8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 27, 2024

BAIN CAPITAL SPECIALTY FINANCE, INC.

(Exact name of Registrant as Specified in Its Charter)

Delaware	814-01175	81-2878769
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
200 Clarendon Street 37th Floor
Boston, Massachusetts		02116
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 516-2000

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	BCSF	New York Stock Exchange

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

Emerging growth company ☐

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

Item 2.02 Results of Operations and Financial Condition.

On February 27, 2024, Bain Capital Specialty Finance, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and fiscal year ended December 31, 2023. A copy of the press release is attached hereto as Exhibit 99.1.

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for any purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such Section. The information in this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 8.01 Other Events.

On February 27, 2024, the Company issued a press release announcing the declaration of a first fiscal quarter 2024 dividend of $0.42 per share and additional dividends totaling $0.12 per share for 2024, to be distributed in four consecutive quarterly payments of $0.03 per share per quarter. The first fiscal quarter 2024 dividend of $0.42 per share and the first additional dividend of $0.03 per share are for stockholders of record as of March 28, 2024 and payable on April 30, 2024. A copy of the press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

99.1 Press Release, dated February 27, 2024.

104 Cover page interactive data file (formatted as Inline XBRL)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			BAIN CAPITAL SPECIALTY FINANCE, INC.
Date:	February 27, 2024	By:	/s/ Jessica Yeager
			Name: Jessica Yeager Title: Secretary

EX-99.1

Exhibit 99.1

 

Bain Capital Specialty Finance, Inc. Announces December 31, 2023 Financial Results and Declares First Quarter 2024 Dividend of $0.42 per Share and Additional Dividends Totaling $0.12 per Share for 2024

BOSTON – February 27, 2024 – Bain Capital Specialty Finance, Inc. (NYSE: BCSF, the “Company”, “our” or “we”) today announced financial results for the fourth quarter and fiscal year ended December 31, 2023, and that its Board of Directors (the “Board”) has declared a dividend of $0.42 per share for the first quarter of 2024 and has also declared additional dividends totaling $0.12 per share for 2024.

“BCSF reported strong quarterly and full year 2023 results as we benefited from attractive levels of interest income, net asset value growth and continued stable credit performance across our primarily senior secured portfolio,” said Michael Ewald, Chief Executive Officer of BCSF. “As a result of our strong 2023 performance, we declared additional dividends totaling $0.12 per share to be paid in equal quarterly amounts during the year, bringing our total annualized dividend yield to 10.2% at ending book value, inclusive of our regular quarterly dividend of $0.42 per share.”

QUARTERLY HIGHLIGHTS

•Net investment income (NII) per share was $0.54, equating to an annualized NII yield on book value of 12.3%(1);

•Net income per share was $0.48, equating to an annualized return on book value of 10.9%(1);

•Net asset value per share as of December 31, 2023 was $17.60, as compared to $17.54 as of September 30, 2023;

•Gross and net investment fundings were $206.4 million and $(101.8) million, respectively; Ending net debt-to-equity was 1.02x, as compared to 1.12x as of September 30, 2023(2);

•Investments on non-accrual remained low at 1.9% and 1.2% of the total investment portfolio at amortized cost and fair value, respectively, as of December 31, 2023;

•Subsequent to quarter-end, the Company’s Board of Directors declared a dividend of $0.42 per share for the first quarter of 2024 payable to stockholders of record as of March 28, 2024 and has also declared additional dividends totaling $0.12 per share for 2024, to be distributed in four consecutive quarterly payments of $0.03 per share per quarter. The first additional dividend is payable to stockholders of record as of March 28, 2024(3); and

•In February 2024, Kroll Bond Rating Agency, LLC (KBRA) affirmed the Company’s investment grade rating of BBB and stable outlook.

SELECTED FINANCIAL HIGHLIGHTS

($ in millions, unless otherwise noted)		Q4 2023	Q3 2023
Net investment income per share		$0.54	$0.55
Net investment income		$34.9	$35.6
Earnings per share		$0.48	$0.52
Dividends per share declared and payable		$0.42	$0.42
($ in millions, unless otherwise noted)	As of December 31, 2023		As of September 30, 2023
Total fair value of investments		$2,298.3	$2,390.2
Total assets		$2,472.3	$2,566.5
Total net assets		$1,136.5	$1,132.5
Net asset value per share		$17.60	$17.54

PORTFOLIO AND INVESTMENT ACTIVITY

For the three months ended December 31, 2023, the Company invested $206.4 million in 43 portfolio companies, including $56.1 million in two new companies, $145.3 million in 40 existing companies and $5.0 million in ISLP. The Company had $308.2 million of principal repayments and sales in the quarter, resulting in net investment fundings of $(101.8) million.

Investment Activity for the Quarter Ended December 31, 2023:

($ in millions)	Q4 2023	Q3 2023
Investment Fundings	$206.4	$109.5
Sales and Repayments	$308.2	$102.8
Net Investment Activity	$(101.8)	$6.7

As of December 31, 2023, the Company’s investment portfolio had a fair value of $2,298.3 million, comprised of investments in 137 portfolio companies operating across 31 different industries.

Investment Portfolio at Fair Value as of December 31, 2023:

Investment Type	$ in Millions	% of Total
First Lien Senior Secured Loans	$1,464.4	63.8%
Second Lien Senior Secured Loans	68.4	3.0
Subordinated Debt	45.9	2.0
Structured Products	22.6	1.0
Preferred Equity	104.4	4.5
Equity Interests	221.4	9.6
Warrants	0.5	0.0
Investment Vehicles	370.7	16.1
Subordinated Note in ISLP	190.7	8.3
Equity Interest in ISLP	66.2	2.9
Subordinated Note in SLP	116.0	5.0
Preferred and Equity Interest in SLP	(2.2)	(0.1)
Total	$2,298.3	100.0%

As of December 31, 2023, the weighted average yield on the investment portfolio at amortized cost and fair value were 13.0% and 13.1%, respectively, as compared to 12.9% and 13.1%, respectively, as of September 30, 2023(4). 93.8% of the Company’s debt investments at fair value were in floating rate securities.

As of December 31, 2023, three portfolio companies were on non-accrual status, representing 1.9% and 1.2% of the total investment portfolio at amortized cost and fair value, respectively.

As of December 31, 2023, ISLP’s investment portfolio had an aggregate fair value of $709.8 million, comprised of investments in 37 portfolio companies operating across 17 different industries. The investment portfolio on a fair value basis was comprised of 93.7% first lien senior secured loans, 2.9% second lien senior secured loans and 3.4% equity interests. 100% of ISLP’s debt investments at fair value were in floating rate securities.

As of December 31, 2023, SLP’s investment portfolio had an aggregate fair value of $879.9 million, comprised of investments in 62 portfolio companies operating across 21 different industries.(5) The investment portfolio on a fair value basis was comprised of 97.7% first lien senior secured loans and 2.3% second lien senior secured loans. 99.3% of SLP’s debt investments at fair value were in floating rate securities.

 

RESULTS OF OPERATIONS

For the three months ended December 31, 2023 and September 30, 2023, total investment income was $74.9 million and $72.4 million, respectively. The increase in investment income was primarily due to an increase in dividend and other income.

Total expenses (before taxes) for the three months ended December 31, 2023 and September 30, 2023 were $39.0 million and $36.1 million, respectively.

Net investment income for the three months ended December 31, 2023 and September 30, 2023 was $34.9 million or $0.54 per share and $35.6 million or $0.55 per share, respectively.

During the three months ended December 31, 2023, the Company had net realized and unrealized gains (losses) of $(3.8) million.

Net increase in net assets resulting from operations for the three months ended December 31, 2023 was $31.1 million, or $0.48 per share.

CAPITAL AND LIQUIDITY

As of December 31, 2023, the Company had total principal debt outstanding of $1,263.5 million, including $311.0 million outstanding in the Company’s Sumitomo Credit Facility, $352.5 million outstanding of the debt issued through BCC Middle Market CLO 2019-1 LLC, $300.0 million outstanding in the Company’s senior unsecured notes due March 2026 and $300.0 million outstanding in the Company’s senior unsecured notes due October 2026.

For the three months ended December 31, 2023, the weighted average interest rate on debt outstanding was 5.3%, as compared to 5.4% for the three months ended September 30, 2023.

As of December 31, 2023, the Company had cash and cash equivalents (including foreign cash) of $49.4 million, restricted cash and cash equivalents of $63.1 million, $(7.1) million of unsettled trades, net of receivables and payables of investments, and $343.3 million of capacity under its Sumitomo Credit Facility. As of December 31, 2023, the Company had $266.1 million of undrawn investment commitments.

As of December 31, 2023, the Company’s debt-to-equity and net debt-to-equity ratios were 1.11x and 1.02x, respectively, as compared to 1.22x and 1.12x, respectively, as of September 30, 2023(2).

Endnotes

(1)Net investment income yields and net income returns are calculated on average net assets, or book value, for the respective periods shown.

(2)Net debt-to-equity represents principal debt outstanding less cash and cash equivalents and unsettled trades, net of receivables and payables of investments.

(3)The first quarter dividend is payable on April 30, 2024 to stockholders of record as of March 28, 2024.

(4)The weighted average yield is computed as (a) the annual stated interest rate or yield earned on the relevant accruing debt and other income producing securities plus amortization of fees and discounts on the performing debt and other income producing investments, divided by (b) the total relevant investments at amortized cost or fair value. The weighted average yield does not represent the total return to our stockholders.

(5)SLP acquired 70% of the member equity interests of the Company’s 2018-1 portfolio (“2018-1”). The Company retained 30% of the 2018-1 membership interests as a non-controlling equity interest.

 

CONFERENCE CALL INFORMATION

A conference call to discuss the Company’s financial results will be held live at 8:30 a.m. Eastern Time on February 28, 2024. Please visit BCSF’s webcast link located on the Events & Presentations page of the Investor Resources section of BCSF’s website at http://www.baincapitalspecialtyfinance.com for a slide presentation that complements the Earnings Conference Call.

Participants are also invited to access the conference call by dialing one of the following numbers:

•Domestic: 1-888-886-7786

•International: 1-416-764-8658

•Conference ID: 46709784

All participants will need to reference “Bain Capital Specialty Finance - Fourth Quarter and Fiscal Year Ended December 31, 2023 Earnings Conference Call” once connected with the operator. All participants are asked to dial in 10-15 minutes prior to the call.

Replay Information:

An archived replay will be available approximately three hours after the conference call concludes through March 6, 2024 via a webcast link located on the Investor Resources section of BCSF’s website, and via the dial-in numbers listed below:

•Domestic: 1-844-512-2921

•International: 1-412-317-6671

•Conference ID: 46709784

 

Bain Capital Specialty Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

	As of		As of
	December 31, 2023		December 31, 2022
Assets
Investments at fair value:
Non-controlled/non-affiliate investments (amortized cost of $1,615,061 and $1,846,172, respectively)	$	1,593,360	$	1,774,947
Non-controlled/affiliate investment (amortized cost of $132,650 and $133,808, respectively)		147,971		173,400
Controlled affiliate investment (amortized cost of $554,123 and $439,958, respectively)		557,012		438,630
Cash and cash equivalents		42,995		30,205
Foreign cash (cost of $6,865 and $34,528, respectively)		6,405		29,575
Restricted cash and cash equivalents		63,084		65,950
Collateral on forward currency exchange contracts		7,613		9,612
Deferred financing costs		2,802		3,742
Interest receivable on investments		37,169		34,270
Receivable for sales and paydowns of investments		4,310		18,166
Prepaid Insurance		210		194
Unrealized appreciation on forward currency exchange contracts		—		62
Dividend receivable		9,417		13,681
Total Assets	$	2,472,348	$	2,592,434
Liabilities
Debt (net of unamortized debt issuance costs of $7,567 and $10,197, respectively)	$	1,255,933	$	1,385,303
Interest payable		13,283		12,130
Payable for investments purchased		11,453		34,292
Unrealized depreciation on forward currency exchange contracts		2,260		—
Base management fee payable		8,929		8,906
Incentive fee payable		7,327		9,216
Accounts payable and accrued expenses		9,581		2,954
Distributions payable		27,116		23,242
Total Liabilities		1,335,882		1,476,043
Commitments and Contingencies (See Note 10)
Net Assets
Common stock, par value $0.001 per share, 100,000,000,000 and 100,000,000,000 shares authorized, 64,562,265 and 64,562,265 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively		65		65
Paid in capital in excess of par value		1,168,384		1,168,384
Total distributable loss		(31,983)		(52,058)
Total Net Assets		1,136,466		1,116,391
Total Liabilities and Total Net Assets	$	2,472,348	$	2,592,434
Net asset value per share	$	17.60	$	17.29

See Notes to Consolidated Financial Statements

 

Bain Capital Specialty Finance, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

	For the Year Ended December 31,
	2023		2022		2021
Income
Investment income from non-controlled/non-affiliate investments:
Interest from investments	$	184,921	$	138,984	$	153,703
Dividend income		62		634		514
PIK income		20,536		13,495		4,475
Other income		10,561		15,091		6,173
Total investment income from non-controlled/non-affiliate investments		216,080		168,204		164,865
Investment income from non-controlled/affiliate investments:
Interest from investments		9,890		7,470		1,818
Dividend income		4,815		4,109		—
PIK income		2,308		1,542		5,622
Total investment income from non-controlled/affiliate investments		17,013		13,121		7,440
Investment income from controlled affiliate investments:
Interest from investments		33,739		19,819		11,822
Dividend income		30,957		18,401		12,601
PIK income		—		—		666
Total investment income from controlled affiliate investments		64,696		38,220		25,089
Total investment income		297,789		219,545		197,394
Expenses
Interest and debt financing expenses		80,008		52,318		51,345
Base management fee		36,095		34,669		34,888
Incentive fee		25,456		19,572		24,028
Professional fees		2,561		2,959		2,854
Directors fees		716		707		725
Other general and administrative expenses		7,981		5,777		5,038
Total expenses before fee waivers		152,817		116,002		118,878
Base management fee waiver		—		—		(4,837)
Incentive fee waiver		—		—		(4,519)
Total expenses, net of fee waivers		152,817		116,002		109,522
Net investment income before taxes		144,972		103,543		87,872
Income tax expense, including excise tax		3,357		837		134
Net investment income		141,615		102,706		87,738
Net realized and unrealized gains (losses)
Net realized loss on non-controlled/non-affiliate investments		(62,903)		(1,725)		25,084
Net realized gain (loss) on non-controlled/affiliate investments (net of taxes of $4,064, $0 and $0, respectively)		19,006		(1,355)		—
Net realized loss on controlled affiliate investments		—		—		(3,858)
Net realized gain (loss) on foreign currency transactions		(5,134)		5,292		(3,496)
Net realized gain (loss) on forward currency exchange contracts		(407)		20,894		(23,773)
Net realized loss on extinguishment of debt		—		(747)		(4,859)
Net change in unrealized appreciation on foreign currency translation		4,050		(3,644)		(936)
Net change in unrealized appreciation on forward currency exchange contracts		(2,322)		(5,259)		27,935
Net change in unrealized appreciation on non-controlled/non-affiliate investments		49,524		(50,309)		(568)
Net change in unrealized appreciation on non-controlled/affiliate investments		(24,271)		27,190		12,576
Net change in unrealized appreciation on controlled affiliate investments		4,217		12,437		3,964
Total net gains (losses)		(18,240)		2,774		32,069

 

Net increase in net assets resulting from operations	$	123,375	$	105,480	$	119,807
Basic and diluted net investment income per common share	$	2.19	$	1.59	$	1.36
Basic and diluted increase in net assets resulting from operations per common share	$	1.91	$	1.63	$	1.86
Basic and diluted weighted average common shares outstanding		64,562,265		64,562,265		64,562,265

 

About Bain Capital Specialty Finance, Inc.

Bain Capital Specialty Finance, Inc. is an externally managed specialty finance company focused on lending to middle market companies. BCSF is managed by BCSF Advisors, LP, an SEC-registered investment adviser and a subsidiary of Bain Capital Credit, LP. Since commencing investment operations on October 13, 2016, and through December 31, 2023, BCSF has invested approximately $7.0 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits or repayments. BCSF’s investment objective is to generate current income and, to a lesser extent, capital appreciation through direct originations of secured debt, including first lien, first lien/last out, unitranche and second lien debt, investments in strategic joint ventures, equity investments and, to a lesser extent, corporate bonds. BCSF has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended.

Forward-Looking Statements

This letter may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this letter may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the U.S. Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this letter.

Investor Contact:

Katherine Schneider

Tel. (212) 803-9613

investors@baincapitalbdc.com

Media Contact:

Charlyn Lusk

Tel. (646) 502-3549

clusk@stantonprm.com

 

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Cover [Abstract]
Document Type	8-K
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Document Period End Date	Feb. 27, 2024
Entity Registrant Name	BAIN CAPITAL SPECIALTY FINANCE, INC.
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Entity Emerging Growth Company	false
Entity File Number	814-01175
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-2878769
Entity Address, Address Line One	200 Clarendon Street
Entity Address, Address Line Two	37th Floor
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Entity Address, State or Province	MA
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Pre-commencement Tender Offer	false
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Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	BCSF
Security Exchange Name	NYSE