Blackstone Mezzanine Partners. Before joining Blackstone, he worked as an Analyst at Merrill Lynch in the Mergers & Acquisitions group. Mr. Yonon received a B.S. in Economics with concentrations in Finance and Accounting from the Wharton School at the University of Pennsylvania, where he graduated magna cum laude, and an M.B.A. from the Harvard Business School.

Established deal sourcing network

Through the investment professionals of TICC Management, we have extensive contacts and sources from which to generate investment opportunities. These contacts and sources include private equity funds, companies, brokers and bankers. We believe that senior professionals of TICC Management have developed strong relationships within the investment community over their years within the banking, investment management and equity research field.

Recent Developments

From January 1, 2017 through March 30, 2017, we sold or were repaid approximately $134.1 million from our portfolio investments and purchased approximately $47.6 million in portfolio investments, including additional investments of approximately $19.8 million in existing portfolio companies and approximately $27.8 million in new portfolio companies. In addition, we used approximately $24.5 million of the proceeds from these investment sales to pay down the class A-1 notes issued by the 2012 Securitization Issuer. The remaining proceeds have been principally added to our cash account or our restricted cash account, such restricted cash to be used for the next scheduled pay down in May 2017 of the class A-1 notes issued by the 2012 Securitization Issuer.

Management Fee

We pay TICC Management a fee for its services under the Investment Advisory Agreement consisting of two components — a base management fee (the “Base Fee”) and an incentive fee. The cost of both the Base Fee payable to TICC Management and any incentive fees earned by TICC Management are ultimately borne by our common stockholders.

Through March 31, 2016, the Base Fee was calculated at an annual rate of 2.00%. Effective April 1, 2016, the Base Fee is currently calculated at an annual rate of 1.50%. The Base Fee is payable quarterly in arrears, and is calculated based on the average value of TICC’s gross assets at the end of the two most recently completed calendar quarters, and appropriately adjusted for any equity or debt capital raises, repurchases or redemptions during the current calendar quarter (however, no Base Fee will be payable on the cash proceeds received by TICC in connection with any share or debt issuances until such proceeds have been invested in accordance with TICC’s investment objectives). Accordingly, the Base Fee will be payable regardless of whether the value of the Company’s gross assets have decreased during the quarter. The Base Fee for any partial quarter will be appropriately pro rated.

The incentive fee has two parts: net investment income incentive fee and capital gains incentive fee. The net investment income incentive fee is calculated and payable quarterly in arrears based on the amount by

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which (x) the “Pre-Incentive Fee Net Investment Income” for the immediately preceding calendar quarter exceeds (y) the “Preferred Return Amount” for that calendar quarter. For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any accrued income that TICC has not yet received in cash and any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that TICC receives from portfolio companies) accrued during the calendar quarter, minus TICC's operating expenses accrued during the calendar quarter (including the Base Fee, expenses payable under the Administration Agreement, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). “Pre-Incentive Fee Net Investment Income” includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Our investment adviser will not be under any obligation to reimburse us for any part of the incentive fee it received that was based on accrued income that we never receive as a result of a default by an entity on the obligation that resulted in the accrual of such income. “Pre-Incentive Fee Net Investment Income” does not include any realized gains, realized losses or unrealized appreciation or depreciation. Given that this portion of the incentive fee is payable without regard to any gain, loss or unrealized depreciation that may occur during the quarter, this portion of TICC Management’s incentive fee may also be payable notwithstanding a decline in net asset value that quarter.

From January 1, 2005 through March 31, 2016, the “Pre-Incentive Fee Net Investment Income,” which was expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, was compared to one-fourth of an annual hurdle rate that was determined as of the immediately preceding December 31st by adding 5.00% to the interest rate then payable on the most recently issued five-year U.S. Treasury Notes, up to a maximum annual hurdle rate of 10.00%.

Effective April 1, 2016, a “Preferred Return Amount” is calculated on a quarterly basis by multiplying 1.75% by the Company’s net asset value at the end of the immediately preceding calendar quarter. The net investment income incentive fee is then calculated as follows: (a) no net investment income incentive fee is payable to TICC Management in any calendar quarter in which the “Pre-Incentive Fee Net Investment Income” does not exceed the “Preferred Return Amount”; (b) 100% of the “Pre-Incentive Fee Net Investment Income” for such quarter, if any, that exceeds the “Preferred Return Amount” but is less than or equal to a “Catch-Up Amount” determined on a quarterly basis by multiplying 2.1875% by TICC’s net asset value at the end of such calendar quarter; and (c) for any quarter in which the “Pre-Incentive Fee Net Investment Income” exceeds the “Catch-Up Amount,” the net investment income incentive fee will be 20% of the amount of the “Pre-Incentive Fee Net Investment Income” for such quarter. There is no accumulation of amounts from quarter to quarter for the “Preferred Return Amount,” and accordingly there is no clawback of amounts previously paid to TICC Management if the “Pre-Incentive Fee Net Investment Income” for subsequent quarters is below the quarterly “Preferred Return Amount,” and there is no delay of payment of incentive fees to TICC Management if the “Pre-Incentive Fee Net Investment Income” for prior quarters is below the quarterly “Preferred Return Amount” for the quarter for which the calculation is being made.

In addition, effective April 1, 2016, the calculation of the Company’s net investment income incentive fee is subject to a total return requirement, which provides that a net investment income incentive fee will not be payable to TICC Management except to the extent 20% of the “cumulative net increase in net assets resulting from operations” (which is the amount, if positive, of the sum of the “Pre-Incentive Fee Net Investment Income,” realized gains and losses and unrealized appreciation and depreciation) during the calendar quarter for which such fees are being calculated and the eleven (11) preceding quarters (or if shorter, the number of quarters since April 1, 2016) exceeds the cumulative net investment income incentive fees accrued and/or paid for such eleven (11) preceding quarters (or if shorter, the number of quarters since April 1, 2016). Under the revised fee structure, under no circumstances will the aggregate fees earned from April 1, 2016 by TICC Management in any quarterly period be higher than the aggregate fees that would have been earned prior to the adoption of these changes.

The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 20% of our “Incentive Fee Capital Gains,” which consists of our realized capital gains for each calendar year, computed net of all realized capital losses and unrealized capital depreciation for that calendar year. For accounting purposes only, in order to reflect the theoretical capital gains incentive fee that would be payable

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for a given period as if all unrealized gains were realized, we will accrue a capital gains incentive fee based upon net realized gains and unrealized depreciation for that calendar year (in accordance with the terms of the Investment Advisory Agreement), plus unrealized appreciation on investments held at the end of the period. It should be noted that a fee so calculated and accrued would not necessarily be payable under the Investment Advisory Agreement, and may never be paid based upon the computation of capital gains incentive fees in subsequent periods. Amounts paid under the Investment Advisory Agreement will be consistent with the formula reflected in the Investment Advisory Agreement.

Summary Risk Factors

The value of our assets, as well as the market price of our securities, will fluctuate. Our investments may be risky, and you may lose all or part of your investment in us. Investing in our securities involves other significant risks, including the following:

We are dependent upon TICC Management’s management personnel for our future success, particularly Jonathan H. Cohen and Saul B. Rosenthal.
We operate in a highly competitive market for investment opportunities.
Because our investments are generally not in publicly traded securities, there is uncertainty regarding the fair value of our investments, which could adversely affect the determination of our net asset value.
The lack of liquidity in our investments may adversely affect our business.
We may experience fluctuations in our operating results for any period, and as a result, our financial results for any period should not be relied upon as being indicative of performance in future periods.
Economic recessions or downturns could impair our portfolio companies and harm our operating results.
Global capital markets could enter a period of severe disruption and instability. These market conditions have historically and could again have a materially adverse effect on debt and equity capital markets in the U.S., which could have a materially negative impact on our business, financial condition and results of operations.
Our business is subject to increasingly complex corporate governance, public disclosure and accounting requirements that could adversely affect our business and financial results.
We are permitted to borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us.
We are subject to risks associated with our debt securitization financing transactions.
Regulations governing our operation as a BDC affect our ability to, and the way in which we raise additional capital, which may expose us to risks, including the typical risks associated with leverage.
A change in interest rates may adversely affect our profitability and we may expose ourselves to risks if we engage in hedging transactions to mitigate changes in interest rates.
We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC for U.S. federal income tax purposes.
Our investment portfolio may be concentrated in a limited number of portfolio companies, which will subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt securities that we hold or if the sectors in which we invest experience a market downturn.
Most of our debt investments will not fully amortize during their lifetime, which may subject us to the risk of loss of our principal in the event a portfolio company is unable to repay us prior to maturity.

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The sectors in which we invest are subject to many risks, including volatility, intense competition, decreasing life cycles and periodic downturns which could result in a heightened risk of loss in your investment.
Our investments in the companies that we target may be extremely risky and we could lose all or part of our investments.
Our incentive fee may induce TICC Management to use leverage and to make speculative investments.
Our investments in CLO vehicles may be riskier and less transparent than direct investments in portfolio companies.
Failure by a CLO vehicle in which we are invested to satisfy certain tests may harm our operating results.
Our financial results may be affected adversely if one or more of our equity or junior debt investments in a CLO vehicle defaults on its payment obligations or fails to perform as we expect or if the market price fluctuates significantly in such illiquid investments.
The Notes will be unsecured and therefore will be effectively subordinated to any secured indebtedness we have incurred or may incur in the future.
The Notes will be structurally subordinated to the indebtedness and other liabilities of our subsidiaries.
The indenture under which the Notes will be issued contains limited protection for holders of the Notes.
There is no existing trading market for the Notes and, even if NASDAQ approves the listing of the Notes, an active trading market for the Notes may not develop, which could limit your ability to sell the Notes or the market price of the Notes.
We may choose to redeem the Notes when prevailing interest rates are relatively low.
If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Notes.

See “Supplementary Risk Factors” beginning on page S-15 of this prospectus supplement and “Risk Factors” beginning on page 20 of the accompanying prospecuts, and the other information included in this prospectus supplement nad the accompanying prospectus, for additional discussion of factors you should carefully consider before deciding to invest in our securities, including the Notes.

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SPECIFIC TERMS OF THE NOTES AND THE OFFERING

Issuer    
    TICC Capital Corp.
Title of the Securities    
    6.50% Notes due 2024
Initial aggregate principal amount being offered    
    $57.5 million
Option to purchase additional shares    
    The underwriters may also purchase from us from time to time up to an additional $8.625 million aggregate principal amount of Notes within 30 days of the date of this prospectus supplement.
Initial public offering price    
    100% of the aggregate principal amount
Principal payable at maturity    
    100% of the aggregate principal amount; the principal amount of each Note will be payable on its stated maturity date at the office of the Trustee, Paying Agent, and Registrar for the Notes or at such other office in New York, New York as we may designate.
Type of note    
    Fixed rate note
Listing    
    We intend to list the Notes on the Nasdaq Global Select Market, within 30 days of the original issue date under the trading symbol “TICCL.”
Interest Rate    
    6.50% per year
Day count basis    
    360-day year of twelve 30-day months
Original issue date    
    April 12, 2017
Stated maturity date    
    March 30, 2024
Date interest starts accruing    
    April 12, 2017
Interest payment dates    
    Every March 30, June 30, September 30, and December 30, beginning June 30, 2017. If an interest payment date falls on a non-business day, the applicable interest payment will be made on the next business day and no additional interest will accrue as a result of such delayed payment.
Interest periods    
    The initial interest period will be the period from and including April 12, 2017, to, but excluding, the initial interest payment date, and the subsequent interest periods will be the periods from and including an interest payment date to, but excluding, the next interest payment date or the stated maturity date, as the case may be.
Regular record dates for interest    
    March 15, June 15, September 15, and December 15, beginning June 15, 2017.
Specified Currency    
    U.S. Dollars
Place of Payment    
    New York City
Ranking of Notes    
    The Notes will be our direct unsecured obligations and will rank:
   

•  

pari passu with, which means equal to, all outstanding and future unsecured unsubordinated indebtedness issued by us, including our Convertible Notes (which have an aggregate principal amount of approximately $94.5 million, plus accrued interest, as of the offering date of the Notes). The Notes will also rank pari passu with, which means equal to,

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    our general liabilities, which consist of trade and other payables, including any outstanding dividend payable, base and incentive management fees payable, interest and debt fees payable, vendor payables and accrued expenses such as auditor fees, legal fees, director fees, etc. In total, these general liabilities were approximately $6.5 million as of December 31, 2016.
   

•  

senior to any of our future indebtedness that expressly provides it is subordinated to the Notes. We currently do not have outstanding debt that is subordinated to the Notes and do not currently intend to issue indebtedness that expressly provides that it is subordinated to the Notes. Therefore, the Notes will not be senior to any indebtedness or obligations.

   

•  

effectively subordinated to all of our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes, and any assets of our subsidiaries will not be directly available to satisfy the claims of our creditors, including holders of the Notes. Currently, we do not have any secured indebtedness at the TICC Capital Corp. level.

   

•  

structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries, CLO vehicles in which we hold an equity interest (including TICC-CLO 2012-1) and financing vehicles since the Notes are obligations exclusively of TICC Capital Corp. and not of any of our subsidiaries. Structural subordination means that creditors of a parent entity are subordinate to creditors of a subsidiary entity with respect to the subsidiary’s assets.

    Except as described under the captions “Description of the Notes — Events of Default,” “— Other Covenants,” and “— Merger or Consolidation” in this prospectus supplement, the indenture does not contain any provisions that give you protection in the event we issue a large amount of debt or we are acquired by another entity.

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Denominations    
    We will issue the Notes in denominations of $25 and integral multiples of $25 in excess thereof.
Business Day    
    Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York City are authorized or required by law or executive order to close.
Optional redemptions    
    The Notes may be redeemed in whole or in part at any time or from time to time at our option on or after March 30, 2020 upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount of the Notes to be redeemed plus accrued and unpaid interest payments otherwise payable thereon for the then-current quarterly interest period accrued to the date fixed for redemption.
    You may be prevented from exchanging or transferring the Notes when they are subject to redemption. In case any Notes are to be redeemed in part only, the redemption notice will provide that, upon surrender of such Note, you will receive, without a charge, a new Note or Notes of authorized denominations representing the principal amount of your remaining unredeemed Notes.
    Any exercise of our option to redeem the Notes will be done in compliance with the 1940 Act. If we redeem only some of the Notes, the Trustee or, with respect to global securities, The Depository Trust Company (“DTC”) will determine the method for selection of the particular Notes to be redeemed, in accordance with the indenture and the 1940 Act, and in accordance with the rules of any national securities exchange or quotation system on which the Notes are listed. Unless we default in payment of the redemption price, on and after the date of redemption, interest will cease to accrue on the Notes called for redemption.
Sinking Fund    
    The Notes will not be subject to any sinking fund (i.e., no amounts will be set aside by us to ensure repayment of the Notes at maturity). As a result, our ability to repay the Notes at maturity will depend on our financial condition on the date that we are required to repay the Notes.
Repayment at option of Holders    
    Holders will not have the option to have the Notes repaid prior to the stated maturity date.
Defeasance    
    The Notes are subject to defeasance by us. “Defeasance” means that, by depositing with a trustee an amount of cash and/or government securities sufficient to pay all principal and interest, if any, on the Notes when due and satisfying any additional conditions required under the indenture relating to the Notes, we will be deemed to have been discharged from our obligations under the Notes.
Covenant defeasance    
    The Notes are subject to covenant defeasance by us. In the event of a “covenant defeasance,” upon depositing such funds and satisfying similar conditions discussed below we would be released from the restrictive covenants under the indenture relating to the Notes. The consequences to the holders of the Notes is that, while they no longer benefit from the restrictive covenants under the indenture, and while the Notes may not be accelerated for any

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    reason, the holders of Notes nonetheless are guaranteed to receive the principal and interest owed to them.
Form of Notes    
    The Notes will be represented by global securities that will be deposited and registered in the name of DTC or its nominee. This means that, except in limited circumstances, you will not receive certificates for the Notes. Beneficial interests in the Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in DTC. Investors may elect to hold interests in the Notes through either DTC, if they are a participant, or indirectly through organizations that are participants in DTC.
Trustee, Paying Agent, and
Registrar,
   
    U.S. Bank National Association
Other covenants    
    In addition to any covenants described elsewhere in this prospectus, the following covenants shall apply to the Notes:
   

•  

We agree that for the period of time during which the Notes are outstanding, we will not violate (whether or not we are subject to) Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions, but giving effect to any exemptive relief granted to us by the SEC. Currently, these provisions generally prohibit us from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowings. See “Risk Factors — Pending legislation may allow us to incur additional leverage” in the accompanying prospectus.

   

•  

We agree that, if, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, to file any periodic reports with the SEC, we agree to furnish to holders of the Notes and the Trustee, for the period of time during which the Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance with applicable United States generally accepted accounting principles.

Events of Default    
    You will have rights if an Event of Default occurs with respect to the Notes.
    The term “Event of Default” in respect of the Notes means any of the following:
   

•  

We do not pay the principal (or premium, if any) of any Note when due.

   

•  

We do not pay interest on any Note when due, and such default is not cured within 30 days.

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•  

We remain in breach of any other covenant with respect to the Notes for 60 days after we receive a written notice of default stating we are in breach. The notice must be sent by either the Trustee or holders of at least 25.0% of the principal amount of the Notes.

   

•  

We file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur and in the case of certain orders or decrees entered against us under any bankruptcy law, such order or decree remains undischarged or unstayed for a period of 60 days.

   

•  

On the last business day of each of twenty-four consecutive calendar months, the Notes have an asset coverage, as defined in the 1940 Act, of less than 100% after giving effect to any exemptive relief granted to us by the SEC.

Further Issuances    
    We have the ability to issue additional debt securities under the indenture with terms different from the Notes and, without consent of the holders thereof, to reopen the Notes and issue additional Notes. If we issue additional debt securities, these additional debt securities could rank higher in priority of payment or have a lien or other security interest greater than that accorded to the holders of the Notes.
Global Clearance and Settlement Procedures    
    Interests in the Notes will trade in DTC’s Same Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. None of the Company, the Trustee or the Paying Agent will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.
Use of Proceeds    
    We estimate that the net proceeds we will receive from the sale of the Notes will be approximately $55.5 million (or $63.8 million if the underwriters exercise their option to purchase additional Notes in full) after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We expect to use the net proceeds from this offering to repay or repurchase a portion of the outstanding indebtedness under our Convertible Notes. As of March 30, 2017, we had approximately $94.5 million outstanding plus accrued interest under the Convertible Notes.

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SUPPLEMENTARY RISK FACTORS

Investing in our securities involves a number of significant risks. Before you invest in our securities, you should be aware of various risks, including those described below and those set forth in the accompanying prospectus. You should carefully consider these risk factors, together with all of the other information included in this prospectus supplement and the accompanying prospectus, before you decide whether to make an investment in our securities. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us may also impair our operations and performance. If any of the following events occur, our business, financial condition, results of operations and cash flows could be materially and adversely affected, and consequently, our ability to repay principal and pay interest on the Notes could be materially affected. In such case, our net asset value and the trading price of our securities could decline, and you may lose all or part of your investment. The risk factors described below, together with those set forth in the accompanying prospectus, are the principal risk factors associated with an investment in us as well as those factors generally associated with an investment company with investment objectives, investment policies, capital structure, or trading markets similar to ours.

RISKS RELATING TO THE NOTES

The Notes will be unsecured and therefore are effectively subordinated to any secured indebtedness we have incurred or may incur in the future and rank pari passu with, which means equal to, all outstanding and future unsecured unsubordinated indebtedness issued by us and our general liabilities.

The Notes will not be secured by any of our assets or any of the assets of our subsidiaries, including our wholly owned subsidiaries. As a result, the Notes will be effectively subordinated to all of our existing and future secured indebtedness (including indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes.

The Notes will rank pari passu with, which means equal to, all outstanding and future unsecured unsubordinated indebtedness issued by us, including our Convertible Notes (which have an aggregate principal amount of $94.5 million, plus accrued interest, as of the offering date of the Notes). Even if we are able to use all of the net proceeds of this offering to repay or repurchase Convertible Notes, there will remain approximately $39.0 million (or approximately $30.7 million if the underwriters exercise their option to purchase additional Notes in full) aggregate principal amount of Convertible Notes outstanding which mature on November 1, 2017. The Notes will also rank pari passu with our general liabilities, which consist of trade and other payables, including any outstanding dividend payable, base and incentive management fees payable, interest and debt fees payable, vendor payables and accrued expenses such as auditor fees, legal fees, director fees, etc. In total, these general liabilities were approximately $6.5 million as of December 31, 2016.

The Notes will be structurally subordinated to the indebtedness and other liabilities of our subsidiaries.

The Notes will be obligations exclusively of TICC Capital Corp., will not be of any of our subsidiaries. None of our subsidiaries will be a guarantor of the Notes and the Notes are not required to be guaranteed by any subsidiary we may acquire or create in the future. Any assets of our subsidiaries will not be directly available to satisfy the claims of our creditors, including holders of the Notes. Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors of our subsidiaries will have priority over our equity interests in such entities (and therefore the claims of our creditors, including holders of the Notes) with respect to the assets of such entities. Even if we are recognized as a creditor of one or more of these entities, our claims would still be effectively subordinated to any security interests in the assets of any such entity and to any indebtedness or other liabilities of any such entity senior to our claims. Consequently, the Notes will be structurally subordinated to all existing and future indebtedness and other liabilities of any of our subsidiaries, CLO vehicles in which we hold an equity interest (including TICC CLO 2012-1) and financing vehicles since the Notes are obligations exclusively of TICC Capital Corp. and not of any of our subsidiaries. Structural subordination means that creditors of a parent entity are subordinate to creditors of a subsidiary entity with respect to the subsidiary’s assets.

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The indenture under which the Notes are issued contains limited protection for holders of the Notes.

The indenture under which the Notes are issued offers limited protection to holders of the Notes. The terms of the indenture and the Notes do not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have a material adverse impact on your investment in the Notes. In particular, the terms of the indenture and the Notes do not place any restrictions on our or our subsidiaries’ ability to:

issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries or the portfolio companies with respect to which we hold an equity investment that would be senior to our equity interests in those entities and therefore rank structurally senior to the Notes with respect to the assets of these entities, in each case other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions (whether or not we are subject thereto), but giving effect, in each case, to any exemptive relief granted to us by the SEC. Currently, these provisions generally prohibit us from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowings;
pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the Notes;
sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);
enter into transactions with affiliates;
create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;
make investments; or
create restrictions on the payment of dividends or other amounts to us from our subsidiaries.

In addition, the indenture does not require us to offer to purchase the Notes in connection with a change of control or any other event.

Furthermore, the terms of the indenture and the Notes do not protect holders of the Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, if any, as they do not require that we adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow, or liquidity.

Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Notes may have important consequences for you as a holder of the Notes, including making it more difficult for us to satisfy our obligations with respect to the Notes or negatively affecting the trading value of the Notes.

Other debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of the Notes.

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There is no existing trading market for the Notes, and, even if NASDAQ approves the listing of the Notes, an active trading market for the Notes may not develop, which could limit your ability to sell the Notes or the market price of the Notes.

The Notes will be a new issue of debt securities for which there initially will not be a trading market. We intend to list the Notes on the NASDAQ Global Select Market within 30 days of the original issue date under the trading symbol “TICCL.” However, there is no assurance that the Notes will be approved for listing on the NASDAQ Global Select Market.

Moreover, even if the listing of the Notes is approved, we cannot provide any assurances that an active trading market will develop or be maintained for the Notes or that you will be able to sell your Notes. If the Notes are traded after their initial issuance, they may trade at a discount from their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, if any, general economic conditions, our financial condition, performance and prospects and other factors. The underwriters have advised us that they intend to make a market in the Notes, but they are not obligated to do so. The underwriters may discontinue any market-making in the Notes at any time at their sole discretion.

Accordingly, we cannot assure you that the Notes will be approved for listing on NASDAQ, that a liquid trading market will develop for the Notes, that you will be able to sell your Notes at a particular time or that the price you receive when you sell will be favorable. To the extent an active trading market does not develop, the liquidity and trading price for the Notes may be harmed. Accordingly, you may be required to bear the financial risk of an investment in the Notes for an indefinite period of time.

We may choose to redeem the Notes when prevailing interest rates are relatively low.

On or after March 30, 2020, we may choose to redeem the Notes from time to time, especially when prevailing interests rates are lower than the rate borne by the Notes. If prevailing rates are lower at the time of redemption, you would not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the Notes being redeemed. Our redemption right also may adversely impact your ability to sell the Notes as the optional redemption date or period approaches.

If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Notes.

Any default under the agreements governing our indebtedness or other indebtedness to which we may be a party that is not waived by the required lenders or holders thereof, and the remedies sought by the holders of such indebtedness, could make us unable to pay principal, premium, if any, and interest on the Notes and substantially decrease the market value of the Notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness, including the Notes. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, and the lender of the debt we may incur in the future could elect to terminate its commitment, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in the future need to seek to obtain waivers from the lender under the debt that we may incur in the future to avoid being in default. If we breach our covenants under any outstanding debt and seek a waiver, we may not be able to obtain a waiver from the required lenders. If this occurs, we would be in default under such debt, the lender of such debt could exercise its rights as described above, and we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations could proceed against the collateral securing the debt. Because any future credit facilities will likely have customary cross-default provisions, if the indebtedness under the Notes or under any future credit facility is accelerated, we may be unable to repay or finance the amounts due. The indenture governing our Convertible Notes includes such a cross-default provision that would be triggered to the extent that we default or any of our significant subsidiaries default on any indebtedness we have outstanding in excess of $20 million.

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We may invest the proceeds from this offering in temporary investments until November 1, 2017, which are expected to provide a lower net return than we hope to achieve from our target investments.

We expect to use the net proceeds from this offering to repay or repurchase a portion of the outstanding indebtedness under our Convertible Notes, which currently amounts to approximately $94.5 million plus accrued interest. The Convertible Notes are not redeemable by us prior to their maturity on November 1, 2017. If we are unable to repurchase the Convertible Notes prior to maturity with the proceeds from this offering, then we may invest the proceeds from this offering in temporary investments (including cash, cash equivalents, and U.S. government securities and other high quality debt investments that mature in one year or less) until we repay the Convertible Notes at their maturity on November 1, 2017. Such temporary investments are expected to provide a lower net return than we hope to achieve from our target investments. The management fee payable by us to our investment adviser will not be reduced while our assets are invested in such temporary investments.

RISKS RELATING TO OUR BUSINESS AND STRUCTURE

There will be uncertainty as to the value of our portfolio investments, which may impact our net asset value.

A large percentage of our portfolio investments are in the form of securities that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable. We value these securities on a quarterly basis in accordance with our valuation policy, which is at all times consistent with U.S. generally accepted accounting principles (“GAAP”). Our board of directors utilizes the services of third-party valuation firms to aid it in determining the fair value of certain securities. The board of directors discusses valuations and determines the fair value in good faith based on the input of our investment adviser and the respective third-party valuation firms. The factors that may be considered in fair value pricing our investments include the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings, the markets in which the portfolio company does business, comparisons to publicly traded companies, discounted cash flow and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such securities.

Further downgrades of the U.S. credit rating, impending automatic spending cuts or another government shutdown could negatively impact our liquidity, financial condition and earnings.

Recent U.S. debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades and economic slowdowns, or a recession in the U.S. The federal debt limit has been suspended since November 2, 2015, but the limit is set to be reinstated March 15, 2017. If legislation increasing the debt ceiling is not enacted, as needed, and the debt ceiling is reached, the U.S. federal government may stop or delay making payments on its obligations, which could negatively impact the U.S. economy and our portfolio companies. Multiple factors relating to the international operations of some of our portfolio companies and to particular countries in which they operate could negatively impact their business, financial condition and results of operations. In addition, disagreement over the federal budget has caused the U.S. federal government to shut down for periods of time. Continued adverse political and economic conditions could have a material adverse effect on our business, financial condition and results of operations.

Global economic, political and market conditions may adversely affect our business, results of operations and financial condition, including our revenue growth and profitability.

The current worldwide financial market situation, as well as various social and political tensions in the United States and around the world, may contribute to increased market volatility, may have long-term effects on the U.S. and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide. The U.S. and global capital markets experienced extreme volatility and

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disruption during the economic downturn that began in mid-2007, and the U.S. economy was in a recession for several consecutive calendar quarters during the same period. In 2010, a financial crisis emerged in Europe, triggered by high budget deficits and rising direct and contingent sovereign debt, which created concerns about the ability of certain nations to continue to service their sovereign debt obligations. Risks resulting from such debt crisis and any future debt crisis in Europe or any similar crisis elsewhere could have a detrimental impact on the global economic recovery, sovereign and non-sovereign debt in certain countries and the financial condition of financial institutions generally. In July and August 2015, Greece reached agreements with its creditors for bailouts that provide aid in exchange for certain austerity measures. These and similar austerity measures may adversely affect world economic conditions and have an adverse impact on our business and that of our portfolio companies. In the second quarter of 2015, stock prices in China experienced a significant drop, resulting primarily from continued sell-off of shares trading in Chinese markets. In August 2015, Chinese authorities sharply devalued China's currency. In June 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union (“Brexit”), and, accordingly, on February 1, 2017, the U.K. Parliament voted in favor of allowing the U.K. government to begin the formal process of Brexit. Brexit created political and economic uncertainty and instability in the global markets (including currency and credit markets), and especially in the United Kingdom and the European Union, and this uncertainty and instability may last indefinitely. There is continued concern about national-level support for the Euro and the accompanying coordination of fiscal and wage policy among European Economic and Monetary Union member countries. In addition, the fiscal policy of foreign nations, such as Russia and China, may have a severe impact on the worldwide and U.S. financial markets.

As a result of the 2016 U.S. election, the Republican Party currently controls both the executive and legislative branches of government, which increases the likelihood that legislation may be adopted that could significantly affect the regulation of U.S. financial markets. Areas subject to potential change, amendment or repeal include the Dodd-Frank Act and the authority of the Federal Reserve and the Financial Stability Oversight Council. The United States may also potentially withdraw from or renegotiate various trade agreements and take other actions that would change current trade policies of the United States. We cannot predict which, if any, of these actions will be taken or, if taken, their effect on the financial stability of the United States. Such actions could have a significant adverse effect on our business, financial condition and results of operations. We cannot predict the effects of these or similar events in the future on the U.S. economy and securities markets or on our investments. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in doing so.

The effect of global climate change may impact the operations of our portfolio companies.

There may be evidence of global climate change. Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change. For example, the needs of customers of energy companies vary with weather conditions, primarily temperature and humidity. To the extent weather conditions are affected by climate change, energy use could increase or decrease depending on the duration and magnitude of any changes. Increases in the cost of energy could adversely affect the cost of operations of our portfolio companies if the use of energy products or services is material to their business. A decrease in energy use due to weather changes may affect some of our portfolio companies’ financial condition, through decreased revenues. Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stresses, including service interruptions. In December 2015 the United Nations, of which the U.S. is a member, adopted a climate accord (the “Paris Agreement”) with the long-term goal of limiting global warming and the short-term goal of significantly reducing greenhouse gas emissions. The U.S. subsequently ratified the Paris Agreement, and it entered into force on November 4, 2016. As a result, some of our portfolio companies may become subject to new or strengthened regulations or legislation which could increase their operating costs and/or decrease their revenues.

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We are permitted to borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us.

We have completed a debt securitization financing transaction, presently consisting of $104.8 million in secured notes and $80 million of subordinated notes, which subordinated notes were purchased by us. The secured notes bear interest at variable rates based upon three-month LIBOR.

We also completed a private placement of the Convertible Notes totaling $115 million. On December 2, 2016 and December 16, 2016, we repurchased $12.0 million and approximately $8.5 million, respectively, of outstanding Convertible Notes. As of December 31, 2016, approximately $94.5 million of Convertible Notes remain issued and outstanding, plus accrued interest. The Convertible Notes bear interest at an annual rate of 7.50%, payable semiannually in arrears on May 1 and November 1 of each year, beginning May 1, 2013. The Convertible Notes mature on November 1, 2017, unless previously converted in accordance with their terms. The Convertible Notes are our general unsecured obligations, rank equally in right of payment with our future senior unsecured debt, and rank senior in right of payment to any potential subordinated debt, should any be issued in the future.

Borrowings (including through the securitization transactions described above, which are consolidated in our financial statements), also known as leverage, magnify the potential for gain or loss on amounts invested and, therefore, increase the risks associated with investing in our securities. We may borrow from and issue senior debt securities to banks, insurance companies, and other lenders. Lenders of these senior securities have fixed dollar claims on our assets that are superior to the claims of our common stockholders. If the value of our assets increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net income to increase more than it would without the leverage, while any decrease in our income would cause net income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to make common stock distribution payments. Leverage is generally considered a speculative investment technique. Our ability to service any debt that we incur will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as the management fee payable to TICC Management will be payable on our gross assets, including those assets acquired through the use of leverage, TICC Management may have a financial incentive to incur leverage which may not be consistent with our stockholders’ interests. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of leverage, including any increase in the management fee payable to TICC Management.

Illustration.  The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns on the portfolio, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

         
  Assumed total return on our portfolio
(net of expenses)
     (10.0)%   (5.0)%   0.0%   5.0%   10.0%
Corresponding return to stockholder(1)     (19.0 )%      (11.1 )%      (3.2 )%      4.7 %      12.6 % 

(1) Assumes $612.5 million in total assets and $223.8 million in total debt outstanding, which reflects our total assets and total debt outstanding as of December 31, 2016, and a cost of funds of approximately 5.56%.

The 2012 Securitization Issuer may fail to meet certain asset coverage tests.

Under the documents governing the 2012 debt securitization financing transaction, there are two coverage tests applicable to the Secured Notes. The first such test compares the amount of interest received on the portfolio loans held by the 2012 Securitization Issuer to the amount of interest payable in respect of the Secured Notes. For the TICC CLO 2012-1, to meet this test at any time, interest received on the portfolio loans must equal at least 120% to 160% (based upon a graduated scale for the class of Secured Notes to which such test is applied as provided for in the indenture) of the interest payable in respect of the Secured

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Notes. The second such test compares the principal amount of the portfolio loans held by the 2012 Securitization Issuer to the aggregate outstanding principal amount of the Secured Notes. For the TICC CLO 2012-1, to meet this test at any time, the aggregate principal amount of the portfolio loans held by the 2012 Securitization Issuer must equal at least 126% to 152.50% (based upon a graduated scale for the class of Secured Notes to which such test is applied as provided for in the indenture) of the outstanding principal amount of the Secured Notes. If either coverage test is not satisfied, interest and/or principal received by the 2012 Securitization Issuer are diverted on the following payment date to pay the most senior class or classes of Secured Notes to the extent necessary to cause all coverage tests to be satisfied on a pro forma basis after giving effect to all payments made in respect of the notes, which, with respect to the payment of any principal amount of the Secured Notes, we refer to as a mandatory redemption.

Regulations governing our operation as a BDC affect our ability to, and the way in which we raise additional capital, which may expose us to risks, including the typical risks associated with leverage.

Our ability to grow our business requires a substantial amount of capital, which we may acquire from the following sources:

Senior Securities and Other Indebtedness

We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% immediately after each issuance of senior securities. This requirement of sustaining a 200% asset coverage ratio limits the amount that we may borrow. Because we will continue to need capital to grow our loan and investment portfolio, this limitation may prevent us from incurring debt. Further additional debt financing may not be available on favorable terms, if at all, or may be restricted by the terms of our debt facilities. If we are unable to incur additional debt, we may be required to raise additional equity at a time when it may be disadvantageous to do so.

As a result of the issuance of senior securities, including preferred stock and debt securities, we are exposed to typical risks associated with leverage, including an increased risk of loss and an increase in expenses, which are ultimately borne by our common stockholders. Because we may incur leverage to make investments, a decrease in the value of our investments would have a greater negative impact on the value of our common stock. When we issue debt securities or preferred stock, it is likely that such securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. In addition, such securities may be rated by rating agencies, and in obtaining a rating for such securities, we may be required to abide by operating and investment guidelines that could further restrict our operating flexibility. See “— We are permitted to borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us” for a description of our outstanding senior securities.

We completed a debt securitization financing transaction on August 23, 2012, which included $240.0 million in secured notes. On August 25, 2016, November 25, 2016 and February 27, 2017, the 2012 Securitization Issuer repaid approximately $36.0 million, approximately $74.7 million and approximately $24.5 million, respectively, of the Class A-1 notes. As of March 30, 2017, the secured notes of the 2012 Securitization Issuer had an aggregate face amount of approximately $104.8 million. We also completed a private placement of the Convertible Notes on September 26, 2012, issuing a total of $105.0 million aggregate principal amount of the Convertible Notes at the closing, and an additional $10.0 million aggregate principal amount of the Convertible Notes on October 22, 2012, pursuant to the exercise of the initial purchasers’ option to purchase additional Convertible Notes. On December 2, 2016 and December 16, 2016, we repurchased $12.0 million and approximately $8.5 million, respectively, of outstanding Convertible Notes. As of December 31, 2016, approximately $94.5 million of Convertible Notes remain issued and outstanding plus accrued interest. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for more information.

Our ability to pay distributions or issue additional senior securities may be restricted if our asset coverage ratio is not at least 200%. If the value of our assets declines, we may be unable to satisfy this test. If that

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happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Furthermore, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders.

There are significant potential conflicts of interest between TICC and our management team.

In the course of our investing activities, we pay management and incentive fees to TICC Management, and reimburse BDC Partners for certain expenses it incurs. As a result, investors in our common stock invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in, among other things, a lower rate of return than one might achieve through direct investments. As a result of this arrangement, there may be times when the management team of TICC Management has interests that differ from those of our stockholders, giving rise to a conflict.

TICC Management receives a quarterly incentive fee based, in part, on our “Pre-Incentive Fee Net Investment Income,” if any, for the immediately preceding calendar quarter. This incentive fee is subject to a quarterly hurdle rate before providing an incentive fee return to TICC Management. To the extent we or TICC Management are able to exert influence over our portfolio companies, the quarterly pre-incentive fee may provide TICC Management with an incentive to induce our portfolio companies to accelerate or defer interest or other obligations owed to us from one calendar quarter to another.

In addition, our executive officers and directors, and the executive officers of TICC Management, and its managing member, BDC Partners, serve or may serve as officers and directors of entities that operate in a line of business similar to our own. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of us or our stockholders. Charles M. Royce, a member of our Board of Directors, holds a minority, non-controlling interest in our investment adviser.

Messrs. Cohen and Rosenthal currently serve as Chief Executive Officer and President, respectively, of Oxford Lane Capital Corp., a non-diversified closed-end management investment company that currently invests primarily in CLO debt and equity tranches, and its investment adviser, Oxford Lane Management. Messrs. Cohen and Rosenthal also currently serve as Chief Executive Officer and President, respectively, at Oxford Bridge Management, LLC, the investment adviser to Oxford Bridge, LLC, a private fund that invests principally in the equity of CLOs. BDC Partners is the managing member of Oxford Bridge Management, LLC. As a result, certain conflicts of interest may arise with respect to the management of our portfolio by Messrs. Cohen and Rosenthal, on the one hand, and the obligations of Messrs. Cohen and Rosenthal to manage the portfolios of Oxford Lane Capital Corp. and Oxford Bridge, LLC, respectively, on the other hand. In addition, Bruce L. Rubin, our Chief Financial Officer, Corporate Secretary and Treasurer, currently serves in similar capacities for Oxford Lane Capital Corp. Mr. Rubin also currently serves as the Chief Financial Officer and Secretary of Oxford Lane Management, TICC Management, LLC, Oxford Bridge Management, LLC, and BDC Partners. Further, Mr.Gerald Cummins, our Chief Compliance Officer, currently serves in similar capacities for Oxford Lane Management, Oxford Lane Capital Corp., TICC Management, LLC and Oxford Bridge Management, LLC. Because of these possible conflicts of interest, these individuals may direct potential business and investment opportunities to other entities rather than to us or such individuals may undertake or otherwise engage in activities or conduct on behalf of such other entities that is not in, or which may be adverse to, our best interests.

TICC Management, Oxford Lane Management, LLC and Oxford Bridge Management, LLC are subject to a written policy with respect to the allocation of investment opportunities among TICC, Oxford Lane Capital Corp. and Oxford Bridge, LLC. Where investments are suitable for more than one entity, the allocation policy generally provides that, depending on size and subject to current and anticipated cash availability, the absolute size of the investment as well as its relative size compared to the total assets of each entity, current and anticipated weighted average costs of capital, among other factors, an investment amount will be determined by the adviser to each entity. If the investment opportunity is sufficient for each entity to receive its investment amount, then each entity receives the investment amount; otherwise, the investment amount is reduced pro rata.

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On October 13, 2016, we filed an exemptive application with the SEC to permit us to co-invest with funds or entities managed by TICC Management or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. Any such order, if granted by the SEC, will be subject to certain terms and conditions. Furthermore, there is no assurance when, or if, this application for exemptive relief will be granted by the SEC.

In the ordinary course of business, we may enter into transactions with portfolio companies that may be considered related party transactions. In order to ensure that we do not engage in any prohibited transactions with any persons affiliated with us, we have implemented certain policies and procedures whereby our executive officers screen each of our transactions for any possible affiliations between the proposed portfolio investment, us, companies controlled by us and our employees and directors. We will not enter into any agreements unless and until we are satisfied that doing so will not raise concerns under the 1940 Act or, if such concerns exist, we have taken appropriate actions to seek board review and approval or exemptive relief for such transaction. Our Board of Directors reviews these procedures on an annual basis.

We have also adopted a Code of Ethics which applies to, among others, our senior officers, including our Chief Executive Officer and Chief Financial Officer, as well as all of our officers, directors and employees. Our Code of Ethics requires that all employees and directors avoid any conflict, or the appearance of a conflict, between an individual’s personal interests and our interests. Pursuant to our Code of Ethics, each employee and director must disclose any conflicts of interest, or actions or relationships that might give rise to a conflict, to our Chief Compliance Officer. Our Audit Committee is charged with approving any waivers under our Code of Ethics. As required by the NASDAQ Global Select Market corporate governance listing standards, the Audit Committee of our Board of Directors is also required to review and approve any transactions with related parties (as such term is defined in Item 404 of Regulation S-K).

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus supplement and the accompanying prospectus contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this prospectus supplement and the accompanying prospectus involve risks and uncertainties, including statements as to:

our future operating results;
our business prospects and the prospects of our portfolio companies;
the impact of investments that we expect to make;
our contractual arrangements and relationships with third parties;
the dependence of our future success on the general economy and its impact on the industries in which we invest;
the ability of our portfolio companies to achieve their objectives;
our expected financings and investments;
the adequacy of our cash resources and working capital; and
the timing of cash flows, if any, from the operations of our portfolio companies.

These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;
a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities;
interest rate volatility could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;
currency fluctuations could adversely affect the results of our investments in foreign companies, particularly to the extent that we receive payments denominated in foreign currency rather than U.S. dollars; and
the risks, uncertainties and other factors we identify in “Supplementary Risk Factors” in this prospectus supplement and in “Risk Factors” in the accompanying prospectus and in our filings with the SEC.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this prospectus supplement or the accompanying prospectus should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in “Supplementary Risk Factors” in this prospectus supplement and in “Risk Factors” in the accompanying prospectus. You should not place undue reliance on these forward-looking statements,

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which apply only as of the respective dates of this prospectus supplement and the accompanying prospectus. However, we will update this prospectus supplement and the accompanying prospectus to reflect any material changes to the information contained herein. The forward-looking statements contained in this prospectus supplement and the accompanying prospectus are excluded from the safe harbor protection provided by Section 27A of the Securities Act.

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USE OF PROCEEDS

We estimate that the net proceeds we will receive from the sale of the $57.5 million aggregate principal amount of Notes in this offering will be approximately $55.5 million (or approximately $63.8 million if the underwriters fully exercise their overallotment option), in each case assuming a public offering price of 100% of par, after deducting the underwriting discounts and commissions of approximately $1.8 million (or approximately $2.1 million if the underwriters fully exercise their overallotment option) payable by us and estimated offering expenses of approximately $0.2 million payable by us.

We expect to use the net proceeds from this offering to repay or repurchase a portion of the outstanding indebtedness under our Convertible Notes. As of March 30, 2017, we had approximately $94.5 million outstanding under the Convertible Notes plus accrued interest. The Convertible Notes are not redeemable by us prior to maturity on November 1, 2017. If we are unable to repurchase the Convertible Notes prior to maturity with the proceeds from this offering, then we may invest the proceeds from this offering in temporary investments until we repay the Convertible Notes at their maturity on November 1, 2017.

Such temporary investments primarily include cash, cash equivalents, and U.S. government securities and other high-quality debt investments that mature in one year or less, which are consistent with maintaining our election as a RIC. These temporary investments are expected to provide a lower net return than we hope to achieve from our target investments. The management fee payable by us to our investment adviser will not be reduced while our assets are invested in such temporary investments.

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CAPITALIZATION

The following table sets forth:

the actual capitalization of TICC Capital Corp. at December 31, 2016; and
on an as adjusted basis to reflect the sale of $57.5 million aggregate principal amount of the Notes offered hereby but without giving effect to the use of the cash proceeds from such sale as described in “Use of Proceeds.”

This table should be read in conjunction with “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and financial statements and notes thereto included in this prospectus supplement. The adjusted information is illustrative only.

   
  As of December 31, 2016
     Actual   As Adjusted for this Offering(1)
Liabilities:
                 
Notes offered hereby   $     $ 57,500,000  
Other liabilities and Debt(2)     226,464,008       226,464,008  
Total liabilities     226,464,008       283,964,008  
Net Assets:
                 
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 51,479,409 issued and outstanding     514,794       514,794  
Capital in excess of par value     558,822,643       558,822,643  
Net unrealized depreciation investments     (34,116,765 )      (34,116,765 ) 
Accumulated net realized losses on investments     (95,605,057 )      (95,605,057 ) 
Distributions in excess of investment income     (43,623,117 )      (43,623,117 ) 
Total net assets     385,992,498       385,992,498  
Total liabilities and net assets   $ 612,456,506     $ 669,956,506  

(1) Excludes any exercise of the underwriters’ option to purchase additional Notes.
(2) On February 27, 2017, the 2012 Securitization Issuer repaid approximately $24.5 million of its class A-1 notes, which is not reflected in the table above.

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RATIO OF EARNINGS TO FIXED CHARGES

For the years ended December 31, 2016, 2015, 2014, 2013 and 2012, the ratios of earnings to fixed charges of TICC, computed as set forth below, were as follows:

         
  For the Year Ended December 31, 2016   For the Year Ended December 31, 2015   For the Year Ended December 31, 2014   For the Year Ended December 31, 2013   For the Year Ended December 31, 2012
Earnings to Fixed Charges(1)     6.5       (2)      0.9       4.1       10.4  

For purposes of computing the ratios of earnings to fixed charges, earnings represent net increase in net assets resulting from operations plus (or minus) income tax expense (benefit) including excise tax expense plus fixed charges. Fixed charges include interest and amortization of debt issuance costs and one-third of rent expense, which management estimates to represent the interest component of rent expense.

(1) Earnings include net realized and unrealized gains or losses. Net realized and unrealized gains or losses can vary substantially from period to period.
(2) Earnings for the year ended December 31, 2015 were inadequate to cover fixed charges by approximately $45.2 million.

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SELECTED FINANCIAL AND OTHER DATA

The following selected financial data for the years ended December 31, 2016, 2015, 2014, 2013 and 2012 is derived from our consolidated financial statements which have been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm. Other data, also included below is unaudited. The data should be read in conjunction with our consolidated financial statements and related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus supplement and the accompanying prospectus.

         
  Year Ended
December 31,
2016
  Year Ended
December 31,
2015
  Year Ended
December 31,
2014
  Year Ended
December 31,
2013
  Year Ended
December 31,
2012
Total Investment Income   $ 69,280,046     $ 87,462,939     $ 117,324,740     $ 105,092,143     $ 71,174,920  
Total Expenses   $ 45,260,980     $ 48,882,017     $ 51,866,896     $ 49,299,511     $ 33,997,566  
Net Investment Income   $ 24,019,066     $ 38,580,922     $ 65,457,844     $ 55,792,632     $ 37,177,354  
Net Increase (Decrease) in Net Assets Resulting from Operations   $ 110,361,763     $ (66,133,649 )    $ (3,348,400 )    $ 58,944,734     $ 68,323,188  
Per Share Data:
                                            
Net Increase in Net Assets Resulting from Net Investment Income per common share (Basic)   $ 0.46     $ 0.65     $ 1.11     $ 1.09     $ 0.98  
Net Increase in Net Assets Resulting from Net Investment Income per common share (Diluted)(1)   $ 0.46     $ 0.65     $ 1.06     $ 1.03     $ 0.96  
Net Increase (Decrease) in Net Assets Resulting from Operations per common share (Basic)   $ 2.13     $ (1.11 )    $ (0.06 )    $ 1.15     $ 1.80  
Net Increase (Decrease) in Net Assets Resulting from Operations per common share (Diluted)(1)   $ 1.92     $ (1.11 )    $ (0.06 )    $ 1.09     $ 1.73  
Distributions Declared per Share   $ 1.16     $ 1.14     $ 1.16     $ 1.16     $ 1.12  
Balance Sheet Data:
                                            
Total Assets(6)   $ 612,456,506     $ 718,298,207     $ 1,036,971,445     $ 990,180,160     $ 747,868,115  
Total Long Term Debt(6)   $ 219,970,473     $ 347,749,142     $ 495,406,028     $ 442,690,760     $ 322,179,521  
Total Net Assets   $ 385,992,498     $ 360,934,711     $ 520,813,061     $ 526,242,427     $ 409,602,529  
Other Data:
                                            
Number of Portfolio Companies at Period End     60       72       77       91       89  
Purchases of Loan Originations   $ 171,600,000     $ 234,800,000     $ 556,700,000     $ 577,500,000     $ 494,600,000  
Loan Repayments   $ 115,200,000     $ 224,200,000     $ 311,900,000     $ 203,900,000     $ 191,200,000  
Proceeds from Sales of Securities   $ 176,800,000     $ 196,200,000     $ 127,500,000     $ 118,500,000     $ 69,300,000  
Reductions to CLO Equity Cost
Value
  $ 34,200,000 (4)      41,600,000 (5)                   
Total Return(2)     33.29 %      (4.35 )%      (17.22 )%      14.68 %      30.49 % 
Weighted Average Yield on Debt Investments at Period End(3)     8.3 %      7.1 %      7.8 %      8.7 %      9.4 % 

(1) Due to the anti-dilutive effect on the computation of diluted earnings per share for the years ended December 31, 2016, 2015 and 2014, the adjustments for interest on convertible senior notes, base management fees, deferred issuance costs and incentive fees as well as weighted average common shares outstanding adjustments for the dilutive effect of convertible notes were excluded from the respective period’s diluted earnings per share computation.
(2) Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value per share, assuming distribution reinvestment at prices obtained under our distribution reinvestment plan, excluding any discounts.
(3) Weighted average yield calculation includes the impact of any loans on non-accrual status as of the year end.

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(4) Reduction to cost value on our CLO equity investments represents the difference between distributions received, or entitled to be received, of approximately $66.7 million and the effective yield interest income of approximately $32.5 million.
(5) Reduction to cost value on our CLO equity investments represents the difference between distributions received, or entitled to be received, of approximately $76.5 million and the effective yield interest income of approximately $34.9 million.
(6) Presentation of prior period tables has been updated to conform to current year presentation.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The information contained in this section should be read in conjunction with the financial statements and related notes and other financial information appearing elsewhere in this prospectus supplement and the accompanying prospectus. In addition to historical information, the following discussion and other parts of this prospectus supplement and the accompanying prospectus contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under “Supplementary Risk Factors,” “Risk Factors,” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this prospectus supplement and the accompanying prospectus.

OVERVIEW

Our investment objective is to maximize our portfolio’s total return. Our primary focus is to seek an attractive risk-adjusted total return by investing primarily in corporate debt securities pursuant to or following a syndication process and CLO structured finance investments that own corporate debt securities. CLO investments may also include warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle. We operate as a closed-end, non-diversified management investment company and have elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). We have elected to be treated for tax purposes as a regulated investment company (“RIC”), under the Internal Revenue Code of 1986, as amended (the “Code”), beginning with our 2003 taxable year.

Our investment activities are managed by TICC Management, LLC (“TICC Management”), a registered investment adviser under the Investment Advisers Act of 1940, as amended. TICC Management is owned by BDC Partners, LLC (“BDC Partners”), its managing member, and Charles M. Royce, a member of our Board of Directors who holds a minority, non-controlling interest in TICC Management. Jonathan H. Cohen, our Chief Executive Officer, and Saul B. Rosenthal, our President and Chief Operating Officer, are the controlling members of BDC Partners. Under an investment advisory agreement (the “Investment Advisory Agreement”), we have agreed to pay TICC Management an annual base fee calculated on gross assets, and an incentive fee based upon our performance. Under an amended and restated administration agreement (the “Administration Agreement”), we have agreed to pay or reimburse BDC Partners, as administrator, for certain expenses incurred in operating TICC. Our executive officers and directors, and the executive officers of TICC Management and BDC Partners, serve or may serve as officers and directors of entities that operate in a line of business similar to our own. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in the best interests of us or our stockholders.

We generally expect to invest between $5 million and $50 million in each of our portfolio companies, although this investment size may vary proportionately as the size of our capital base changes and market conditions warrant, and accrue interest at fixed or variable rates. We expect that our investment portfolio will be diversified among a large number of investments with few investments, if any, exceeding 5.0% of the total portfolio. As of December 31, 2016, our debt investments had stated interest rates of between 4.75% and 15.00% and maturity dates of between 24 and 93 months. In addition, our total portfolio had a weighted average yield on debt investments of approximately 8.3%.

We have historically borrowed funds to make investments and may continue to borrow funds to make investments. As a result, we are exposed to the risks of leverage, which may be considered a speculative investment technique. Borrowings, also known as leverage, magnify the potential for gain and loss on amounts invested and therefore increase the risks associated with investing in our securities. In addition, the costs associated with our borrowings, including any increase in the management fee payable to TICC Management, will be borne by our common stockholders.

In addition, as a BDC under the 1940 Act, we are required to make available significant managerial assistance, for which we may receive fees, to our portfolio companies. These fees would be generally non-recurring, however in some instances they may have a recurring component. We have received no fee income for managerial assistance to date.

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Prior to making an investment, we may enter into a non-binding term sheet with the potential portfolio company. These term sheets are generally subject to a number of conditions, including but not limited to the satisfactory completion of our due diligence investigations of the company’s business and legal documentation for the loan.

To the extent possible, we will generally seek to invest in loans that are collateralized by a security interest in the borrower’s assets or guaranteed by a principal to the transaction. Interest payments, if not deferred, are normally payable quarterly with most debt investments having scheduled principal payments on a monthly or quarterly basis. When we receive a warrant to purchase stock in a portfolio company, the warrant will typically have a nominal strike price, and will entitle us to purchase a modest percentage of the borrower’s stock.

Current Market and Economic Conditions

During the early part of 2016, the U.S. capital markets experienced a period of volatility and disruption, resulting in an increase in the spread between the yields realized on risk-free and higher risk securities. U.S. capital markets improved over the course of 2016, leading to a compression in the spread between risk-free and higher risk securities. Despite this spread compression, we feel that the risk adjusted return for certain senior secured corporate loans will be attractive in 2017. In view of that perspective, we continue to invest with a focus on smaller broadly-syndicated, narrowly syndicated, middle-market and privately negotiated loans. Moreover, we continue to be focused on certain structured finance investments, such as CLO investment vehicles which own senior secured corporate loans.

PORTFOLIO COMPOSITION AND INVESTMENT ACTIVITY

The total fair value of our investment portfolio was approximately $589.9 million and $656.7 million as of December 31, 2016 and December 31, 2015, respectively. The decrease in the value of investments during the year ended December 31, 2016 was due primarily to debt repayments and sales of securities totaling approximately $291.9 million and realized losses of $14.3 million, partially offset by purchases of investments of approximately $171.6 million and net unrealized appreciation on our investment portfolio of approximately $100.6 million (which incorporates reductions to CLO equity cost value of $34.2 million). Refer to the table below, which reconciles the investment portfolio for the year ended December 31, 2016 and the year ended December 31, 2015.

During the year ended December 31, 2016, we closed approximately $171.6 million in portfolio investments, including additional investments of approximately $71.3 million in existing portfolio companies and approximately $100.3 million in new portfolio companies. For the year ended December 31, 2015, we closed approximately $234.8 million in portfolio investments, including additional investments of approximately $130.4 million in existing portfolio companies and approximately $104.4 million in new portfolio companies.

In certain instances, we receive payments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments may fluctuate significantly from period to period.

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For the years ended December 31, 2016 and December 31, 2015, we had approximately $115.1 million and approximately $224.2 million, respectively, of loan repayments and amortization payments. The most significant repayments during the year ended December 31, 2016 were as follows ($ in millions):

 
  2016
Repayments
Serena Software, Inc   $ 18.7  
CRCI Holdings, Inc. (aka “CLEAResult”)     16.3  
Algorithmic Implementations, Inc. (d/b/a “Ai Squared”)     13.8  
Vision Solutions     13.1  
Innovairre Holding Company, LLC (f/k/a “RBS Holding Company”)     11.6  
Avantor Performance Materials     11.0  
The TOPPS Company, Inc     9.8  
ABB/Con Cise Optical Group     6.5  
Crowne Group, LLC     5.7  
Birch Communications, Inc     1.1  
SourceHov, LLC     0.9  
Stratus Technologies, Inc     0.9  
iEnergizer Limited     0.8  
Premiere Global Services, Inc     0.6  
Net all other     4.3  
Total repayments   $ 115.1  

Portfolio activity also reflects sales of securities in the amounts of approximately $176.8 million and approximately $196.2 million for the years ended December 31, 2016 and 2015, respectively. The most significant sales during the year ended December 31, 2016 were as follows ($ in millions):

 
  2016
Sales
Carlyle Global Market Strategies CLO 2014-4, Ltd   $ 18.0  
GlobalLogic Holdings, Inc     12.0  
Och Ziff CLO XII, Ltd     11.7  
Newmark Capital Funding 2013-1 CLO, Ltd     10.8  
Sesac Holdco II, LLC     9.2  
First Data Corporation     9.1  
Global Healthcare Exchange     8.9  
Catamaran CLO 2013-1, Ltd     8.9  
PGX Holdings     8.6  
Teleguam Holdings LLC     7.8  
MidOcean Credit CLO IV     7.0  
Albertson’s LLC     7.0  
Stratose Intermediate Holdings II     5.0  
Global Tel Link Corp     3.9  
Immucor, Inc     3.9  
Net all other     45.0  
Total sales   $ 176.8  

As of December 31, 2016, we had investments in debt securities of, or loans to, 30 portfolio companies, with a fair value of approximately $376.4 million, and equity investments of approximately $213.5 million. These debt investments included approximately $0.3 million in PIK interest, which, as described in “— Overview” above, is added to the carrying value of our investments, reduced by repayments of principal.

As of December 31, 2015, we had investments in debt securities of, or loans to, 45 portfolio companies, with a fair value of approximately $468.9 million, and equity investments of approximately $187.8 million.

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These debt investments included approximately $0.6 million in accrued PIK interest, which, as described in “— Overview” above, is added to the carrying value of our investments, reduced by repayments of principal.

A reconciliation of the investment portfolio for the years ended December 31, 2016 and 2015 follows:

   
($ in millions)   December 31,
2016
  December 31,
2015
Beginning Investment Portfolio   $ 656.7     $ 984.2  
Portfolio Investments Acquired     171.6       234.8  
Debt repayments     (115.1 )      (224.2 ) 
Sales of securities     (176.8 )      (196.2 ) 
Reductions to CLO equity cost value(1)     (34.2 )      (41.6 ) 
Payment in Kind(2)     0.3       0.5  
Accretion of discounts on investments(3)     1.1       3.9  
Net Unrealized Appreciation (Depreciation)     100.6       (98.4 ) 
Net Realized Losses     (14.3 )      (6.3 ) 
Ending Investment Portfolio   $ 589.9     $ 656.7  

(1) For the year ended December 31, 2016, reduction to cost value on our CLO equity investments represents the difference between distributions received, or entitled to be received, for the year ended December 31, 2016, of approximately $66.7 million and the effective yield interest income of approximately $32.5 million. For the year ended December 31, 2015, reduction to cost value on our CLO equity investments represents the difference between distributions received, or entitled to be received, for the year ended December 31, 2015, of approximately $76.5 million and the effective yield interest income of approximately $34.9 million.
(2) Includes rounding adjustment to reconcile ending investment portfolio at December 31, 2016 and December 31, 2015.
(3) Includes rounding adjustment to reconcile ending investment portfolio at December 31, 2016.

The following table indicates the quarterly portfolio investment activity for the years ended December 31, 2016 and 2015:

       
($ in millions)   New
Investments
  Debt
Repayments
  Reductions to CLO
Equity Cost(1)
  Sales of
Securities
Quarter ended
                                   
December 31, 2016   $ 27.0     $ 1.9     $ 3.9     $ 51.6  
September 31, 2016     58.4       50.5       9.4       74.7  
June 30, 2016     73.4       60.0       9.5       36.0  
March 31, 2016     12.8       2.7       11.4       14.5  
Total   $ 171.6     $ 115.1     $ 34.2     $ 176.8  
December 31, 2015   $ 20.7     $ 62.7     $ 10.3     $ 145.2  
September 31, 2015     66.3       47.0       9.9        
June 30, 2015     88.2       80.3       9.7       33.4  
March 31, 2015     59.6       34.2       11.7       17.6  
Total   $ 234.8     $ 224.2     $ 41.6     $ 196.2  

(1) Represents reductions to CLO equity cost value (representing distributions received, or entitled to be received, in excess of interest income).

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The following table shows the fair value of our portfolio of investments by asset class as of December 31, 2016 and 2015:

       
  2016   2015
($ in millions)   Investments at
Fair Value
  Percentage of
Total Portfolio
  Investments at
Fair Value
  Percentage of
Total Portfolio
Senior Secured Notes   $ 373.0       63.2 %    $ 466.2       71.0 % 
Subordinated Debt     0.7       0.1 %      0.6       0.1 % 
CLO Debt     2.7       0.5 %      2.1       0.3 % 
CLO Equity     200.8       34.0 %      179.0       27.3 % 
Equity     12.7       2.2 %      8.8       1.3 % 
Total   $ 589.9       100.0 %    $ 656.7       100.0 % 

Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of December 31, 2016, we held qualifying assets that represented 65.9% of its total assets.

The following table shows our portfolio of investments by industry at fair value, in millions, as of December 31, 2016 and 2015:

       
  December 31, 2016   December 31, 2015
     Investments at
Fair Value
  Percentage of
Fair Value
  Investments at
Fair Value
  Percentage of
Fair Value
     ($ in millions)        ($ in millions)
Structured finance(1)   $ 203.5       34.5 %    $ 181.1       27.6 % 
Telecommunication services     96.7       16.4 %      97.7       14.9 % 
Business services     80.3       13.6 %      59.5       9.1 % 
Printing and publishing     62.9       10.7 %      64.9       9.9 % 
Financial intermediaries     47.0       8.0 %      45.8       7.0 % 
Software     18.7       3.2 %      32.2       4.9 % 
Consumer services     16.9       2.9 %      26.2       4.0 % 
Diversified insurance     15.1       2.5 %      15.4       2.3 % 
IT consulting     11.6       2.0 %      6.8       1.0 % 
Logistics     10.6       1.8 %      10.3       1.6 % 
Travel     8.9       1.5 %      8.5       1.3 % 
Computer hardware     7.9       1.3 %      8.5       1.3 % 
Aerospace and defense     5.5       0.9 %      5.5       0.8 % 
Education     4.3       0.7 %      4.4       0.7 % 
Enterprise software           0.0 %      17.5       2.7 % 
Utilities           0.0 %      16.0       2.4 % 
Healthcare           0.0 %      14.3       2.2 % 
Leisure goods           0.0 %      9.6       1.4 % 
Radio and television           0.0 %      9.3       1.4 % 
Retail           0.0 %      8.4       1.3 % 
Grocery           0.0 %      6.9       1.0 % 
Auto parts manufacturer           0.0 %      5.5       0.8 % 
Pharmaceuticals           0.0 %      2.4       0.4 % 
Total   $ 589.9       100.0 %    $ 656.7       100.0 % 

(1) Reflects our debt and equity investments in CLOs as of December 31, 2016 and December 31, 2015, respectively.

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The following tables present the top ten industries (based upon Moody’s industry classifications) of the aggregate holdings of the CLOs included in our portfolio, based on par value, as of December 31, 2016 and December 31, 2015.

 
Top Ten Industries   At December 31,
2016
Healthcare & Pharmaceuticals     9.23 % 
High Tech Industries     7.65 % 
Services: Business     6.77 % 
Banking, Finance, Insurance & Real Estate     5.98 % 
Media: Broadcasting and Subscription     5.84 % 
Retail     5.64 % 
Hotel, Gaming, and Leisure     5.41 % 
Telecommunications     4.86 % 
Chemicals, Plastics, and Rubber     4.38 % 
Beverage, Food & Tobacco     3.77 % 
Total     59.53 % 

 
Top Ten Industries   At December 31,
2015
Healthcare and pharmaceuticals     9.28 % 
High tech industries     6.96 % 
Services: business     6.39 % 
Media: broadcasting and subscription     6.35 % 
Banking, finance, insurance, and real estate     5.72 % 
Retail     5.72 % 
Telecommunications     5.69 % 
Hotel, gaming, and leisure     5.34 % 
Chemicals, plastics, and rubber     4.52 % 
Beverage, food & tobacco     3.57 % 
Total     59.54 % 

PORTFOLIO GRADING

We have adopted a credit grading system to monitor the quality of our debt investment portfolio. Equity securities are not graded. As of December 31, 2016 and 2015 our portfolio had a weighted average grade of 2.2 and 2.2, respectively, based upon the fair value of the debt investments in the portfolio.

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At December 31, 2016 and 2015, our debt investment portfolio was graded as follows:

         
    December 31, 2016
Grade   Summary Description   Principal
Value
  Percentage of
Total Portfolio
  Portfolio at
Fair Value
  Percentage of
Total Portfolio
          ($ in millions)        ($ in millions)
1     Company is ahead of expectations and/or outperforming financial covenant requirements and such trend is expected to continue.     $       0.0 %    $       0.0 % 
2     Full repayment of the outstanding amount of TICC’s cost basis and interest is expected, for the specific tranche.       309.7       78.3 %      301.9       80.2 % 
3     Closer monitoring is required. Full repayment of the outstanding amount of TICC’s cost basis and interest is expected for the specific tranche.       85.8       21.7 %      74.5       19.8 % 
4     A loss of interest income has occurred or is expected to occur and, in most cases, the investment is placed on non-accrual status. Full repayment of the outstanding amount of TICC’s cost basis is expected for the specific tranche.             0.0 %            0.0 % 
5     Full repayment of the outstanding amount of TICC’s cost basis is not expected for the specific tranche and the investment is placed on non-accrual status.             0.0 %            0.0 % 
           $ 395.5       100.0 %    $ 376.4       100.0 % 

         
    December 31, 2015
Grade   Summary Description   Principal
Value
  Percentage of
Total Portfolio
  Portfolio at
Fair Value
  Percentage of
Total Portfolio
          ($ in millions)        ($ in millions)
1     Company is ahead of expectations and/or outperforming financial covenant requirements and such trend is expected to continue.     $       0.0 %    $       0.0 % 
2     Full repayment of the outstanding amount of TICC’s cost basis and interest is expected, for the specific tranche.       405.9       79.0 %      387.5       82.6 % 
3     Closer monitoring is required. Full repayment of the outstanding amount of TICC’s cost basis and interest is expected for the specific tranche.       85.1       16.6 %      67.9       14.5 % 
4     A loss of interest income has occurred or is expected to occur and, in most cases, the investment is placed on non-accrual status. Full repayment of the outstanding amount of TICC’s cost basis is expected for the specific tranche.             0.0 %            0.0 % 
5     Full repayment of the outstanding amount of TICC’s cost basis is not expected for the specific tranche and the investment is placed on non-accrual status.       22.7       4.4 %      13.5       2.9 % 
           $ 513.7       100.0 %    $ 468.9       100.0 % 

We expect that a portion of our investments will be in the Grades 3, 4 or 5 categories from time to time, and, as such, we will be required to work with troubled portfolio companies to improve their business and protect our investment. The number and amount of investments included in Grade 3, 4 or 5 may fluctuate from year to year.

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RESULTS OF OPERATIONS

Set forth below is a comparison of our results of operations for the years ended December 31, 2016, 2015 and 2014.

Comparison of the years ended December 31, 2016 and December 31, 2015

Investment Income

Investment income for the years ended December 31, 2016 and 2015 was approximately $69.3 million and $87.5 million, respectively, reflecting a decrease of approximately $18.2 million. The following tables set forth the components of investment income for the years ended December 31, 2016 and 2015:

   
  December 31,
2016
  December 31,
2015
Interest Income
                 
Stated interest income   $ 33,154,526     $ 45,728,704  
Original issue discount and market discount income     1,158,401       3,865,679  
Payment-in-kind income     214,389       572,408  
Discount income derived from unscheduled remittances at par     20,574       61,702  
Total interest income   $ 34,547,890     $ 50,228,493  
Income from securitization vehicles and investments(1)   $ 32,503,279     $ 34,901,766  
Commitment, amendment and other fee income
                 
Fee letters   $ 1,352,396     $ 1,353,373  
Loan prepayment and bond call fees     358,381       360,000  
All other fees     518,100       619,307  
Total commitment, amendment and other fee income   $ 2,228,877     $ 2,332,680  
Total investment income   $ 69,280,046     $ 87,462,939  

(1) During the first quarter of 2015, we identified a non-material error in our accounting policy for revenue recognition — refer to “Note 2. Change of Accounting for Collateralized Loan Obligation Equity Investment Income” in the notes to our consolidated financial statements.

The decrease in total investment income in 2016 was primarily due to a reduction of stated interest income (approximately $12.6 million) resulting largely from a smaller portfolio due to loan sale activity because we sold certain assets to fund the repayment of the TICC Funding credit facility during the quarter ended December 31, 2015, voluntary partial repayment of the TICC CLO 2012-1 class A-1 notes (during the third and fourth quarters of the fiscal year ended December 31, 2016), and partial repurchase of outstanding Convertible Notes (during the fourth quarter of the fiscal year ended December 31, 2016). Additionally, income from securitization vehicles declined (approximately $2.4 million) in 2016 largely as a result of volatility in the corporate loan market and a lower cost basis in the CLO equity portfolio. The total principal outstanding on income producing debt investments as of December 31, 216 and December 31, 2015 was approximately $395.5 million and $491.0 million, respectively.

As of December 31, 2016, our debt investments had stated interest rates of between 4.75% and 15.00% and maturity dates of between 24 and 93 months. In addition, our total portfolio had a weighted average yield on debt investments of approximately 8.3%, compared with 7.1% as of December 31, 2015. The increase in the weighted average yield on our debt portfolio is primarily due to our ongoing strategy of rotating the corporate loan portfolio into higher-yielding, less liquid loans and the restructuring of our investment previously held in Innovairre Holding Company (f/k/a “RBS Holding Company”).

Operating Expenses

Total expenses for the year ended December 31, 2016 were approximately $45.3 million and total expenses for the year ended December 31, 2015 were approximately $48.9 million. These amounts consisted of investment advisory fees, interest expense and other debt financing expenses, professional fees, compensation expense, and general and administrative expenses.

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Expenses before incentive fees for the year ended December 31, 2016 were approximately $42.5 million, which represents a decrease of approximately $7.3 million from the year ended December 31, 2015, attributable primarily to lower investment advisory base management fees, interest expense, and compensation expense partially offset by higher professional fees and higher general and administrative expenses. Expenses before incentive fees for the year ended December 31, 2015 were approximately $49.8 million.

The investment advisory base management fee for the year ended December 31, 2016 was approximately $11.3 million. The investment advisory base management fee in the comparable period in 2015 was approximately $19.8 million. The decrease of approximately $8.5 million is largely due to the previously announced fee reduction from 2.00% to 1.50% of gross assets (refer to “Incentive Fees,” in the Business section above, for discussion of ongoing fee waivers), as well as a decline in the weighted average gross assets due to the sale of certain assets to pay-off the TICC Funding credit facility during the fourth quarter of 2015 and to fund the voluntary partial repayments of the TICC CLO 2012-1 LLC class A-1 notes and the partial repurchase of Convertible Notes outstanding, during the third and fourth quarters of 2016. At December 31, 2016 and December 31, 2015, approximately $3.7 million and $4.2 million, respectively, of base management fees remained payable to TICC Management.

Interest expense for the year ended December 31, 2016 was approximately $20.0 million, which was directly related to our TICC CLO 2012-1 debt and Convertible Notes. Interest expense for the comparable period on 2015 was approximately $20.9 million. The primary driver of the decrease was the pay-off of the TICC Funding credit facility in the fourth quarter of 2015, partially offset by losses on extinguishment recognized during the third and fourth quarters of the year ended December 31, 2016 of approximately $1.9 million resulting from the partial repayment of the TICC CLO 2012-1 class A-1 notes and $0.8 million resulting from the partial repayment of the Convertible Notes, as well higher LIBOR rates incurred during the year ended December 31, 2016 on our outstanding TICC CLO 2012-1 class A, B, C, and D notes. The aggregate accrued interest which remained payable at December 31, 2016, was approximately $1.7 million comprised of $0.5 million for the TICC CLO 2012-1 notes and $1.2 million for the Convertible notes. The aggregate interest payable at December 31, 2015 was approximately $2.1 million.

Professional fees, consisting of legal, valuation, compliance, audit and tax fees, were approximately $6.4 million for the year ended December 31, 2016, compared to approximately $5.7 million for the year ended December 31, 2015. This increase is largely due to the engagement of legal and financial advisors to the Company’s Special Committee of the Board of Directors, partially offset by an insurance recovery of approximately $0.8 million related to previously incurred legal costs.

Compensation expenses were approximately $0.8 million for the year ended December 31, 2016 compared to approximately $1.2 million for the year ended December 31, 2015, reflecting the allocation of compensation expenses for the services of our chief financial officer, accounting personnel, and other administrative support staff. This decrease was largely the result of staffing changes during the second half of 2015. At December 31, 2016 and December 31, 2015, respectively, approximately $0 of compensation expenses remained payable for each respective period.

General and administrative expenses, consisting primarily of listing fees, office supplies, facilities costs and other expenses, were approximately $2.9 million for the year ended December 31, 2016 compared to approximately $1.3 million for the year ended December 31, 2015. This increase was primarily the result of proxy related costs incurred of approximately $1.1 million (such costs include fees for mailing, filing, processing, tabulation, and solicitation). Office supplies, facilities costs and other expenses are allocated to us under the terms of the Administration Agreement.

Incentive Fees

The net investment income incentive fee recorded for the year ended December 31, 2016 was approximately $2.8 million, compared to a credit of $0.9 million for the year ended December 31, 2015, which was composed of a fee reversal of approximately $2.4 million, representing the cumulative overstatement of fees from 2009 through 2014 resulting from the identification and correction of a non-material error in our accounting policy for revenue recognition (see “Note 2. Change of Accounting for Collateralized Loan Obligation Equity Investment Income” in the notes to our consolidated financial statements), partially offset by approximately $1.5 million representing the net investment income incentive

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fee earned for the year ended December 31, 2015. On April 30, 2015 TICC Management repaid in full to TICC, the portion of its previously paid net investment income incentive fees attributable to the overstated amounts.

The net investment income incentive fee is calculated and payable quarterly in arrears based on the amount by which (x) the “Pre-Incentive Fee Net Investment Income” for the immediately preceding calendar quarter exceeds (y) the “Preferred Return Amount” for calendar quarter (see “Note 7. Related Party Transactions” in the notes to our consolidated financial statements). For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income accrued during the calendar quarter minus our operating expenses for the quarter (including the base fee, expenses payable under the Administration Agreement with BDC Partners, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee).

The capital gains incentive fee expense, as reported under generally accepted accounting principles, is calculated on the basis of net realized and unrealized gains and losses at the end of each period. The expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to our investment adviser in the event of a complete liquidation of our portfolio as of period end and the termination of the Investment Advisory Agreement on such date. For the year ended December 31, 2016 and December 31, 2015, no accrual was required as a result of the impact of accumulated net unrealized depreciation and net realized losses on our portfolio.

The amount of the capital gains incentive fee which will actually be payable is determined in accordance with the terms of the Investment Advisory Agreement and is calculated as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). The terms of the Investment Advisory Agreement state that the capital gains incentive fee calculation is based on net realized gains, if any, offset by gross unrealized depreciation for the calendar year. No effect is given to gross unrealized appreciation in this calculation. For the year ended December 31, 2016 and December 31, 2015, such an accrual was not required under the terms of the Investment Advisory Agreement.

Realized and Unrealized Gains/Losses on Investments

For the year ended December 31, 2016, we recognized net realized losses on investments of approximately $14.3 million, which primarily represents the losses from the sale of several CLO equity investments, the sale of our equity investment in Algorithmic Implementations, Inc. (d/b/a “Ai Squared”) of approximately $3.0 million and the restructuring of our investment in Innovairre Holding Company (f/k/a “RBS Holding Company”) of approximately $3.9 million.

For the year ended December 31, 2016, our net change in unrealized appreciation was approximately $100.6 million, composed of approximately $74.6 million in gross unrealized appreciation, approximately $9.0 million in gross unrealized depreciation and approximately $35.0 million relating to the reversal of prior period net unrealized appreciation as investment gains and losses were realized. This includes net unrealized appreciation of approximately $34.2 million as a result of reductions to the cost value of our CLO equity investments under the effective yield accounting methodology, whereby the cost value of the respective investments are reduced by the excess of actual cash received and record date distributions to be received over the calculated income using the effective yield.

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The most significant components of the net change in unrealized appreciation and depreciation during the year ended December 31, 2016 were as follows ($ in millions):

 
Portfolio Company   Changes in
Unrealized
Appreciation
(Depreciation)
Newmark Capital Funding 2013-1 CLO Ltd   $ 5.9  
Shackleton 2013-IV CLO, Ltd     5.9  
Algorithmic Implementations, Inc     5.5  
Global Tel Link Corp     5.5  
Catamaran CLO 2012-1 Ltd     5.0  
Unitek Global Services, Inc     4.7  
Securus Technologies, Inc     4.5  
Shackleton 2013-III CLO, Ltd     4.2  
Carlyle Global Market Strategies CLO 2014-4, Ltd     4.0  
Benefit Street Partners CLO II, Ltd     3.8  
Mountain Hawk III CLO, Ltd     3.7  
Cedar Funding II CLO, Ltd     3.6  
Ares XXIX CLO Ltd     3.2  
Catamaran CLO 2013-1 Ltd     3.2  
Jamestown CLO V Ltd     2.8  
Ares XXV CLO Ltd     2.7  
Marea CLO, Ltd     2.5  
OZLM XII, Ltd     2.3  
Halcyon Loan Advisors Funding 2012-2 Ltd     2.2  
Telos CLO 2014-5, Ltd     2.1  
CIFC Funding 2012-1, Ltd     2.1  
Innovairre Holding Company (f/k/a “RBS Holding Company”)     2.0  
Ares XXVI CLO Ltd     1.8  
Telos CLO 2013-3, Ltd     1.7  
Telos CLO 2013-4, Ltd     1.7  
Windriver 2012-1 CLO, Ltd     1.6  
York CLO-1, Ltd     1.3  
Ivy Hill Middle Market Credit Fund VII, Ltd     1.1  
Carlyle Global Market Strategies CLO 2013-2, Ltd     1.0  
Birch Communications, Inc     (1.3 ) 
Other CLO equity related investments     (1.5 ) 
SourceHov, LLC     (2.9 ) 
Net all other(1)     14.7  
Total   $ 100.6  

(1) Unrealized gains and losses less than $1.0 million have been combined.

For the year ended December 31, 2015, we recognized net realized losses on investments of approximately $6.3 million, which primarily represents the losses from the restructuring of our debt investment in Unitek Global Services, Inc. (approximately $4.3 million), the repayment of our debt and sale of our equity investments in Nextag, Inc. (approximately $2.5 million), as well as the net loss on the sale of several of our CLO debt and equity investments (approximately $4.4 million), partially offset by realized gains from the sale of our equity investment held in Merrill Communications LLC (approximately $2.8 million) and from the repayment of our debt investment held in Merrill Communications LLC (approximately $2.6 million).

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For the year ended December 31, 2015, our net change in unrealized depreciation was approximately $98.4 million, composed of $3.0 million in gross unrealized appreciation, $112.1 million in gross unrealized depreciation and approximately $10.7 million relating to the reversal of prior period net unrealized appreciation as investment gains and losses were realized. This includes net unrealized appreciation of approximately $41.6 million as a result of reductions to the cost value of our CLO equity investments under the effective yield accounting methodology, whereby the cost value of the respective investments are reduced by the excess of actual cash received and record date distributions to be received over the calculated income using the effective yield.

 
Portfolio Company   Change in
Unrealized
Appreciation
(Depreciation)
Unitek Global Services, Inc   $ 4.4  
Nextag, Inc     2.7  
CS Advisors CLO I Ltd     2.5  
Serena Software Inc     (1.0 ) 
AMMC CLO XII, Ltd     (1.2 ) 
Windriver 2012-1 CLO, Ltd     (1.2 ) 
Carlyle Global Market Strategies CLO 2013-2, Ltd     (1.4 ) 
Aricent Technologies, Inc     (1.4 ) 
Shackleton 2013-III CLO, Ltd     (1.6 ) 
Hull Street CLO Ltd     (1.7 ) 
Cedar Funding II CLO, Ltd     (1.7 ) 
Telos CLO 2013-4, Ltd     (1.8 ) 
Catamaran CLO 2013-1 Ltd     (1.8 ) 
Telos CLO 2013-3, Ltd     (2.2 ) 
OZLM XII, Ltd     (2.3 ) 
Ares XXV CLO Ltd     (2.4 ) 
CIFC Funding 2012-1, Ltd     (2.4 ) 
Halcyon Loan Advisors Funding 2012-4 Ltd     (2.6 ) 
Halcyon Loan Advisors Funding 2012-2 Ltd     (2.7 ) 
Source Hov, LLC     (3.1 ) 
Carlyle Global Market Strategies CLO 2014-4, Ltd     (3.2 ) 
Jamestown CLO V Ltd     (3.6 ) 
Merrill Communications, LLC     (3.9 ) 
Algorithmic Implementations, Inc     (3.9 ) 
Ares XXIX CLO Ltd     (4.4 ) 
Securus Technologies, Inc     (4.4 ) 
Marea CLO, Ltd     (4.6 ) 
Benefit Street Partners CLO II, Ltd     (4.6 ) 
Newmark Capital Funding 2013-1 CLO Ltd     (4.9 ) 
Innovairre Holding Company (f/k/a “RBS Holding Company”)     (5.0 ) 
Global Tel Link Corp     (5.5 ) 
Mountain Hawk III CLO, Ltd     (5.8 ) 
Shackleton 2013-IV CLO, Ltd     (6.5 ) 
Catamaran CLO 2012-1 Ltd     (7.4 ) 
Net all other(1)     (7.8 ) 
Total   $ (98.4 ) 

(1) Unrealized gains and losses less than $1.0 million have been combined.

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Net Increase in Net Assets Resulting from Net Investment Income

Net investment income for the year ended December 31, 2016 and December 31, 2015 was approximately $24.0 million and $38.6 million, respectively, or a decrease of $14.6 million. The decrease was largely the result of lower investment income of $18.2 million, partially offset by a reduction in total expenses of $3.6 million, as discussed above.

For the year ended December 31, 2016, the net increase in net assets resulting from net investment income per common share was $0.46 (basic and diluted), compared to the net increase in net assets resulting from net investment income per share of $0.65 (basic and diluted) for the year ended December 31, 2015. Due to the anti-dilutive effect on the computation of diluted earnings per share for the years ended December 31, 2016 and December 31, 2015, the adjustments for interest on convertible senior notes, investment advisory fees, deferred issuance costs and net investment income incentive fees as well as share adjustments for dilutive effect of convertible notes were excluded from the respective period’s diluted earnings per share computation, where applicable.

For the year ended December 31, 2016, the net increase in the net assets resulting from core net investment income per common share was $1.12 (basic and diluted), compared to $1.27 (basic and diluted) for the year ended December 31, 2015. Core net investment income is a non-GAAP measure; please see “— Supplemental Information Regarding Core Net Investment Income and Core Net Increase (Decrease) in Net Assets Resulting from Operations” below for more information.

Net Increase (Decrease) in Net Assets Resulting from Operations

Net increase in net assets resulting from operations for the year ended December 31, 2016 was approximately $110.4 million compared to a net decrease of $66.1 million for year ended December 31, 2015, resulting in an increase of $176.5 million. This increase was largely due to a net change in unrealized appreciation of approximately $100.6 million, as discussed above.

For the year ended December 31, 2016, the net increase in net assets resulting from operations per common share was $2.13 (basic) and $1.92 (diluted), compared to a net decrease in net assets resulting from operations per common share of approximately $1.11 (basic and diluted) for the year ended December 31, 2015. Due to the anti-dilutive effect on the computation of diluted earnings per share for the year ended December 31, 2015, the adjustments for interest on convertible notes, investment advisory fees, deferred issuance costs and net investment income incentive fees as well as share adjustments for dilutive effect of convertible notes were excluded from the respective period’s diluted earnings per share computation, where applicable.

For the year ended December 31, 2016, the core net increase in net assets resulting from operations per common share was $2.13 (basic) and $1.92 (diluted) compared to the core net decrease in net assets resulting from operations per common share of $1.11 (basic and diluted) for the year ended December 31, 2015. Core net increase (decrease) in net assets resulting from operations is a non-GAAP measure; please see “— Supplemental Information Regarding Core Net Investment Income and Core Net Increase (Decrease) in Net Assets Resulting from Operations” below for more information.

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Comparison of the years ended December 31, 2015 and December 31, 2014

Investment Income

Investment income for the years ended December 31, 2015 and 2014 was approximately $87.5 million and $117.3 million, respectively, reflecting a decrease of approximately $29.8 million. The following tables set forth the components of investment income for the years ended December 31, 2015 and 2014:

   
  December 31,
2015
  December 31,
2014
Interest income
                 
Stated interest income   $ 45,728,704     $ 48,122,458  
Original issue discount income     3,865,679       2,748,786  
Payment-in-kind income     572,408       1,245,247  
Discount income derived from unscheduled remittances at par     61,702       240,343  
Total interest income   $ 50,228,493     $ 52,356,834  
Income from securitization vehicles(1)   $ 34,901,766     $ 59,516,739  
Commitment, amendment and other fee income
                 
Fee letters   $ 1,353,373     $ 1,263,200  
Success fees on CLO warehouses           1,031,360  
Loan prepayment and bond call fees     360,000       2,464,176  
All other fees     619,307       692,431  
Total commitment, amendment and other fee income   $ 2,332,680     $ 5,451,167  
Total investment income   $ 87,462,939     $ 117,324,740  

(1) During the first quarter of 2015, we identified a non-material error in our accounting policy for revenue recognition — refer to “Note 2. Change of Accounting for Collateralized Loan Obligation Equity Investment Income” in the notes to our consolidated financial statements.

The decrease in total investment income was primarily due to a reduction of income from securitization vehicles resulting from the correction of a non-material accounting error related to our CLO equity investments described in further detail in “Note 2. Change of Accounting for Collateralized Loan Obligation Equity Investment Income” in the notes to our consolidated financial statements, lower interest income primarily attributable to our investment in Innovairre Holding Company (f/k/a “RBS Holding Company”) being placed on non-accrual status during the quarter ended December 31, 2015 and lower commitment, amendment and other fee income due to not earning success fees on warehouse investments during 2015 and fewer loan prepayments. These decreases were partially offset by an approximate $1.1 million out of period adjustment to interest income described further in “Note 3. Summary of Significant Accounting Policies” in the notes to our consolidated financial statements. The total principal value of income producing debt investments as of December 31, 2015 and 2014 was approximately $491.0 million and $729.3 million, respectively. The decline in the size of our debt portfolio is primarily attributable to our full repayment of TICC Funding’s $150.0 million credit facility with Citibank, N.A. (the “Facility”) which was terminated on December 31, 2015 (refer to “Note 10. Borrowings” in the notes to our consolidated financial statements). The full repayment occurred late in the fourth quarter of 2015 and, therefore, did not have a meaningful impact to interest income during the year.

As of December 31, 2015, our debt investments had stated interest rates of between 4.25% and 15.00% and maturity dates of between three and 97 months. In addition, our total portfolio had a weighted average yield on debt investments of approximately 7.1%, compared with 7.8% as of December 31, 2014. The reduction in the weighted average yield on our debt portfolio over the past year is primarily a result of our investment in Innovairre Holding Company (f/k/a “RBS Holding Company”) being placed on non-accrual and current market conditions.

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Operating Expenses

Total expenses for the year ended December 31, 2015 were approximately $48.9 million and total expenses for the year ended December 31, 2014 were approximately $51.9 million. These amounts consisted of investment advisory fees, interest expense and other debt financing expenses, professional fees, compensation expense, and general and administrative expenses.

Expenses before incentive fees for the year ended December 31, 2015 were approximately $49.8 million, which represents a decrease of approximately $0.3 million from the year ended December 31, 2014, attributable primarily to lower base management fees, interest expense, and compensation expense partially offset by higher professional fees. Expenses before incentive fees for the year ended December 31, 2014 were approximately $50.1 million.

The base management fee for the year ended December 31, 2015 was approximately $19.8 million. The base management fee in the comparable period in 2014 was approximately $21.2 million. The decrease of approximately $1.4 million is due to the decline of weighted average gross assets due largely to lower fair values. At December 31, 2015 and December 31, 2014, approximately $4.2 million and $6.2 million, respectively, of investment advisory fees remained payable to TICC Management, including the net investment income incentive fee discussed below.

Interest expense and other debt financing expenses for the year ended December 31, 2015 was approximately $20.9 million, which was directly related to our debt securitization financing transactions, Convertible Notes and Facility, as well as the incurrence of accelerated costs and commitment fees (approximately $1.0 million) associated with the repayment in full of the Facility’s $150.0 million outstanding borrowings as of December 31, 2015 — refer to “Note 10. Borrowings” in the notes to our consolidated financial statements. Interest expense for the year ended December 31, 2014 was approximately $22.9 million. The aggregate accrued interest which remained payable at December 31, 2015, was approximately $2.1 million, comprised of $0.7 million for the notes of TICC CLO 2012-1 and $1.4 million for the Convertible Notes. The aggregate interest payable at December 31, 2014, was approximately $2.6 million.

Professional fees, consisting of legal, valuation, compliance, audit and tax fees, were approximately $5.7 million for the year ended December 31, 2015, compared to approximately $2.1 million for the year ended December 31, 2014. This increase is largely due to the recognition of approximately $2.6 million of incremental expenses primarily related to the engagement of legal and financial advisors to the Company’s Special Committee — refer to “Note 9. Commitments and Contingencies,” “Note 18. Proposed Sale of Company’s Investment Adviser” and “Note 19. Subsequent Events” in the notes to our consolidated financial statements.

Compensation expenses were approximately $1.2 million for the year ended December 31, 2015 compared to approximately $1.9 million for the year ended December 31, 2014, reflecting the allocation of compensation expenses for the services of our chief financial officer, accounting personnel, and other administrative support staff. This decrease was largely the result of the reversal of previously accrued compensation due to staffing changes. At December 31, 2015 and December 31, 2014, respectively, approximately $0 of compensation expenses remained payable for each respective period.

General and administrative expenses, consisting primarily of directors’ fees, insurance, listing fees, transfer agent and custodian fees, office supplies, facilities costs and other expenses, were approximately $2.3 million for the year ended December 31, 2015 compared to approximately $2.1 million for the year ended December 31, 2014. Office supplies, facilities costs and other expenses are allocated to us under the terms of the Administration Agreement.

Incentive Fees

The net investment income incentive fee recorded for the year ended December 31, 2015 resulted in a credit of approximately $0.9 million, which was composed of a fee reversal of approximately $2.4 million, representing the cumulative overstatement of fees from 2009 through 2014 resulting from the identification and correction of a non-material error in our accounting policy for revenue recognition (see “Note 2. Change of Accounting for Collateralized Loan Obligation Equity Investment Income” in the notes to our consolidated financial statements), partially offset by approximately $1.5 million representing the net investment income

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incentive fee earned for the year ended December 31, 2015. On April 30, 2015 TICC Management repaid in full to TICC, the portion of its previously paid net investment income incentive fees attributable to the overstated amounts. The net investment income incentive fee recorded for the year ended December 31, 2014 was approximately $5.6 million.

Applicable for the years ended December 31, 2015 and 2014, the net investment income incentive fee is calculated and payable quarterly in arrears based on our “Pre-Incentive Fee Net Investment Income” for the immediately preceding calendar quarter subject to a hurdle rate which is determined as of December 31 of the preceding year. For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income accrued during the calendar quarter minus our operating expenses for the quarter (including the base fee, expenses payable under the Administration Agreement with BDC Partners, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee).

The capital gains incentive fee expense, as reported under generally accepted accounting principles, is calculated on the basis of net realized and unrealized gains and losses at the end of each period. The expense related to the hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to our investment adviser in the event of a complete liquidation of our portfolio as of period end and the termination of the Investment Advisory Agreement on such date. For the year ended December 31, 2015, no accrual was required as a result of the impact of accumulated net unrealized depreciation and net realized losses on our portfolio. For the year ended December 31, 2015, an accrual reversal of approximately $3.9 million was recorded under the hypothetical liquidation calculation.

The amount of the capital gains incentive fee which will actually be payable is determined in accordance with the terms of the Investment Advisory Agreement and is calculated as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). The terms of the Investment Advisory Agreement state that the capital gains incentive fee calculation is based on net realized gains, if any, offset by gross unrealized depreciation for the calendar year. No effect is given to gross unrealized appreciation in this calculation. For the year ended December 31, 2015, such an accrual was not required under the terms of the Investment Advisory Agreement.

Realized and Unrealized Gains/Losses on Investments

For the year ended December 31, 2015, we recognized net realized losses on investments of approximately $6.3 million, which primarily represents the losses from the restructuring of our debt investment in Unitek Global Services, Inc. (approximately $4.3 million), the repayment of our debt and sale of our equity investments in Nextag, Inc. (approximately $2.5 million), as well as the net loss on the sale of several of our CLO debt and equity investments (approximately $4.4 million), partially offset by realized gains from the sale of our equity investment held in Merrill Communications LLC (approximately $2.8 million) and from the repayment of our debt investment held in Merrill Communications LLC (approximately $2.6 million).

For the year ended December 31, 2015, our net change in unrealized depreciation was approximately $98.4 million, composed of $3.0 million in gross unrealized appreciation, $112.1 million in gross unrealized depreciation and approximately $10.7 million relating to the reversal of prior period net unrealized appreciation as investment gains and losses were realized. This includes net unrealized appreciation of approximately $41.6 million as a result of reductions to the cost value of our CLO equity investments under the effective yield accounting methodology, whereby the cost value of the respective investments are reduced by the excess of actual cash received and record date distributions to be received over the calculated income using the effective yield.

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The most significant components of the net change in unrealized appreciation and depreciation during the year ended December 31, 2015 were as follows ($ in millions):

 
Portfolio Company   Change in
unrealized
appreciation
(depreciation)
Unitek Global Services, Inc   $ 4.4  
Nextag, Inc     2.7  
CS Advisors CLO I Ltd     2.5  
Serena Software Inc     (1.0 ) 
AMMC CLO XII, Ltd     (1.2 ) 
Windriver 2012-1 CLO, Ltd     (1.2 ) 
Carlyle Global Market Strategies CLO 2013-2, Ltd     (1.4 ) 
Aricent Technologies, Inc     (1.4 ) 
Shackleton 2013-III CLO, Ltd     (1.6 ) 
Hull Street CLO Ltd     (1.7 ) 
Cedar Funding II CLO, Ltd     (1.7 ) 
Telos CLO 2013-4, Ltd     (1.8 ) 
Catamaran CLO 2013-1 Ltd     (1.8 ) 
Telos CLO 2013-3, Ltd     (2.2 ) 
OZLM XII, Ltd     (2.3 ) 
Ares XXV CLO Ltd     (2.4 ) 
CIFC Funding 2012-1, Ltd     (2.4 ) 
Halcyon Loan Advisors Funding 2012-4 Ltd     (2.6 ) 
Halcyon Loan Advisors Funding 2012-2 Ltd     (2.7 ) 
Source Hov, LLC     (3.1 ) 
Carlyle Global Market Strategies CLO 2014-4, Ltd     (3.2 ) 
Jamestown CLO V Ltd     (3.6 ) 
Merrill Communications, LLC     (3.9 ) 
Algorithmic Implementations, Inc     (3.9 ) 
Ares XXIX CLO Ltd     (4.4 ) 
Securus Technologies, Inc     (4.4 ) 
Marea CLO, Ltd     (4.6 ) 
Benefit Street Partners CLO II, Ltd     (4.6 ) 
Newmark Capital Funding 2013-1 CLO Ltd     (4.9 ) 
Innovairre Holding Company (f/k/a “RBS Holding Company”)     (5.0 ) 
Global Tel Link Corp     (5.5 ) 
Mountain Hawk III CLO, Ltd     (5.8 )          
Shackleton 2013-IV CLO, Ltd     (6.5 ) 
Catamaran CLO 2012-1 Ltd     (7.4 ) 
Net all other(1)     (7.8 ) 
Total   $ (98.4 ) 

(1) Unrealized gains and losses less than $1.0 million have been combined.

For the year ended December 31, 2014, we recorded net realized capital losses on investments of approximately $19.5 million, which largely represents the net loss on the sale of several of our CLO debt and equity investments which totaled approximately $13.2 million as well as the loss associated with the restructuring of our investment in Nextag, Inc. senior secured notes of approximately $4.7 million.

Based upon the fair value determinations made in good faith by the Board of Directors, during the year ended December 31, 2014, we had net unrealized losses of approximately $49.3 million, comprised of

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$1.4 million in gross unrealized appreciation, $60.8 million in gross unrealized depreciation and approximately $10.1 million relating to the reversal of prior period net unrealized depreciation as certain investments were realized. The most significant changes in net unrealized appreciation and depreciation during the year ended December 31, 2014 were as follows ($ in millions):

 
Portfolio Company   Changes in
Unrealized
Appreciation
(Depreciation)
Stone Tower CLO VII Ltd   $ 4.0  
ACA CLO 2007-1, Ltd     2.4  
Lightpoint CLO VIII, Ltd     1.3  
Nextag, Inc     1.2  
Mmodal, Inc     1.2  
Newmark Capital Funding 2013-1 CLO Ltd     (1.0 ) 
Mountain Hawk III CLO, Ltd     (1.2 ) 
Edmentum, Inc     (1.2 ) 
AMMC CLO XII, Ltd     (1.4 ) 
Cedar Funding II CLO, Ltd     (1.4 ) 
Catamaran CLO 2013-1 Ltd     (1.4 ) 
Marea CLO, Ltd     (1.5 ) 
Emporia Preferred Funding III, Ltd     (1.5 ) 
Ares XXV CLO Ltd     (1.6 ) 
Carlyle Global Market Strategies CLO 2013-2, Ltd     (1.7 ) 
Telos CLO 2014-5, Ltd     (1.8 ) 
Telos CLO 2013-3, Ltd     (1.8 ) 
Ivy Hill Middle Market Credit Fund VII, Ltd     (1.9 ) 
Shackleton 2013-III CLO, Ltd     (2.5 ) 
Innovairre Holding Company (f/k/a “RBS Holding Company”)     (2.6 ) 
Shackleton 2013-IV CLO, Ltd     (2.9 ) 
Catamaran CLO 2012-1 Ltd     (3.4 ) 
Merrill Communications, LLC     (3.5 ) 
Ares XXVI CLO Ltd     (3.9 ) 
Benefit Street Partners CLO II, Ltd     (4.9 ) 
Unitek Global Services, Inc     (5.5 ) 
Net all other(1)     (10.8 ) 
Total   $ (49.3 ) 

(1) Unrealized gains and losses less than $1.0 million have been combined.

Net Increase in Net Assets Resulting from Net Investment Income

Net investment income for the year ended December 31, 2015 and December 31, 2014 was approximately $38.6 million and $65.5 million, respectively, or a decrease of $26.9 million. The decrease was largely the result of lower investment income of $29.9 million, partially offset by a reduction in total expenses of $3.0 million, as discussed above.

For the year ended December 31, 2015, the net increase in net assets resulting from net investment income per common share was $0.65 (basic and diluted), compared to the net increase in net assets resulting from net investment income per share of $1.11 (basic) and $1.06 (diluted) for the year ended December 31, 2014. Due to the anti-dilutive effect on the computation of diluted earnings per share for the year ended December 31, 2015, the adjustments for interest on convertible notes, investment advisory fees, deferred issuance costs and net investment income incentive fees as well as share adjustments for dilutive effect of convertible notes were excluded from the respective period’s diluted earnings per share computation.

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For the year ended December 31, 2015, the net increase in the net assets resulting from core net investment income per common share was $1.27 (basic and diluted), compared to $1.05 (basic) and $1.00 (diluted) for the year ended December 31, 2014. Core net investment income is a non-GAAP measure; please see “— Supplemental Information Regarding Core Net Investment Income and Core Net Increase (Decrease) in Net Assets Resulting from Operations” below for more information.

Net Decrease in Net Assets Resulting from Operations

Net decrease in net assets resulting from operations for the year ended December 31, 2015 and December 31, 2014 was approximately $66.1 million and $3.3 million, respectively, or a decrease of approximately $62.8 million. This decrease was largely due to lower net investment income of $29.9 million and greater unrealized depreciation on investments of $49.1 million, partially offset by a decrease in net realized losses of $13.2 million.

For the year ended December 31, 2015, the net decrease in net assets resulting from operations per common share was $1.11 (basic and diluted), compared to a net decrease in net assets resulting from operations per share of approximately $0.06 (basic and diluted) for the year ended December 31, 2014. Due to the anti-dilutive effect on the computation of diluted earnings per share for the years ended December 31, 2015 and December 31, 2014, the adjustments for interest on convertible notes, investment advisory fees, deferred issuance costs and net investment income incentive fees as well as share adjustments for dilutive effect of convertible notes were excluded from the respective period’s diluted earnings per share computation.

For the year ended December 31, 2015 and December 31, 2014, the core net decrease in net assets resulting from operations per common share was $1.11 (basic and diluted) and $0.12 (basic and diluted), respectively. Core net decrease in net assets resulting from operations is a non-GAAP measure; please see “— Supplemental Information Regarding Core Net Investment Income and Core Net Increase (Decrease) in Net Assets Resulting from Operations” below for more information.

Supplemental Information Regarding Core Net Investment Income and Core Net Increase (Decrease) in Net Assets Resulting from Operations

On a supplemental basis, we provide information relating to core net investment income, its ratio to net assets and core net increase in net assets resulting from operations, which are non-GAAP measures. These measures are provided in addition to, but not as a substitute for, GAAP net investment income and net increase in net assets resulting from operations. Our non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core net investment income represents GAAP net investment income adjusted for additional taxable income on our CLO equity investments and also excludes our capital gains incentive fee. Core net increase in net assets resulting from operations represents GAAP net increase in net assets resulting from operations excluding the capital gains incentive fee (there would not have been any change to the net increase in net assets resulting from operations resulting from our CLO equity investments as there is an offsetting change in unrealized appreciation equal to the change in net investment income).

Income from investments in the equity class securities of CLO equity vehicles, for GAAP purposes, is recorded using the effective interest method. This method requires an estimate of future cash flows, including recurring cash flows as well as future principal payments, compared to the cost resulting in an effective yield for the investment; the difference between the actual cash received or distributions entitled to receive and the effective yield calculation is an adjustment to cost. Accordingly, investment income recognized on CLO equity securities in the GAAP statement of operations differs from both the tax-basis investment income and from the cash distributions actually received by us during the period, (referred to below as “CLO equity additional estimated taxable income”). As the capital gains incentive fee, for generally accepted accounting purposes, is based on the hypothetical liquidation of the entire portfolio (and as any capital gains incentive fee may be non-recurring), such fees are excluded when calculating core net investment income. We believe that core net investment income and core net increase in net assets resulting from operations are useful indicators of performance during this period. Further, as the RIC requirements are to distribute taxable earnings and as capital gains incentive fees may not be fully and currently tax deductible, the core net investment income provides an indication of estimated taxable income for the year-to-date.

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The following table provides a reconciliation of net investment income to core net investment income for the years ended December 31, 2016, 2015 and 2014:

                 
                 
  Year Ended
December 31, 2016
  Year Ended
December 31, 2015
  Year Ended
December 31, 2014
     Amount   Per Share
Amounts
(basic)
  Per Share
Amounts
(diluted)
  Amount   Per Share
Amounts
(basic)
  Per Share
Amounts
(diluted)
  Amount   Per Share
Amounts
(basic)
  Per Share
Amounts
(diluted)
Net investment income   $ 24,019,066     $ 0.46     $ 0.46     $ 38,580,922     $ 0.65     $ 0.65     $ 65,457,844     $ 1.11     $ 1.06  
CLO equity additional distributions     34,165,951       0.66       0.66       37,497,502       0.62       0.62                    
Capital gains incentive fee                                         (3,872,853 )      (0.07 )      (0.06 ) 
Core net investment income   $ 58,185,017     $ 1.12     $ 1.12     $ 76,078,424     $ 1.27     $ 1.27     $ 61,584,991     $ 1.04     $ 1.00  

The following table provides a reconciliation of net increase (decrease) in net assets resulting from operations to core net increase (decrease) in net assets resulting from operations for the years ended December 31, 2016, 2015 and 2014:

                 
                 
  Year Ended
December 31, 2016
  Year Ended
December 31, 2015
  Year Ended
December 31, 2014
     Amount   Per Share
Amounts
(basic)
  Per Share
Amounts
(diluted)
  Amount   Per Share
Amounts
(basic)
  Per Share
Amounts
(diluted)
  Amount   Per Share
Amounts
(basic)
  Per Share
Amounts
(diluted)
Net increase (decrease) in net assets resulting from operations   $ 110,361,763     $ 2.13     $ 1.92     $ (66,133,649 )    $ (1.11 )    $ (1.11 )    $ (3,348,400 )    $ (0.06 )    $ (0.06 ) 
Capital gains incentive fee                                         (3,872,853 )      (0.06 )      (0.07 ) 
Core net increase (decrease) in net assets resulting from operations   $ 110,361,763     $ 2.13     $ 1.92     $ (66,133,649 )    $ (1.11 )    $ (1.11 )    $ (7,221,253 )    $ (0.12 )    $ (0.13 ) 

In addition, the following ratio is presented to supplement the financial highlights included in Note 11 (also presented below) to the consolidated financial statements:

         
  Year Ended
December 31,
2016
  Year Ended
December 31,
2015
  Year Ended
December 31,
2014
  Year Ended
December 31,
2013
  Year Ended
December 31,
2012
Ratio of core net investment income to average net assets     16.95 %      15.59 %      11.00 %      10.79 %      11.74 % 

The following table provides a reconciliation of the ratio of net investment income to average net assets to the ratio of core net investment income to average net assets, for the years ended December 31, 2016, 2015, 2014, 2013 and 2012, respectively.

         
  Year Ended
December 31,
2016
  Year Ended
December 31,
2015
  Year Ended
December 31,
2014
  Year Ended
December 31,
2013
  Year Ended
December 31,
2012
Ratio of net investment income to average net assets     7.00 %      7.91 %      11.69 %      11.02 %      10.23 % 
Ratio of CLO equity additional estimated taxable income to average net assets     9.95 %      7.69 %                   
Ratio of capital gain incentive fee to average net assets                 (0.69 )%      (0.23 )%      1.51 % 
Ratio of core net investment income to average net assets     16.95 %      15.59 %      11.00 %      10.79 %      11.74 % 

LIQUIDITY AND CAPITAL RESOURCES

During the year ended December 31, 2016, we repurchased 4,917,026 shares under our share repurchase program.

During the year ended December 31, 2016, cash and cash equivalents decreased from approximately $23.2 million at the beginning of the period to approximately $8.3 million at the end of the period. Net cash provided by operating activities for the year ended December 31, 2016, consisting primarily of the items

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described in “— Results of Operations,” was approximately $185.7 million, largely reflecting repayments of principal and reductions to investment cost value ($103.5 million) and proceeds from the sale of investments ($184.6 million), partially offset by purchases of new investments ($160.0 million). Net cash provided by investing activities reflects the change in restricted cash in TICC CLO 2012-1 LLC. During the year ended December 31, 2016, net cash used by financing activities was approximately $215.1 million, reflecting repayment of the TICC CLO 2012-1 class A-1 notes ($109.3 million), distribution of dividends ($59.7 million), repayment of the Convertible Notes ($20.5 million), and the repurchases of our common stock ($25.6 million).

Contractual Obligations

We have certain obligations with respect to the investment advisory and administration services we receive. See “— Overview”. We incurred approximately $11.3 million for investment advisory fees, approximately $2.8 million for net investment income incentive fees, and approximately $4.0 million for administrative services for the year ended December 31, 2016.

A summary of our significant contractual payment obligations is as follows as of December 31, 2016. See also “Note 10. Borrowings” in the notes to our consolidated financial statements.

         
Contractual obligations   Total   Payments Due by Period
  Less than
1 year
  1 – 3 years   3 – 5 years   More than
5 years
Long-term debt obligations:
                                            
TICC CLO 2012-1 LLC Notes   $ 129,281,817     $     $     $     $ 129,281,817  
TICC Convertible Notes     94,542,000       94,542,000                    
Total   $ 223,823,817     $ 94,542,000     $     $     $ 129,281,817  

Off-Balance Sheet Arrangements

As of December 31, 2016, the Company had commitments to purchase additional debt investments totaling a par amount of $5.0 million.

We currently have no other off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

Share Repurchase Program

On November 5, 2015, the Board of Directors authorized a repurchase program for the purpose of repurchasing up to $75 million worth of our common stock. Under this repurchase program, we could have, but we were not obligated to, repurchase outstanding common stock in the open market from time to time through June 30, 2016 provided that repurchases complied with the prohibitions under our Insider Trading Policies and Procedures and the guidelines specified in Rule 10b-18 of the Securities Exchange Act of 1934, as amended, including certain price, market volume and timing constraints. Further, any repurchases were conducted in accordance with the 1940 Act. The Board authorized program to repurchase up to $75 million worth of our common stock expired on June 30, 2016. During the year ended December 31, 2016, we repurchased shares under this repurchase program totaling 4,917,026 shares of our common stock for approximately $25.6 million at the weighted average price of approximately $5.20 per share, inclusive of commissions. This represents a discount of approximately 30.7% of the net asset value per share at December 31, 2016.

Borrowings

In accordance with the 1940 Act, with certain limited exceptions, the Company is only allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 200% immediately after such borrowing. As of December 31, 2016, the Company’s asset coverage for borrowed amounts was approximately 271%.

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The following are the Company’s outstanding principal amounts, carrying values and fair values of the Company’s borrowings as of December 31, 2016 and December 31, 2015. Fair values of our notes payable are based upon the bid price provided by the placement agent at the measurement date, if available:

           
(dollars in thousands)   As of
  December 31, 2016   December 31, 2015
  Principal Amount   Carrying Value   Fair Value   Principal Amount   Carrying Value   Fair Value
TICC CLO 2012-1 LLC Class A-1 Notes   $ 65,282     $ 64,788 (1)    $ 65,282     $ 176,000     $ 174,469 (1)    $ 174,680  
TICC CLO 2012-1 LLC Class B-1 Notes     20,000       19,633 (1)      20,025       20,000       19,578 (1)      19,700  
TICC CLO 2012-1 LLC Class C-1 Notes     23,000       22,375 (1)      23,058       23,000       22,284 (1)      22,770  
TICC CLO 2012-1 LLC Class D-1 Notes     21,000       20,290 (1)      21,210       21,000       20,188 (1)      20,737  
TICC CLO 2012-1 LLC deferred issuance costs           (1,232 )                  (2,632 )       
Sub-total TICC CLO 2012-1, LLC Notes     129,282       125,854       129,575       240,000       233,887       237,887  
Convertible Notes     94,542       94,117       96,906       115,000       113,862       115,863  
Total   $ 223,824     $ 219,971     $ 226,481     $ 355,000     $ 347,749     $ 353,750  

(1) Represents the aggregate principal amount outstanding less the unaccreted discount. The total unaccreted discount as of December 31, 2016 for the 2023 Class A Notes, the 2023 Class B Notes, the 2023 Class C Notes and the 2023 Class D Notes was approximately $494, $367, $625 and $710, respectively. As of December 31, 2015, the total unaccreted discount for the 2023 Class A Notes, the 2023 Class B Notes, the 2023 Class C Notes and the 2023 Class D Notes was approximately $1,531, $422, $716 and $812, respectively.

The weighted average stated interest rate and weighted average maturity on all our debt outstanding as of December 31, 2016 were 5.56% and 4.2 years, respectively, and as of December 31, 2015 were 4.41% and 5.8 years, respectively.

The table below summarizes the components of interest expense for the years ended December 31, 2016 and 2015:

         
  Year Ended December 31, 2016
($ in thousands)   Stated Interest
Expense
  Note Discount   Amortization of
Deferred Debt
Issuance Costs
  Loss on
Extinguishment
  Total
TICC CLO 2012-1 LLC Class A-1 Notes   $ 3,819.8     $ 176.8     $     $ 1,944.2     $ 5,940.8  
TICC CLO 2012-1 LLC Class B-1 Notes     852.5       54.4                   906.9  
TICC CLO 2012-1 LLC Class C-1 Notes     1,273.4       91.0                   1,364.4  
TICC CLO 2012-1 LLC Class D-1 Notes     1,376.8       102.3                   1,479.1  
TICC CLO 2012-1 amortization of deferred debt(1)                 316.1             316.1  
Convertible Notes     8,526.1             613.7       815.0       9,954.8  
Total   $ 15,848.6     $ 424.5     $ 929.8     $ 2,759.2     $ 19,962.1  

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  Year Ended December 31, 2015(2)
($ in thousan