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

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

Business Wire

NEW YORK -- November 7, 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
January 3, 2014 to stockholders of record as of December 20, 2013.

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

                                                         
HIGHLIGHTS:

Investment Portfolio: $1,152.8 million
Net Assets: $696.3 million
Indebtedness (borrowings under credit facility, term loan, senior secured
notes & convertible notes): $412.9 million
Net Asset Value per share: $9.38

Portfolio Activity for the Quarter Ended September 30,
2013:
Cost of investments during period: $133.1 million
Sales, repayments and other exits during period: $16.0
million
Number of portfolio companies at end of period: 47

Operating Results for the Quarter Ended September 30,
2013:
Net investment income per share: $0.12
Dividends declared per share: $0.26
Earnings per share: $0.27
Net investment income: $8.9 million
Net realized and unrealized gains: $11.0 million
Net increase in net assets from operations: $19.8
million

Net investment income per share, as adjusted^1: $0.22
Net investment income, as adjusted^1: $16.1 million
                                                                    

Portfolio and Investment Activity

We had a strong third quarter for new investments, experiencing a net increase
in our overall portfolio for the quarter of $117.1 million. We invested $133.1
million during the three months ended September 30, 2013, and $365.0 million
during the nine months ended September 30, 2013, a 53.0% increase over the
$238.5 million invested during the same nine month period one year ago. In
conjunction with certain of our investments, we recognized $2.3 million in
capital structuring fees during the quarter, increasing our 2013 fee total to
$10.2 million, or $0.14 per share. Sales, repayments and other exits of
investment principal during the three months ended September 30, 2013 were at
a three year low totaling $16.0 million. We are pleased that such exits during
the quarter were at par or above, and produced a blended IRR, or cash on cash
return, in excess of twelve percent.

During the quarter, we also finalized the restructuring of a portfolio company
we have been actively engaged in since year end. Details of the transaction
are as follows:

  *During July 2013, we restructured our investment in the 16.0% first lien
    term loan of The Bargain! Shop Holdings Inc. (“TBS”). We completed the
    purchase of substantially all of TBS assets through a newly-formed entity
    called Red Apple Stores Inc. (“Red Apple”). The majority of the existing
    term loan was converted into $20.0 million of a new 16.0% senior secured
    term loan and the remaining $1.5 million was converted to common equity.
    Additionally, we contributed $12.0 million to Red Apple in the form of a
    $5.0 million 18.0% subordinated PIK note and another $7.0 million for a
    controlling interest in its common equity. The entire investment was
    valued at par as of September 30, 2013. We also received a $1.3 million
    capital structuring fee in conjunction with our services performed in
    structuring the transaction.

At September 30, 2013, our portfolio consisted of 47 portfolio companies and
was invested 48% in senior secured loans, 21% in equity investments, 19% in
senior secured notes, 11% in unsecured or subordinated debt securities, and 1%
in cash and cash equivalents. As compared to the prior quarter, the
composition of our portfolio invested in senior secured loans increased 5%
while our senior secured notes and cash equivalents components declined 5%.
Our average portfolio company investment at amortized cost, excluding
investments below $5.0 million, was approximately $21.6 million at September
30, 2013, down from $22.6 million at the prior quarter end.

The weighted average yield of the debt and income producing equity securities
in our portfolio at its current cost basis was 11.7% at September 30, 2013
versus 12.1% at the prior quarter end. The weighted average yields on our
senior secured loans, and our other debt securities at their current cost
basis were 10.9% and 13.2%, respectively, at September 30, 2013. The 40 basis
point decline in our total portfolio yield during the current quarter was
anticipated as we shifted the composition of our portfolio into slightly lower
yielding more senior loans. 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. We are also now better positioned to benefit in a rising rate
environment as the percentage of our debt portfolio invested in floating rate
securities shifted up 5.9% this quarter to 47.5%.

At September 30, 2013, we had $13.7 million in cash and cash equivalents,
$236.0 million available under our senior secured, revolving credit facility,
and $30.7 million payable for investments purchased. Our leverage stood at
0.59 times at quarter end providing us with available debt capacity under our
asset coverage requirements of $279.7 million at September 30, 2013.

Results of Operations

Results comparisons are for the three and nine months ended September 30, 2013
and 2012.

Investment Income

For the three and nine months ended September 30, 2013, our portfolio
generated investment income of $31.4 million and $98.6 million, respectively.
Of these totals, $2.4 million and $10.2 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
$29.0 million and $88.4 million for the respective periods, a $0.01 per share
decline for the quarter from the three month average pre-fee level of $0.40
per share earned during the first half of 2013. Although there was a decline
in the weighted average yields of our income producing securities over the
prior quarter, it was partially offset by the $117.1 million growth in our
asset base during 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. Fee income earned for the 2012 and 2011 annual
periods has been relatively consistent at $20.7 million, or $0.28 per share,
and $22.0 million, or $0.30 per share, respectively.

Expenses

Total expenses for the three and nine months ended September 30, 2013 were
$22.5 million and $55.6 million, respectively, versus $16.8 million and $44.0
million for the three and nine months ended September 30, 2012. Of these
totals, for the three and nine months ended September 30, 2013, $5.3 million
and $15.8 million, respectively, were base management fees, versus $6.0
million and $16.9 million for the three and nine months ended September 30,
2012.

Incentive management fees for the three and nine months ended September 30,
2013 were $9.4 million and $16.7 million, respectively, as compared to $3.0
million and $5.2 million for the three and nine months ended September 30,
2012. With respect to incentive management fees based on income, $1.9 million
and $2.2 million were earned for the respective nine month periods ending
September 30, 2013 and 2012, while no such fees were earned for the comparable
three month periods. The remainder for the three and nine months ended
September 30, 2013 represents incentive management fees accrued based on a
hypothetical capital gains calculation, as required by GAAP, of $9.4 million
and $14.8 million, respectively, as compared to $3.0 million for each of the
three and nine month periods ending September 30, 2012. 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 June 30, 2013
measurement period end, no gains based incentive management fee was due and
payable. However, the increase in the accrual for the current quarter is the
result of $97.5 million of net unrealized appreciation on the balance sheet as
of quarter end.

Interest and credit facility related expenses were $5.5 million and $15.1
million, respectively, for the three and nine months ended September 30, 2013,
compared to $5.2 and $14.9 million for the three and nine months ended
September 30, 2012. The comparable amounts reflect average debt outstanding of
$334.4 million for the nine month 2013 period at a weighted average cost of
debt of 5.68%, as compared to average debt outstanding of $390.7 million for
the 2012 period with a weighted average cost of debt of 4.87%.

Professional fees were $1.6 million and $1.1 million, respectively, for the
nine month periods ended September 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 nine months ended September 30, 2013 and 2012 were relatively
consistent at $40.8 million and $41.0 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

Net investment income (“NII”) totaled $8.9 million and $43.1 million, or $0.12
per share and $0.58 per share, respectively, for the three and nine months
ended September 30, 2013. Included in these amounts are $9.4 million and $16.7
million of aggregate incentive management fees, as required to be accrued
under GAAP. Excluding such fees, and including $2.1 million and $8.4 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 $16.1 million, or $0.22 per share, and $51.4 million, or $0.69 per
share. On a trailing four quarters basis, our net investment income, as
adjusted, is $0.96 per share, as compared to $1.04 per share one quarter
earlier. The decline is due to exits of some of our higher yielding assets in
the recent quarters, as well as the timing of fees earned in conjunction with
early repayments of certain portfolio companies over the last twelve month
period. 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 Gain or Loss

Total net realized gain or loss for the three and nine months ended September
30, 2013 was a gain of $0.1 million and a loss of $58.0 million, respectively,
compared to a gain of $2.8 million and a loss of $73.4 million for the three
and nine months ended September 30, 2012. Nearly all of our realized losses
for the nine months ended September 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.

Net Unrealized Appreciation or Depreciation

For the three and nine months ended September 30, 2013, the change in net
unrealized appreciation on investments and foreign currency translation was an
increase (decrease) in net unrealized appreciation of $10.8 million and $76.6
million, respectively, versus ($12.4) million and $63.7 million for the three
and nine months ended September 30, 2012. Net unrealized appreciation at
September 30, 2013 and 2012 was $97.5 million and $11.7 million, respectively.
The current unrealized appreciation in the portfolio marks the highest levels
experienced since the Company’s inception. For the three months ended
September 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 and believe our
portfolio credit quality to be solid.

Net Increase in Net Assets from Operations

The net increase in net assets from operations for the three and nine months
ended September 30, 2013 was $19.8 million and $61.7 million, or $0.27 per
share and $0.83 per share, respectively. The net increase in net assets for
the same 2012 periods was $14.3 million and $55.6 million, or $0.19 per share
and $0.76 per share, respectively. As compared to prior periods, the decline
in net investment income was partially offset by net realized and unrealized
gains for the period. Our GAAP earnings helped drive our net asset value per
share up $0.01 to $9.38 per share at September 30, 2013. This was a further
increase over our $9.31 net asset value per share at year end.

Liquidity and Capital Resources

At September 30, 2013, we had approximately $13.7 million in cash and cash
equivalents, $30.7 million in payables for investments purchased, $412.9
million in debt outstanding and, subject to leverage and borrowing base
restrictions, $236.0 million available for use under our amended and restated
senior secured revolving credit facility, which matures in March 2017.
Relative to our $1.2 billion dollar portfolio at fair value, we continue to
have sufficient debt capacity to deploy in attractive investment
opportunities. At September 30, 2013, we were in compliance with regulatory
coverage requirements with an asset coverage ratio of 267% and were in
compliance with all financial covenants under our debt agreements. 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 November 5, 2013, our Board of Directors declared a quarterly dividend of
$0.26 per share, payable on January 3, 2014 to stockholders of record at the
close of business on December 20, 2013.

We continue to remain focused on our dividend coverage, although challenging
in today’s environment. Our net investment income, as adjusted, was $0.22 per
share for the three months ended September 30, 2013, relative to dividends
declared of $0.26 per share for the same period, resulting in NII dividend
coverage of 83%. Net investment income, as adjusted, for the nine months ended
September 30, 2013 was $51.4 million versus dividends declared of $57.8
million for dividend coverage of 89% for 2013 thus far. Net increase in net
assets from operations for the three and nine months ended September 30, 2013
was $0.27 and $0.83 per share, respectively, resulting in dividend coverage of
103% and 107%, respectively. While net short term capital gains are a
component of a RIC’s annual distribution requirement, we anticipate having
sufficient short and long term capital loss carryforwards to eliminate
potential future capital gains distributions, thus providing available cash
from which to cover a shortfall in cash adjusted NII dividend coverage, if
any.

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.

For more information on our dividends, please refer to the Section 19 Notice
that will be posted to BlackRock Kelso Capital’s website within the
Distribution History section of the Investor Relations page
(http://www.blackrockkelso.com/InvestorRelations/DistributionHistory/index.htm).

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 nine months ended September 30, 2013 and 2012, dividends
reinvested pursuant to our dividend reinvestment plan totaled $3.9 million and
$4.3 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 nine months ended
September 30, 2013. Since inception of the repurchase plan through September
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 November 7, 2013 to discuss its third 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 29135516). 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 7:30 p.m.
on Thursday, November 7, 2013 and ending at midnight on Thursday, November 14,
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 29135516. 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)
                                                               
                                                               
                                       September 30,        December 31,
                                         2013                  2012
Assets
Investments at fair value:
Non-controlled, non-affiliated
investments (cost of                   $ 802,818,060         $ 850,511,125
$791,002,833 and $849,028,227)
Non-controlled, affiliated
investments (cost of $98,337,878         143,726,372           67,750,172
and $50,983,674)
Controlled investments (cost of          192,543,797          143,336,244   
$149,890,939 and $137,337,392)
                                                               
Total investments at fair value
(cost of $1,039,231,650 and              1,139,088,229         1,061,597,541
$1,037,349,293)
Cash and cash equivalents                13,727,451            9,122,141
Unrealized appreciation on
forward foreign currency                 —                     369,417
contracts
Receivable for investments sold          10,357,911            504,996
Interest receivable                      18,739,382            14,048,248
Prepaid expenses and other               11,666,665           4,375,527     
assets
                                                               
Total Assets                           $ 1,193,579,638      $ 1,090,017,870 
                                                               
Liabilities
Payable for investments                $ 30,675,753          $ 440,243
purchased
Debt                                     412,919,440           346,850,000
Interest payable                         3,365,354             5,277,132
Dividend distributions payable           19,302,790            19,196,418
Base management fees payable             5,286,986             5,626,893
Incentive management fees                20,269,011            20,277,930
payable
Accrued administrative services          221,967               277,000
Other accrued expenses and               5,238,135            4,692,562     
payables
                                                               
Total Liabilities                        497,279,436          402,638,178   
                                                               
Net Assets
Common stock, par value $.001
per share, 200,000,000 common
shares authorized,                       75,667                75,258
75,667,000 and 75,257,888 issued
and 74,241,493 and 73,832,381
outstanding
Paid-in capital in excess of par         922,588,375           917,534,577
Distributions in excess of               (37,031,405   )       (22,291,022   )
taxable net investment income
Accumulated net realized loss            (277,308,567  )       (219,270,607  )
Net unrealized appreciation              97,452,808            20,808,162
Treasury stock at cost,
1,425,507 and 1,425,507 shares           (9,476,676    )       (9,476,676    )
held
                                                               
Total Net Assets                         696,300,202          687,379,692   
                                                               
Total Liabilities and Net Assets       $ 1,193,579,638      $ 1,090,017,870 
                                                               
Net Asset Value Per Share              $ 9.38                $ 9.31
                                                                             
                                                                             

                                                                         
                                                                                    
BlackRock Kelso
Capital                  Three months       Three months        Nine months         Nine months
Corporation              ended              ended               ended               ended
Consolidated             September 30,      September 30,       September 30,       September 30,
Statement of             2013               2012                2013                2012
Operations
(Unaudited)
Investment
Income:
Interest income:
Non-controlled,
non-affiliated           $ 21,370,250       $ 27,543,637        $ 73,117,037        $ 81,802,597
investments
Non-controlled,
affiliated                 3,876,098          1,037,387           5,958,969           4,053,330
investments
Controlled                2,702,931        3,071,070         7,641,475         6,501,767   
investments
                                                                                    
Total interest             27,949,279         31,652,094          86,717,481          92,357,694
income
Fee income:
Non-controlled,
non-affiliated             29,875             8,369,140           7,578,694           15,457,315
investments
Non-controlled,
affiliated                 —                  602,344             —                   735,708
investments
Controlled                2,350,000        57,679            2,638,680         136,170     
investments
                                                                                    
Total fee income          2,379,875        9,029,163         10,217,374        16,329,193  
                                                                                    
Dividend income:
Non-controlled,
non-affiliated             640,163            38,845              1,226,348           706,157
investments
Non-controlled,
affiliated                 413,302            —                   487,141             —
investments
Controlled                —                —                 —                 —           
investments
                                                                                    
Total dividend            1,053,465        38,845            1,713,489         706,157     
income
                                                                                    
Total investment          31,382,619       40,720,102        98,648,344        109,393,044 
income
                                                                                    
Expenses:
Incentive                  9,358,529          2,963,803           16,692,244          5,177,662
management fees
Interest and
credit facility            5,455,017          5,180,706           15,128,057          14,917,849
fees
Base management            5,286,986          5,964,904           15,826,168          16,877,541
fees
Amortization of
debt issuance              568,678            634,677             1,431,226           1,890,236
costs
Professional               541,180            577,051             1,647,600           1,080,582
fees
Investment                 479,871            511,774             1,520,714           1,364,420
advisor expenses
Director fees              194,500            113,500             474,000             347,063
Administrative             174,288            164,074             607,429             416,608
services
Other                     449,909          671,341           2,263,313         1,975,362   
                                                                                    
Total expenses            22,508,958       16,781,830        55,590,751        44,047,323  
                                                                                    
Net Investment            8,873,661        23,938,272        43,057,593        65,345,721  
Income
                                                                                    
Realized and
Unrealized Gain
(Loss):
Net realized
gain (loss):
Non-controlled,
non-affiliated             307,321            (4,417      )       (25,980,491 )       (75,340,007 )
investments
Non-controlled,
affiliated                 —                  2,441,751           21                  2,123,846
investments
Controlled                 769,604            —                   (31,890,556 )       —
investments
Foreign currency          (933,861   )      362,009           (166,934    )      (217,703    )
                                                                                    
Net realized              143,064          2,799,343         (58,037,960 )      (73,433,864 )
gain (loss)
                                                                                    
Net change in
unrealized
appreciation or
depreciation:
Non-controlled,
non-affiliated             (408,094   )       (1,814,151  )       21,595,785          77,069,859
investments
Non-controlled,
affiliated                 4,602,853          5,287,500           28,621,996          6,300,604
investments
Controlled                 6,507,911          (14,735,396 )       26,688,350          (20,004,775 )
investments
Foreign currency          124,348          (1,146,461  )      (261,485    )      331,946     
translation
                                                                                    
Net change in
unrealized                10,827,018       (12,408,508 )      76,644,646        63,697,634  
appreciation or
depreciation
                                                                                    
Net realized and
unrealized gain           10,970,082       (9,609,165  )      18,606,686        (9,736,230  )
(loss)
                                                                                    
Net Increase in
Net Assets               $ 19,843,743      $ 14,329,107       $ 61,664,279       $ 55,609,491  
Resulting from
Operations
                                                                                    
Net Investment
Income Per Share         $ 0.12            $ 0.32             $ 0.58             $ 0.89        
- basic
                                                                                    
Earnings Per             $ 0.27            $ 0.19             $ 0.83             $ 0.76        
Share – basic
                                                                                    
Basic and
Diluted
Weighted-Average          74,239,932       73,692,104        74,099,028        73,555,011  
Shares
Outstanding -
basic
                                                                                    
Net Investment
Income Per Share         $ 0.12            $ 0.32             $ 0.57             $ 0.89        
- diluted
                                                                                    
Earnings Per             $ 0.26            $ 0.19             $ 0.80             $ 0.76        
Share – diluted
                                                                                    
Basic and
Diluted
Weighted-Average           84,136,659         73,692,104          82,183,168          73,555,011
Shares
Outstanding -
diluted
Dividends
Declared Per             $ 0.26             $ 0.26              $ 0.78              $ 0.78
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     Nine months      Nine months

                      ended            ended            ended            ended
                      September        September        September        September
                      30, 2013         30, 2012         30, 2013         30, 2012
GAAP Basis:
Net
Investment            $ 8,873,661      $ 23,938,272     $ 43,057,593     $ 65,345,721
Income
Net
Investment              0.12             0.32             0.58             0.89
Income per
share
                                                                         
Addback: GAAP
incentive
management              9,358,529        2,963,803        14,774,276       2,963,803
fee expense
based on
Gains
Addback: GAAP
incentive
management              —           —           1,917,968        2,213,859
fee expense
based on
Income
                                                                         
Pre-Incentive
Fee^2:
Net
Investment            $ 18,232,190     $ 26,902,075     $ 59,749,837     $ 70,523,383
Income
Net
Investment              0.25             0.37             0.81             0.96
Income per
share
                                                                         
Less:
Incremental
incentive
management              2,114,510        5,013,423        8,390,983        11,425,802
fee expense
based on
Income
                                                                         
As
Adjusted^1:
Net
Investment            $ 16,117,680     $ 21,888,652     $ 51,358,854     $ 59,097,581
Income
Net
Investment              0.22             0.30             0.69             0.80
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 the incremental
incentive management fee expense based on Income. The incremental incentive
management fee is based on each trailing four-fiscal quarter period, 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 reflect 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.

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

Contact:

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