James Keenan: Thank you, Chip. In summary, our transformed portfolio, coupled with prudent portfolio management and strong credit quality, has led to increased return on equity, as well as improved NAV stability. Furthermore, we are excited about the merger with TCPC and believe that the transaction will bolster the combined company’s abilities to generate strong returns for our shareholders. With that, we would like to now open the call for your questions.
Operator: Thank you. [Operator Instructions] We do have a caller in the queue. We’ll hear from Melissa Wedel from JP Morgan. Please go ahead.
Melissa Wedel: Good morning. Thanks for taking my questions today. I wanted to get your thoughts on the amount of repayment activity that you’re seeing in the portfolio. Are you surprised, especially in the rate environment that we’re in with base rates remaining so high, are you surprised to see the kind of repayment activity sort of outpacing new deployments?
Nik Singhal: Yes. Hi, Melissa, this is Nik. Thank you for the questions. In general, I would say that repayment activity can tend to be very lumpy quarter-over-quarter and just inherently unpredictable. Thematically, I would say in the rate environment that you refer to, it’s not easy for companies to get refinancing done, so we’re definitely seeing a slower pace of repayment. In the third quarter, there were some idiosyncratic items, and I would note three existing portfolio companies. For example, Cole Haan, Reveal, and one of the companies where we actually provided a new financing to these healthy, well-performing companies. They all had their idiosyncratic circumstances. One was a situation where the company consolidated their first and second lien loan into a new unit ranch facility.
Another was an acquisition add-on. So what you’ll see is that many of these repayments, also at corresponding entries as deployments in our schedule of investments. And so, that’s contributing to a somewhat elevated gross repayment number this quarter. Overall, I would say repayment activity is still at below historical levels.
Melissa Wedel: Sure. That makes sense. And then, in terms of the opportunities that you’re seeing in existing names in particular, can you – I mean, would the nature of those opportunities be similar to what you just described in terms of add-on financing, or are you seeing some extension and amendment potential as well?
Nik Singhal: Yes. So Melissa, predominantly, and deployment into existing companies has been a huge source of deployment for us. And it’s predominantly of the nature where we’re helping our companies grow. These are healthy companies. We are the incumbent lender. We have informational advantage. We have a relationship advantage. And that gives us an opportunity to deploy additional capital into these companies. I would say that if I just look at the last four to five quarters, the actual dollars deployed in terms of defensive capital have been very, very small compared to just normal course business as usual deployments into existing portfolio companies.
Melissa Wedel: Okay. I appreciate that context. If I could sneak in one more question related to the overlap in portfolios between BKCC and TCPC. To the extent that there is a lot of name overlap and similarity among positions and investments, but there might be some discrepancies on portfolio marks on a variety of names. To the extent that that exists, would you expect those marks to converge as you get further along in the process? Thank you very much.
Nik Singhal: Yes. Melissa, the difference that you see in valuation arises from a slightly different valuation policy. I think one BDC uses the midpoint and the other uses the bid side if there’s a two-way code [ph] available. It is our intent that for the purposes of the combination, when the final NAV will be struck, we will align the approach for both BDCs for the overlapping positions.
Melissa Wedel: And so with that, I guess the natural following question would be, does that imply a shift in the approach at BKCC to merge into sort of the TCPC methodology?
Nik Singhal: Yes. And since TCPC will be the surviving entity, again, we expect that TCPC’s valuation policy will carry forward to the combined entity.
Melissa Wedel: Okay. Thank you, Nik.
Operator: And at this time, there are no additional callers in the queue. I would like to thank everyone for their participation today for today’s conference. You may now disconnect.
