BlackRock Kelso Capital Corporation Declares Regular Quarterly Dividend of $0.26 per Share, Announces June 30, 2013 Quarterly

  BlackRock Kelso Capital Corporation Declares Regular Quarterly Dividend of
  $0.26 per Share, Announces June 30, 2013 Quarterly Financial Results

Business Wire

NEW YORK -- August 1, 2013

BlackRock Kelso Capital Corporation (NASDAQ:BKCC) (“BlackRock Kelso Capital”
or the “Company”, “we”, “us” or “our”) announced today that its Board of
Directors has declared a quarterly dividend of $0.26 per share payable on
October 3, 2013 to stockholders of record as of September 19, 2013.

BlackRock Kelso Capital also announced financial results for the quarter ended
June 30, 2013.

HIGHLIGHTS:

Investment Portfolio: $1,053.1 million
Net Assets: $694.5 million
Indebtedness (borrowings under credit facility, term loan, senior secured
notes & convertible notes): $314.9 million
Net Asset Value per share: $9.37

Portfolio Activity for the Quarter Ended June 30, 2013:
Cost of investments during period: $185.8 million
Sales, repayments and other exits during period: $199.1 million
Number of portfolio companies at end of period: 41

Operating Results for the Quarter Ended June 30, 2013:
Net investment income per share: $0.29
Dividends declared per share: $0.26
Earnings per share: $0.16
Net investment income: $21.2 million
Net realized and unrealized losses: $9.2 million
Net increase in net assets from operations: $12.0 million

Net investment income per share, as adjusted^1: $0.26
Net investment income, as adjusted^1: $19.1 million

_____________________
^1 Non-GAAP basis financial measure. See Supplemental Information on page 8.

Portfolio and Investment Activity

During the second quarter, we experienced some portfolio repayments driven by
an elevated amount of liquidity in the markets, which has contributed to a net
reduction in our overall portfolio for the quarter. We invested $185.8 million
during the three months ended June 30, 2013, and $231.8 million during the six
months ended June 30, 2013, a slight increase over the $221.7 million invested
during the same six month period one year ago. Sales, repayments and other
exits of investment principal totaled $199.1 million during the three months
ended June 30, 2013. In conjunction with the early repayments of certain of
our investments during the quarter, we recognized $4.5 million in fees and
prepayment penalties, increasing our 2013 total to $6.5 million, or $0.09 per
share. Although we experienced a net reduction in our overall portfolio this
quarter, we are pleased that our exits during the quarter were at par or
above, and had a blended IRR, or cash on cash return, in excess of twelve
percent.

At June 30, 2013, our portfolio consisted of 41 portfolio companies and was
invested 43% in senior secured loans, 21% in senior secured notes, 21% in
equity investments, 11% in unsecured or subordinated debt securities, and 4%
in cash and cash equivalents. As compared to March 31, 2013, our equity and
cash equivalents components increased 9% while our senior secured loans and
unsecured or subordinated debt securities declined 9%. The composition of our
portfolio invested in equity securities grew 5%, up from 16% last quarter end,
resulting primarily from appreciation in our existing investments, as well as
from additional equity securities received in connection with restructurings
during the quarter. Our average portfolio company investment at amortized
cost, excluding investments below $5.0 million, was approximately $22.6
million at June 30, 2013, down from $26.9 million at year end.

The weighted average yield of the debt and income producing equity securities
in our portfolio at its current cost basis was 12.1% at June 30, 2013. The
weighted average yields on our senior secured loans, and our other debt
securities at their current cost basis were 11.5% and 13.2%, respectively, at
June 30, 2013. Yields exclude common equity investments, preferred equity
investments with no stated dividend rate, short-term investments and cash and
cash equivalents. In certain of our portfolio companies, we hold equity
positions ranging from minority interests to majority stakes, which we expect
will contribute to our investment returns over time.

At June 30, 2013, we had $43.9 million in cash and cash equivalents, $334.0
million available under our senior secured, revolving credit facility, and
$36.3 million payable for investments purchased. Our leverage stood at 0.45
times at quarter end, a reduction from .50 times at year end, providing us
with available debt capacity under our asset coverage requirements of $371.8
million at June 30, 2013.

Results of Operations

Results comparisons are for the three and six months ended June 30, 2013 and
2012.

Investment Income

For the three and six months ended June 30, 2013, our portfolio generated
investment income of $36.1 million and $67.3 million, respectively. Of these
totals, $5.1 million and $7.8 million, respectively, was fee income earned due
to capital structuring, commitment and amendment fees, as well as prepayment
penalties and fees earned in connection with the early repayment of certain
investments. Remaining investment income, net of fees earned, was $31.0
million and $59.5 million for the respective periods, an increase of $2.7
million over the pre-fee levels earned during the first quarter of 2013.
Although there was a 0.3% decline in the weighted average yields of our income
producing securities over the prior quarter, there was still an increase in
pre-fee investment income due to the exits of certain of our higher yielding
assets occurring late in the quarter. Our current portfolio provides us with a
stable base of net investment income regardless of new investment activity and
associated fee income. Fee income also tends to be relatively consistent for
our business on an annual basis, although at times it may be somewhat lumpy
from quarter to quarter.

Expenses

Total expenses for the three and six months ended June 30, 2013 were $14.9
million and $33.1 million, respectively, versus $13.1 million and $27.3
million for the three and six months ended June 30, 2012. Of these totals, for
the three and six months ended June 30, 2013, $5.2 million and $10.5 million,
respectively, were base management fees, versus $5.5 million and $10.9 million
for the three and six months ended June 30, 2012.

Incentive management fees for the three and six months ended June 30, 2013
were $2.1 million and $7.3 million, respectively, as compared to zero and $2.2
million for the three and six months ended June 30, 2012. With respect to
incentive management fees based on income, $0.4 million and $1.9 million were
earned for the three and six months ended June 30, 2013, as compared to zero
and $2.2 million for the three and six months ended June 30, 2012. Although a
larger amount of net investment income was generated for the current trailing
four-fiscal quarter period, a proportionately larger amount of the income
based incentive management fee earned was already paid during the prior
periods, resulting in the smaller amount due and payable for the current
trailing four-fiscal quarter period. The remainder of the 2013 amount is $5.4
million in incentive management fees accrued based on a hypothetical capital
gains calculation, as required by GAAP. A hypothetical liquidation is
performed each quarter possibly resulting in an incentive management fee
accrual if the amount is positive. It should be noted, however, that a fee so
calculated and accrued is not due and payable, if at all, until the end of
each measurement period, or every June 30. As of the current June 30
measurement period end, no gains based incentive management fee is due and
payable. However, the increase in the accrual for the current period is the
result of $86.6 million of net unrealized appreciation on the balance sheet as
of quarter end.

Interest and credit facility related expenses were $4.9 million and $9.7
million, respectively, for the three and six months ended June 30, 2013,
compared to $5.0 and $9.7 million for the three and six months ended June 30,
2012. The comparable amounts reflect average debt outstanding of $313.9
million for the 2013 period at a weighted average cost of debt of 5.80%, as
compared to average debt outstanding of $375.6 million for the 2012 period
with a weighted average cost of debt of 4.96%.

Professional fees were $1.1 million and $0.5 million, respectively, for the
six month periods ended June 30, 2013 and 2012. The spike in professional fees
during the current period is due to a one-time legal fee accrual in connection
with a portfolio company.

Removing the incentive management fee accrual based on capital gains, total
expenses for the six months ended June 30, 2013 and 2012 were relatively
consistent at $27.7 million and $27.3 million, respectively. Expenses also
consist of investment advisor expenses, amortization of debt issuance costs,
administrative services expense, director fees and miscellaneous other
expenses.

Net Investment Income

Continuing our positive earnings momentum, net investment income totaled $21.2
million and $34.2 million, or $0.29 per share and $0.46 per share,
respectively, for the three and six months ended June 30, 2013. Included in
these amounts are $2.1 million and $7.3 million of aggregate incentive
management fees, as required to be accrued under GAAP. Excluding such fees,
and including $4.2 million and $6.3 million, respectively, of income based
incentive management fees, had they been accrued ratably throughout the year,
our net investment income, as adjusted, would have been $19.1 million, or
$0.26 per share, and $35.2 million, or $0.48 per share. On a trailing four
quarters basis, we continued to cover dividends paid out of our $1.04 per
share of adjusted net investment income. Our portfolio continues to produce a
stable amount of interest and dividend income relative to its size. Alternate
presentations of net investment income per share reflecting adjustments to
certain GAAP requirements can be found in the Supplemental table on page 8.

Net Realized Losses

Total net realized losses for the three and six months ended June 30, 2013
were $58.4 million and $58.2 million, respectively, compared to $75.9 million
and $76.2 million for the three and six months ended June 30, 2012. Nearly all
of our realized losses for the six months ended June 30, 2013 resulted from
the restructuring of our debt and equity investments in Bankruptcy Management
Solutions, Inc. and our debt investments in Dial Global, Inc. et. al. and AGY
Holding Corp., and nearly the entire amount had already been reflected in
unrealized depreciation on investments in prior periods. Details of the
restructurings are as follows:

  *During April 2013, we restructured our investment in the 13.0% second lien
    loan of Dial Global, Inc. et. al. (“Dial”) with a fair market value of
    $38.6 million prior to restructuring. Post restructuring we hold half of
    the second lien term loans A & B which will PIK at a blended rate in
    excess of 14.0%, approximately 50% of Dial’s 15.0% PIK preferred stock, as
    well as equity warrants that will vest over time, all with a combined
    total fair market value for the new holdings of $30.9 million.
    Additionally, we invested $31.5 million in a 12.0% priority second lien
    term loan valued at par as of June 30^th, and received a $0.5 million
    capital structuring fee in conjunction with our services performed in
    structuring the transaction. Dial is the largest network radio operator in
    the U.S.
  *During June 2013, we restructured our investments in the Bankruptcy
    Management Solutions, Inc. (“BMS”) first lien term loans A & B, second
    lien term loan and our controlling interest of the BMS common stock with
    an aggregate value of approximately $33.4 prior to the restructuring. Post
    restructuring, we hold a piece of first lien term loans A & B, as well as
    a controlling interest in the BMS common stock, and equity warrants with a
    combined total fair market value of $28.2 million as of June 30^th. BMS is
    the leading national provider of Chapter 7 bankruptcy case management
    solutions for bankruptcy trustees.
  *During June 2013, we restructured our investment in the 11.0% AGY Holding
    Corp. (“AGY”) senior secured second lien notes with a fair market value of
    approximately $25.7 million into an 11.0% senior secured second lien note
    and an interest in AGY’s 20.0% PIK preferred stock with a combined total
    fair market value in the new holdings of $23.7 million. Additionally, we
    purchased $8.0 million of the 12.0% senior secured second lien loan valued
    at par as of June 30^th. AGY is a leading manufacturer of glass yarn with
    applications in a diverse array of end markets.

Net Unrealized Appreciation or Depreciation

For the three and six months ended June 30, 2013, the change in net unrealized
appreciation on investments and foreign currency translation was an increase
in net unrealized appreciation of $49.2 million and $65.8 million,
respectively, versus $74.5 million and $76.1 million for the three and six
months ended June 30, 2012. Net unrealized appreciation at June 30, 2013 and
2012 was $86.6 million and $24.1 million, respectively. For the three months
ended June 30, 2013, while certain of our portfolio companies had strong
performance, there was underperformance in certain others, but we were pleased
with an improved overall health of our investment portfolio. Removing the
effects of reversals due to dispositions and restructurings during the
quarter, unrealized appreciation would have increased by $9.7 million from the
prior quarter.

Net Increase in Net Assets from Operations

The net increase in net assets from operations for the three and six months
ended June 30, 2013 was $12.0 million and $41.8 million, or $0.16 per share
and $0.56 per share, respectively. The net increase for the 2012 periods was
$21.0 million and $41.3 million, or $0.29 per share and $0.56 per share,
respectively. The increase for the latter 2013 period was reduced in part by
net realized and unrealized losses of $9.2 million. As compared to prior
periods, we earned a relatively stable base of investment income, but were
negatively impacted by the portfolio's net realized losses. Our net asset
value per share at June 30, 2013 was $9.37, an increase of $0.06 per share
over a $9.31 net asset value per share at year end.

Liquidity and Capital Resources

We have accomplished many of our strategic initiatives during the quarter,
including finalizing on favorable terms the restructuring of three portfolio
companies we have been actively engaged in since year end, and diversifying
our funding sources with a $10.0 million principal amount senior secured term
loan with attractive pricing. We are now in a position to utilize our
available debt capacity to increase net investment income without raising
additional equity capital.

On June 7, 2013, we entered into an additional $10.0 million of Senior Secured
Term Loan Credit Commitments. The term loan has a maturity date of May 31,
2018, and the interest rate applicable to borrowings is generally LIBOR plus
an applicable spread of 3.75%, or an alternate base rate, as defined in the
governing agreement, plus an applicable spread of 2.75%.

At June 30, 2013, we had approximately $7.6 million in cash and cash
equivalents, net of payables for investments purchased, $314.9 million in debt
outstanding and, subject to leverage and borrowing base restrictions, $334.0
million available for use under our amended and restated senior secured
revolving credit facility, which matures in March 2017. Relative to our $1.1
billion dollar portfolio at fair value, we continue to have sufficient debt
capacity to deploy in attractive investment opportunities. At June 30, 2013,
we were in compliance with regulatory coverage requirements with an asset
coverage ratio of 315% and were in compliance with all financial covenants
under our debt agreements. Cash provided by (used in) operating activities for
the six months ended June 30, 2013 and 2012 was $101.4 million and ($68.0)
million, respectively. In the near term, we expect to meet our liquidity needs
through use of the remaining availability under our credit facility, continued
cash flows from operations, and through periodic add-on equity and debt
offerings, as needed. The primary use of funds will be investments in
portfolio companies, reductions in debt outstanding and other general
corporate purposes.

Dividends

On July 31, 2013, our Board of Directors declared a quarterly dividend of
$0.26 per share, payable on October 3, 2013 to stockholders of record at the
close of business on September 19, 2013.

We continue to remain focused on our dividend coverage. Our net investment
income, as adjusted, was $0.26 per share for the three months ended June 30,
2013, relative to dividends declared of $0.26 per share for the same period.
Although challenging in today's environment, we remain confident that we will
be able to earn adjusted net investment income on an annual basis that
supports our dividend.

We have elected to be treated as a regulated investment company, or RIC, under
Subchapter M of the Internal Revenue Code. To maintain our status as a RIC, we
must distribute annually to our stockholders at least 90% of our investment
company taxable income; and to avoid an excise tax imposed on RICs, we must
distribute annually to our stockholders at least 98% of our ordinary income
and 98.2% of our net capital gains. As part of our strategic tax planning,
from time to time we are able to reduce our investment company taxable income
by losses taken on ordinary assets, thus minimizing the amount of taxable
income to be reported by our shareholders. Tax characteristics of all
dividends are reported to stockholders on Form 1099 after the end of the
calendar year. We have made, and intend to continue to make, timely
distributions sufficient to satisfy the annual distribution requirements to
maintain our qualification as a RIC. We also intend to make distributions of
net realized capital gains, if any, at least annually. We may, at our
discretion, carry forward taxable income in excess of calendar year
distributions and pay a 4% excise tax on this income. We will accrue excise
tax on estimated undistributed taxable income as required. There was no
undistributed taxable income carried forward from 2012.

Dividend Reinvestment Plan

We maintain an “opt out” dividend reinvestment plan for our common
stockholders. As a result, if we declare a dividend, stockholders’ cash
dividends will be automatically reinvested in additional shares of our common
stock, unless they specifically “opt out” of the dividend reinvestment plan so
as to receive cash dividends. With respect to our dividends paid to
stockholders for the six months ended June 30, 2013 and 2012, dividends
reinvested pursuant to our dividend reinvestment plan totaled $2.6 million and
$3.0 million, respectively.

Share Repurchase Plan

In 2008, our Board of Directors approved a share repurchase plan under which
we may repurchase up to 2.5% of our outstanding shares of common stock from
time to time in open market or privately negotiated transactions. In 2009, our
Board of Directors approved an extension and increase to the plan which
authorized us to repurchase up to an additional 2.5% of our outstanding shares
of common stock. In May 2013, the repurchase plan was further extended through
June 30, 2014, with 1,331,143 shares remaining authorized for repurchase.
There were no purchases under the plan during the three and six months ended
June 30, 2013. Since inception of the repurchase plan through June 30, 2013,
we have purchased 1,425,507 shares of our common stock on the open market for
$9.5 million, including brokerage commissions.

Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that from time to time we may purchase shares of our
common stock in the open market at prevailing market prices.

Conference Call

BlackRock Kelso Capital will host a webcast/teleconference at 4:30 p.m.
(Eastern Time) on Thursday August 1, 2013 to discuss its second quarter 2013
financial results. All interested parties are welcome to participate. You can
access the teleconference by dialing, from the United States, (800) 374-0176,
or from outside the United States, (706) 679-3431, shortly before 4:30 p.m.
and referencing the BlackRock Kelso Capital Corporation Conference Call (ID
Number 79034571). A live, listen-only webcast will also be available via the
investor relations section of www.blackrockkelso.com.

Both the teleconference and webcast will be available for replay by 5:30 p.m.
on Thursday, August 1, 2013 and ending at midnight on Thursday, August 8,
2013. To access the replay of the teleconference, callers from the United
States should dial (855) 859-2056 and callers from outside the United States
should dial (404) 537-3406 and enter the Conference ID Number 79034571. To
access the webcast, please visit the investor relations section of
www.blackrockkelso.com.

PRIOR TO THE WEBCAST/TELECONFERENCE, AN INVESTOR PRESENTATION THAT COMPLEMENTS
THE EARNINGS CONFERENCE CALL WILL BE POSTED TO BLACKROCK KELSO CAPITAL’S
WEBSITE WITHIN THE PRESENTATIONS SECTION OF THE INVESTOR RELATIONS PAGE
(http://www.blackrockkelso.com/InvestorRelations/Presentations/index.htm).


BlackRock Kelso Capital Corporation
Consolidated Statements of Assets and Liabilities
(Unaudited)
                                                      
                                                             
                                     June 30,                December 31,
                                     2013                    2012
Assets
Investments at fair value:
Non-controlled, non-affiliated
investments (cost of                 $ 727,324,583           $ 850,511,125
$714,608,812 and $849,028,227)
Non-controlled, affiliated
investments (cost of                   130,937,828             67,750,172
$90,152,187 and $50,983,674)
Controlled investments (cost
of $114,813,492 and                   150,958,439           143,336,244   
$137,337,392)
                                                             
Total investments at fair
value (cost of $919,574,491            1,009,220,850           1,061,597,541
and $1,037,349,293)
Cash and cash equivalents              43,851,523              9,122,141
Unrealized appreciation on
forward foreign currency               —                       369,417
contracts
Receivable for investments             15,551,952              504,996
sold
Interest receivable                    16,365,810              14,048,248
Prepaid expenses and other            9,507,016             4,375,527     
assets
                                                             
Total Assets                         $ 1,094,497,151        $ 1,090,017,870 
                                                             
Liabilities
Payable for investments              $ 36,251,309            $ 440,243
purchased
Debt                                   314,857,385             346,850,000
Interest payable                       7,504,197               5,277,132
Dividend distributions payable         19,265,446              19,196,418
Base management fees payable           5,189,226               5,626,893
Incentive management fees              11,285,066              20,277,930
payable
Accrued administrative                 271,136                 277,000
services
Other accrued expenses and            5,422,677             4,692,562     
payables
                                                             
Total Liabilities                     400,046,442           402,638,178   
                                                             
Net Assets
Common stock, par value $.001
per share, 200,000,000 common
shares authorized,
75,523,371 and 75,257,888
issued and 74,097,864 and              75,523                  75,258
73,832,381outstanding
Paid-in capital in excess of           921,279,979             917,534,577
par
Distributions in excess of net         (26,602,276   )         (22,291,022   )
investment income
Accumulated net realized loss          (277,451,631  )         (219,270,607  )
Net unrealized appreciation            86,625,790              20,808,162
(depreciation)
Treasury stock at cost,
1,425,507 and 1,425,507 shares        (9,476,676    )        (9,476,676    )
held
                                                             
Total Net Assets                      694,450,709           687,379,692   
                                                             
Total Liabilities and Net            $ 1,094,497,151        $ 1,090,017,870 
Assets
                                                             
Net Asset Value Per Share            $ 9.37                  $ 9.31
                                                                             

                                                                                              
BlackRock Kelso
Capital
Corporation            Three months          Three months          Six months            Six months

Consolidated           ended                 ended                 ended                 ended
Statements of          June 30, 2013         June 30, 2012         June 30, 2013         June 30, 2012
Operations
(Unaudited)
Investment                                                        
Income:
Interest income:
Non-controlled,
non-affiliated         $ 26,914,678          $ 28,049,784          $ 51,746,787          $ 54,258,960
investments
Non-controlled,
affiliated               1,134,866             1,484,764             2,082,871             3,015,943
investments
Controlled               2,394,997             1,777,957             4,938,544             3,430,697
investments
Total interest          30,444,541           31,312,505           58,768,202           60,705,600
income
Fee income:
Non-controlled,
non-affiliated          4,807,160             3,708,563             7,548,819             7,088,175
investments
Non-controlled,
affiliated               —                     66,682                —                     133,364
investments
Controlled              267,933             39,245              288,680             78,491      
investments
Total fee income        5,075,093           3,814,490           7,837,499           7,300,030   
Dividend income:
Non-controlled,
non-affiliated           542,750               339,282               586,185               667,312
investments
Non-controlled,
affiliated               73,839                —                     73,839                —
investments
Controlled              —                   —                   —                   —           
investments
Total dividend          616,589             339,282             660,024             667,312     
income
Total investment        36,136,223          35,466,277          67,265,725          68,672,942  
income
                                                                                                             
Expenses:
Base management          5,189,226             5,522,189             10,539,182            10,912,637
fees
Interest and
credit facility          4,915,024             5,024,200             9,673,040             9,737,143
fees
Incentive                2,069,605             —                     7,333,715             2,213,859
management fees
Amortization of
debt issuance            496,542               627,780               862,548               1,255,559
costs
Investment               482,745               488,961               1,040,843             852,646
advisor expenses
Professional             476,223               384,677               1,106,420             503,531
fees
Administrative           181,825               170,203               433,141               252,534
services
Director fees            161,500               112,797               279,500               233,563
Other                   943,679             752,233             1,813,404           1,304,021   
                                                                                                             
Total expenses          14,916,369          13,083,040          33,081,793          27,265,493  
                                                                                                             
Net Investment          21,219,854          22,383,237          34,183,932          41,407,449  
Income
                                                                                                             
Realized and
Unrealized Gain
(Loss):
Net realized
gain (loss):
Non-controlled,
non-affiliated           (26,340,317 )         (75,324,493 )         (26,287,812 )         (75,335,590 )
investments
Non-controlled,
affiliated               —                     (181,608    )         21                    (317,905    )
investments
Controlled               (32,659,817 )         —                     (32,660,160 )         —
investments
Foreign currency        605,768             (409,137    )        766,927             (579,712    )
                                                                                                             
Net realized            (58,394,366 )        (75,915,238 )        (58,181,024 )        (76,233,207 )
loss
                                                                                                             
Net change in
unrealized
appreciation or
depreciation on:
Non-controlled,
non-affiliated           16,270,922            72,311,953            22,003,879            78,884,010
investments
Non-controlled,
affiliated               9,604,746             2,575,713             24,019,143            1,013,104
investments
Controlled               23,958,104            (1,153,154  )         20,180,439            (5,269,379  )
investments
Foreign currency        (635,863    )        779,629             (385,833    )        1,478,407   
translation
                                                                                                             
Net change in
unrealized              49,197,909          74,514,141          65,817,628          76,106,142  
appreciation or
depreciation
                                                                                                             
Net realized and
unrealized gain         (9,196,457  )        (1,401,097  )        7,636,604           (127,065    )
(loss)
                                                                                                             
Net Increase in
Net Assets             $ 12,023,397         $ 20,982,140         $ 41,820,536         $ 41,280,384  
Resulting from
Operations
                                                                                                             
Net Investment
Income Per Share       $ 0.29               $ 0.30               $ 0.46               $ 0.56        
– basic
                                                                                                             
Earnings Per           $ 0.16               $ 0.29               $ 0.56               $ 0.56        
Share - basic
                                                                                                             
Weighted-Average
Shares                  74,096,355          73,553,800          74,027,408          73,485,712  
Outstanding -
basic
                                                                                                             
Net Investment
Income Per Share       $ 0.27               $ 0.30               $ 0.45               $ 0.56        
- diluted
                                                                                                             
Earnings Per           $ 0.16               $ 0.29               $ 0.54               $ 0.56        
Share - diluted
                                                                                                             
Weighted-Average
Shares                  83,993,082          73,553,800          81,190,233          73,485,712  
Outstanding -
diluted
                                                                                                             
Dividends
Declared Per           $ 0.26                $ 0.26                $ 0.52                $ 0.52
Share
                                                                                                             

The Company reports its financial results on a GAAP basis; however, management
believes that evaluating the Company’s ongoing operating results may be
enhanced if investors have additional non-GAAP basis financial measures.
Management reviews non-GAAP financial measures to assess ongoing operations
and, for the reasons described below, considers them to be effective
indicators, for both management and investors, of the Company’s financial
performance over time. The Company’s management does not advocate that
investors consider such non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP.

The Company records its liability for incentive management fees based on
income as it becomes legally obligated to pay them, based on a hypothetical
liquidation at the end of each reporting period. The Company’s obligation to
pay incentive management fees with respect to any fiscal quarter is based on a
formula that reflects the Company’s results over a trailing four-fiscal
quarter period ending with the current fiscal quarter. The Company is legally
obligated to pay the amount resulting from the formula less any cash payments
of incentive management fees during the prior three quarters. The formula’s
requirement to reduce the incentive management fee by amounts paid with
respect to such fees in the prior three quarters has caused the Company’s
incentive management fee expense to become, and currently is expected to be,
concentrated in the fourth quarter of each year. Management believes that
reflecting incentive management fees throughout the year, as the related
investment income is earned, is an effective measure of the Company’s
profitability and financial performance that facilitates comparison of current
results with historical results and with those of the Company’s peers. The
Company’s “as adjusted” results reflect incentive management fees based on the
formula the Company utilizes for each trailing four-fiscal quarter period,
with the formula applied to the current quarter’s incremental earnings and
without any reduction for incentive management fees paid during the prior
three quarters. The resulting amount represents an upper limit of each
quarter’s incremental incentive management fees that the Company may become
legally obligated to pay at the end of the year. Prior year amounts are
estimated in the same manner. These estimates represent upper limits because,
in any calendar year, subsequent quarters’ investment underperformance could
reduce the incentive management fees payable by the Company with respect to
prior quarters’ operating results. Similarly, the Company records its
liability for incentive management fees based on capital gains by performing a
hypothetical liquidation at the end of each reporting period. The accrual of
this hypothetical capital gains incentive management fee is required by GAAP,
but it should be noted that a fee so calculated and accrued is not due and
payable until the end of the measurement period, or every June 30. The
incremental incentive management fees disclosed for a given period are not
necessarily indicative of actual full year results. Changes in the economic
environment, financial markets and other parameters used in determining such
estimates could cause actual results to differ and such differences could be
material. For a more detailed description of the Company’s incentive
management fee, please refer to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2012 on file with the Securities and
Exchange Commission ("SEC").

Computations for the periods below are derived from the Company's financial
statements as follows:

                                                                               
                    Three months       Three months       Six months         Six months

                    ended              ended              ended              ended
                    June 30,           June 30,           June 30,           June 30,
                    2013               2012               2013               2012
GAAP Basis:
Net
Investment          $ 21,219,854       $ 22,383,237       $ 34,183,932       $ 41,407,449
Income
Net
Investment            0.29               0.30               0.46               0.56
Income per
share
                                                                                              
Addback: GAAP
incentive
management            1,695,021          —                  5,415,747          —
fee expense
based on
Gains
Addback: GAAP
incentive
management            374,584            —                  1,917,968          2,213,859
fee expense
based on
Income
                                                                                              
Pre-Incentive
Fee^2:
Net
Investment          $ 23,289,459       $ 22,383,237       $ 41,517,647       $ 43,621,308
Income
Net
Investment            0.31               0.30               0.56               0.59
Income per
share
                                                                                              
Less:
Incremental
incentive
management            4,178,233          3,822,955          6,276,473          6,412,379
fee expense
based on
Income
                                                                                              
As
Adjusted^1:
Net
Investment          $ 19,111,226       $ 18,560,282       $ 35,241,174       $ 37,208,929
Income
Net
Investment            0.26               0.25               0.48               0.51
Income per
share
                                                                                              

  
      As Adjusted^1: Amounts are adjusted to remove the incentive management
      fee expense based on Gains, as required by GAAP, and to include only the
      incremental incentive management fee expense based on Income. The
      incremental incentive management fee is based on the formula the Company
      utilizes for each trailing four-fiscal quarter period, with the formula
      applied to the current quarter's incremental earnings, and without any
      reduction for incentive management fees paid during the prior three
      quarters. Amounts reflect the Company's ongoing operating results and
      are the most effective indicator of the Company's financial performance
      over time.
      Pre-Incentive Fee^2: Amounts are adjusted to remove all incentive
      management fees. Such fees are calculated but not necessarily due and
      payable at this time.
      

About BlackRock Kelso Capital Corporation

BlackRock Kelso Capital Corporation is a business development companythat
provides debt and equity capital to middle-market companies.

The Company's investment objective is to generate both current income and
capital appreciation through debt and equity investments. The Company invests
primarily in middle-market companies in the form of senior and junior secured
and unsecured debt securities and loans, each of which may include an equity
component, and by making direct preferred, common and other equity investments
in such companies.

Forward-Looking Statements

This press release, and other statements that BlackRock Kelso Capital may
make, may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act, with respect to BlackRock Kelso Capital’s
future financial or business performance, strategies or expectations.
Forward-looking statements are typically identified by words or phrases such
as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,”
“expect,” “anticipate,” “current,” “intention,” “estimate,” “position,”
“assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,”
“achieve,” and similar expressions, or future or conditional verbs such as
“will,” “would,” “should,” “could,” “may” or similar expressions.

BlackRock Kelso Capital cautions that forward-looking statements are subject
to numerous assumptions, risks and uncertainties, which change over time.
Forward-looking statements speak only as of the date they are made, and
BlackRock Kelso Capital assumes no duty to and does not undertake to update
forward-looking statements. Actual results could differ materially from those
anticipated in forward-looking statements and future results could differ
materially from historical performance.

In addition to factors previously disclosed in BlackRock Kelso Capital's SEC
reports and those identified elsewhere in this press release, the following
factors, among others, could cause actual results to differ materially from
forward-looking statements or historical performance: (1) our future operating
results; (2) our business prospects and the prospects of our portfolio
companies; (3) the impact of investments that we expect to make; (4) our
contractual arrangements and relationships with third parties; (5) the
dependence of our future success on the general economy and its impact on the
industries in which we invest; (6) the ability of our portfolio companies to
achieve their objectives; (7) our expected financings and investments; (8) the
adequacy of our cash resources and working capital, including our ability to
obtain continued financing on favorable terms; (9) the timing of cash flows,
if any, from the operations of our portfolio companies; (10) the impact of
increased competition; (11) the ability of our investment advisor to locate
suitable investments for us and to monitor and administer our investments;
(12) potential conflicts of interest in the allocation of opportunities
between us and other investment funds managed by our investment advisor or its
affiliates; (13) the ability of our investment advisor to attract and retain
highly talented professionals; (14) fluctuations in foreign currency exchange
rates; and (15) the impact of changes to tax legislation and, generally, our
tax position.

BlackRock Kelso Capital’s Annual Report on Form 10-K for the year ended
December 31, 2012 filed with the SEC identifies additional factors that can
affect forward-looking statements.

Available Information

BlackRock Kelso Capital’s filings with the SEC, press releases, earnings
releases and other financial information are available on its website at
www.blackrockkelso.com. The information contained on our website is not a part
of this press release.

Contact:

BlackRock Kelso Capital Corporation
Investor:
Corinne Pankovcin, 212-810-5798
or
Press:
Brian Beades, 212-810-5596