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Eagle Point Credit Company Inc. Announces Second Quarter 2017 Financial Results and Special Distribution

08/15/2017

GREENWICH, Conn.--(BUSINESS WIRE)-- Eagle Point Credit Company Inc. (the “Company”) (NYSE:ECC)(NYSE:ECCA)(NYSE:ECCB)(NYSE:ECCZ)(NYSE:ECCY) today announced financial results for the quarter ended June 30, 2017, net asset value (“NAV”) as of June 30, 2017 and certain portfolio activity through August 8, 2017.

SECOND QUARTER 2017 HIGHLIGHTS

  • Net investment income (“NII”) and realized capital gains of $0.53 per weighted average common share1.
  • NAV per common share of $17.53 as of June 30, 2017.
  • Net income (inclusive of unrealized mark-to-market gains) of $15.5 million, or $0.88 per weighted average common share.
  • Weighted average effective yield of the Company’s collateralized loan obligation (“CLO”) equity portfolio was 15.68% as of June 30, 2017.
  • Deployed $57.0 million in net capital and received $30.8 million in cash distributions from the Company’s portfolio in the second quarter of 2017.
  • 10 of the Company’s CLOs refinanced their debt tranches and one CLO was reset during the second quarter of 2017.
  • Completed follow-on offering of 1.553 million shares of common stock (including full exercise of the underwriters’ overallotment option) at a premium to NAV, resulting in net proceeds to the Company of approximately $28.7 million.

SUBSEQUENT EVENTS

  • Declares special distribution of $0.45 per share of common stock payable on September 8, 2017 to stockholders of record as of August 25, 2017.
  • NAV per common share estimated to be between $17.55 and $17.65 as of July 31, 2017.
  • Deployed $15.2 million in net capital from July 1, 2017 through August 8, 2017; received cash distributions from the Company’s portfolio of $20.8 million over the same period.
  • On June 28, 2017, the Company established an “at-the-market” offering program under which the Company may issue up to $50.0 million of common stock and up to one million shares of 7.75% Series B Term Preferred Stock due 2026 (“Series B Term Preferred Stock”). As of August 8, 2017, the Company issued 50,005 shares of common stock and 27,584 shares of Series B Term Preferred Stock pursuant to the “at-the-market” offering, for total net proceeds to the Company of approximately $1.7 million.
  • On August 8, 2017, the Company closed an underwritten public offering of $27.5 million in aggregate principal amount of its 6.75% notes due 2027 (“Series 2027 Notes”), resulting in net proceeds to the Company of approximately $26.4 million, after payment of underwriting discounts, commissions and estimated offering expenses. The underwriters fully exercised their overallotment option to purchase an additional $4.1 million in aggregate principal amount of Series 2027 Notes, and that transaction is expected to close on August 17, 2017.

“It was a very active second quarter for the Company as our portfolio continued to generate strong cash flows while we deployed $69.0 million in gross capital during the period. In addition, we continued to see CLOs, including those in the Company’s portfolio, refinance or reset to capitalize on strong CLO debt demand,” said Thomas Majewski, Chief Executive Officer. “Our NII and realized capital gains for the period saw a reduction in the quarter to $0.53 per common share. In our view, this reduction was principally due to the recalibrating of effective yields of certain CLOs as many loan spreads were compressed and some ‘cash drag’ resulting from our follow-on capital raise in the period. We believe our investment portfolio remains attractive given its cash flow generation over the past several periods.”

“Having nearly fully deployed our cash by the end of the quarter, we recently replenished our capital position through the completion of a $27.5 million aggregate principal amount baby bond offering with a coupon of 6.75%, our lowest cost to date, and the issuance of additional common and preferred shares via our “at-the-market” issuance program, providing the Company with an additional $1.7 million in net proceeds,” added Mr. Majewski. “We will continue to work to create additional long-term value for our shareholders by deploying capital opportunistically into new investments, as well as pursuing opportunities to refinance or reset our CLO investments.”

1 “Per weighted average common share” data are on a weighted average basis based on the average daily number of shares of common stock outstanding for the period and “per common share” refers to per share of the Company’s common stock.

SECOND QUARTER 2017 RESULTS

The Company’s NII and realized capital gains for the quarter ended June 30, 2017 was $0.53 per weighted average common share, compared to $0.60 per weighted average common share for the quarter ended March 31, 2017, and $0.57 per weighted average common share for the quarter ended June 30, 2016.

For the quarter ended June 30, 2017, the Company recorded net income of $15.5 million, or $0.88 per weighted average common share. Net income was comprised of total investment income of $16.2 million, net unrealized appreciation (or unrealized mark-to-market gain on investments) of $6.2 million and realized capital gains on investments of $0.9 million, and partially offset by total expenses of $7.8 million.

NAV as of June 30, 2017 was $317.1 million, or $17.53 per common share, an increase of $0.40 per common share from the Company’s NAV as of March 31, 2017, and an increase of $3.07 per common share from the Company’s NAV as of June 30, 2016.

During the quarter ended June 30, 2017, the Company deployed $69.0 million in gross capital which included $38.6 million in new CLO equity investments. The weighted average effective yield of new CLO equity investments made by the Company during the quarter, which includes a provision for credit losses, was 15.89% as measured at the time of investment. Additionally, during the quarter, the Company received $3.1 million of proceeds from the sales of investments, resulting in $0.3 million of net realized gains and converted one of its existing loan accumulation facilities into a new CLO. One of the Company’s CLO investments was called during the quarter.

During the quarter ended June 30, 2017, the Company received $30.8 million of cash distributions from its investment portfolio, or $1.75 per weighted average common share.

During the quarter ended June 30, 2017, 10 of the Company’s CLOs refinanced their debt tranches and one CLO was reset, bringing the total number of such CLO equity positions that were refinanced or reset since August 2016 to 24 and three, respectively.

As of June 30, 2017, the weighted average effective yield on the Company’s CLO equity portfolio was 15.68%, compared to 16.21% as of March 31, 2017 and 17.03% as of June 30, 2016.

PORTFOLIO STATUS

As of June 30, 2017 on a look-through basis, and based on the most recent CLO trustee reports received by such date, the Company had indirect exposure to approximately 1,197 unique corporate obligors. The largest look-through obligor represented 0.9% of the Company’s CLO equity and loan accumulation facility portfolio. The top-ten largest look-through obligors together represented 6.4% of the Company’s CLO equity and loan accumulation facility portfolio.

Spread compression in the loan market has been a factor for credit investors and the Company is not immune. Whereas in December 2016, the look-through weighted-average spread of the Company’s CLOs’ loans was 3.97%, that value was 3.75% as of June 2017.

As of June 30, 2017, the Company had debt and preferred securities outstanding which totaled approximately 33% of its total assets (less current liabilities). On a pro forma basis, after giving effect to the issuance of the Series 2027 Notes on August 8, 2017, the Company’s leverage (including the Series 2027 Notes, the 7.00% Notes due 2020, 7.75% Series A Term Preferred Stock due 2022 (the “Series A Term Preferred Stock”) and Series B Term Preferred Stock) represented approximately 37% of the Company’s total assets (less current liabilities) as of June 30, 2017 (after accounting for the distribution of $0.20 per share of common stock paid on July 31, 2017). Over the long term, management expects the Company to operate under current market conditions generally with leverage within a range of 25% to 35% of total assets. As market conditions evolve, or should significant opportunities present themselves, the Company may incur leverage outside of this range, subject to applicable regulatory limits.

THIRD QUARTER 2017 PORTFOLIO ACTIVITY THROUGH AUGUST 8, 2017 AND OTHER UPDATES

From July 1, 2017 through August 8, 2017, the Company received cash distributions on its investment portfolio totaling $20.8 million, or $1.15 per weighted average common share. Also from July 1, 2017 through August 8, 2017, the Company made net new investments totaling $15.2 million, which includes an investment of $9.6 million in one primary CLO equity security. As of August 8, 2017, some of the Company’s investments had not yet reached their payment date for the quarter.

In the third quarter, through August 8, 2017, four of the Company’s CLOs refinanced their debt tranches. In addition, two of the Company’s loan accumulation facilities were priced into new CLOs.

As of August 8, 2017, the Company has approximately $36.5 million of cash available for investment.

As published on the Company’s website earlier this month, management’s estimate of the range of Company’s NAV per common share as of July 31, 2017 was $17.55 to $17.65.

PREVIOUSLY DECLARED DISTRIBUTIONS

For each of the three months ended June 30, 2017, the Company paid distributions on common stock of $0.20 per common share, for aggregate distributions of $0.60 per share during that period. The Company also paid a monthly distribution of $0.20 per common share on July 31, 2017 to stockholders of record as of July 13, 2017. Additionally, and as previously announced, the Company declared distributions of $0.20 per share of common stock payable on August 31, 2017 and September 29, 2017, to stockholders of record as of August 11, 2017 and September 12, 2017, respectively.

The Company paid distributions of $0.161459 per share of the Company’s 7.75% Series A Term Preferred Stock (NYSE: ECCA) and Series B Term Preferred Stock (NYSE: ECCB) on July 31, 2017, to stockholders of record as of July 13, 2017. The distributions represented a 7.75% annualized rate, based on both the Series A and Series B Term Preferred Stocks’ $25 liquidation preference per share. Additionally, and as previously announced, the Company declared distributions of $0.161459 per share on its Series A Term Preferred Stock and Series B Term Preferred Stock, payable on each of August 31, 2017 and September 29, 2017, to stockholders of record as of August 11, 2017 and September 12, 2017, respectively.

SPECIAL DISTRIBUTION

As one of the requirements for the Company to maintain its ability to be taxed as a “regulated investment company” (which it has elected to be), the Company is generally required to pay distributions to holders of its common stock in an amount equal to substantially all of the Company’s taxable income within one year of the end of its tax year, which is November 30.

Because the Company’s taxable income for the tax year ending November 30, 2016 exceeded aggregate distributions paid to date to common stockholders with respect to such tax year, the Company today declared a special distribution of $0.45 per share of common stock payable on September 8, 2017 to stockholders of record as of August 25, 2017. The following schedule applies to the distribution:

                             
Ex-Dividend Date       Record Date       Payable Date       Amount per common share
August 23, 2017       August 25, 2017       September 8, 2017       $0.45

During the fourth quarter of 2016, the Company incurred a 4% excise tax in connection with the special distribution.

CONFERENCE CALL

The Company will host a conference call at 10:00 a.m. (Eastern Time) today to discuss the Company’s financial results for the quarter ended June 30, 2017, as well as a portfolio update.

All interested parties may participate in the conference call by dialing (833) 231-8253 (domestic) or (647) 689-4099 (international), and entering Conference ID 54736021 approximately 10 to 15 minutes prior to the call. A live webcast will also be available on the Company’s website (www.eaglepointcreditcompany.com) – please go to the Investor Relations section at least 15 minutes prior to the call to register, download and install any necessary audio software.

An archived replay of the call will be available shortly afterwards until September 15, 2017. To hear the replay, please dial (800) 585-8367 (domestic) or (416) 621-4642 (international). For the replay, enter conference ID 54736021.

ADDITIONAL INFORMATION

The Company has made available on its website, http://eaglepointcreditcompany.com (in the financial statements and reports section) its semiannual stockholder report for the period ended June 30, 2017 (which includes the Company’s unaudited consolidated financial statements as of and for the period ended June 30, 2017). The Company also published on its website (in the investor presentations and portfolio information section) an investor presentation which contains additional information about the Company and its portfolio as of and for the quarter ended June 30, 2017. The Company has filed these documents with the Securities and Exchange Commission.

ABOUT EAGLE POINT CREDIT COMPANY

The Company is a non-diversified, closed-end management investment company. The Company’s investment objectives are to generate high current income and capital appreciation primarily through investment in equity and junior debt tranches of collateralized loan obligations. The Company is externally managed and advised by Eagle Point Credit Management LLC. The principals of Eagle Point Credit Management LLC are Thomas P. Majewski, Daniel W. Ko and Daniel M. Spinner.

The Company makes certain unaudited portfolio information available each month on its website in addition to making certain other unaudited financial information available on its website (www.eaglepointcreditcompany.com). This information includes (1) an estimated range of the Company’s net investment income (“NII”) and realized capital gains or losses per weighted average share of common stock for each calendar quarter end, generally made available within the first fifteen days after the applicable calendar month end, (2) an estimated range of the Company’s NAV per share of common stock for the prior month end and certain additional portfolio-level information, generally made available within the first fifteen days after the applicable calendar month end, and (3) during the latter part of each month, an updated estimate of NAV, if applicable, and, with respect to each calendar quarter end, an updated estimate of the Company’s NII and realized capital gains or losses for the applicable quarter, if available.

FORWARD-LOOKING STATEMENTS

This press release 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 press release 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 in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”). 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 press release.

Source: Eagle Point Credit Company Inc.

Investor and Media Relations:

ICR

203-340-8510

IR@EaglePointCredit.com

www.eaglepointcreditcompany.com

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