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Eagle Point Credit Company Inc. Announces Second Quarter 2018 Financial Results

08/14/2018

GREENWICH, Conn.--(BUSINESS WIRE)-- Eagle Point Credit Company Inc. (the “Company”) (NYSE: ECC, ECCA, ECCB, ECCX, ECCY) today announced financial results for the quarter ended June 30, 2018, net asset value (“NAV”) as of June 30, 2018 and certain portfolio activity through August 8, 2018.

SECOND QUARTER 2018 HIGHLIGHTS

  • Net investment income (“NII”) net of realized capital gains from the Company’s portfolio and capital losses from financing activities of $0.34 per weighted average common share1.
  • NAV per common share of $16.51 as of June 30, 2018.
  • Second quarter 2018 GAAP net income (inclusive of unrealized mark-to-market gains) of $9.5 million, or $0.44 per weighted average common share.
  • Weighted average effective yield of the Company’s collateralized loan obligation (“CLO”) equity portfolio was 14.08% as of June 30, 2018.
  • Deployed $31.3 million in net capital and received $35.4 million in cash distributions from the Company’s investment portfolio in the second quarter of 2018.
  • 8 of the Company’s CLO investments were reset and 1 of the Company’s CLO investments was refinanced during the second quarter of 2018.
  • Completed an underwritten public offering of $67.3 million in aggregate principal amount of its 6.6875% notes due 2028 (ECCX), including a partial exercise of the underwriters’ overallotment option, resulting in net proceeds to the Company of approximately $64.9 million.
  • Fully redeemed its 7.00% notes due 2020 (ECCZ).

SUBSEQUENT EVENTS

  • NAV per common share estimated to be between $16.64 and $16.74 as of July 31, 2018.
  • Deployed $8.4 million in gross capital from July 1, 2018 through August 8, 2018; received cash distributions from the Company’s investment portfolio of $20.6 million over the same period.

“We remain proactive with respect to managing our portfolio and balance sheet as we seek to unlock additional long-term value for our stockholders,” said Thomas Majewski, Chief Executive Officer. “During the second quarter, we completed the effective refinancing of our 7.00% ECCZ notes with our new 6.6875% ECCX notes, further lowering our cost of capital and extending the weighted average maturity of our outstanding notes and preferred stock to approximately eight years. Additionally, we continued to focus on CLO resets to take advantage of our Adviser’s deep investing experience, completing 8 during the quarter and thus further lengthening the reinvestment period in each transaction and locking in lower cost CLO debt. During the second quarter, we also deployed $78.4 million opportunistically into new investments, while selling certain investments where we saw particularly strong demand and pricing.”

“We recorded NII net of realized capital gains and losses per share in the second quarter of $0.34, which was impacted by the acceleration of unamortized deferred debt issuance costs associated with the ECCZ redemption and our election to recognize expenses related to the ECCX issuance in the period they were incurred,” noted Mr. Majewski. “Non-recurring losses and costs related to the early repayment of ECCZ and the new ECCX issuance totaled approximately $0.20 per share during the quarter. With the pace of spread compression continuing to slow, we are actively managing our portfolio and, when appropriate, pursuing additional CLO resets in an effort to lock in longer and lower cost liabilities.”

SECOND QUARTER 2018 RESULTS

The Company’s NII net of realized capital gains and losses for the quarter ended June 30, 2018 was $0.34 per weighted average common share. This compared to $0.50 per weighted average common share for the quarter ended March 31, 2018, and $0.53 per weighted average common share for the quarter ended June 30, 2017.

The Company’s NII net of realized capital gains and losses for the quarter ended June 30, 2018 is net of $4.3 million or $0.20 per weighted average common share of non-recurring loss and expenses related to the accelerated amortization associated with the redemption of the ECCZ notes and offering expenses related to the ECCX issuance.

For the quarter ended June 30, 2018, the Company recorded GAAP net income of $9.5 million, or $0.44 per weighted average common share. Net income was comprised of total investment income of $17.4 million and net unrealized appreciation (or unrealized mark-to-market gain on investments) of $2.3 million, offset by net realized capital loss of $0.7 million and total expenses of $9.5 million.

NAV as of June 30, 2018 was $358.3 million, or $16.51 per common share, which is $0.14 per common share lower than the Company’s NAV as of March 31, 2018, and $1.02 per common share lower than the Company’s NAV as of June 30, 2017.

During the quarter ended June 30, 2018, the Company deployed $78.4 million in gross capital and $31.3 million in net capital. 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 16.31% as measured at the time of investment. Additionally, during the quarter, the Company received $47.1 million of proceeds from the sale of investments and converted 3 of its existing loan accumulation facilities into CLOs.

During the quarter ended June 30, 2018, the Company received $35.4 million of cash distributions from its investment portfolio, or $1.65 per weighted average common share, including amounts received from called investments. Excluding proceeds from called investments, the Company received cash distributions of $1.18 per weighted average common share during the quarter, which was in excess of the Company’s common distribution and other recurring operating costs.

During the quarter ended June 30, 2018, 8 of the Company’s CLO investments were reset and 1 of the Company’s CLO investments was refinanced, bringing the total number of such CLO equity positions that were reset or refinanced since January 1, 2017 to 18 and 27, respectively. The majority of the Company’s current portfolio has been reset, refinanced or both.

As of June 30, 2018, the weighted average effective yield on the Company’s CLO equity portfolio was 14.08%, a decrease from 14.54% as of March 31, 2018. As of June 30, 2017, that measure stood at 15.68%.

Pursuant to the Company’s “at-the-market” offering program under which the Company may issue shares of common stock and 7.75% Series B Term Preferred Stock due 2026 (“Series B Term Preferred Stock”), the Company sold 360,232 shares of common stock at a premium to NAV during the second quarter for total net proceeds to the Company of approximately $6.4 million.

PORTFOLIO STATUS

As of June 30, 2018 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 1,332 unique corporate obligors. The largest look-through obligor represented 0.98% 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.

The look-through weighted average spread of the loans underlying the Company’s CLO equity and related investments was 3.56% as of June 2018.

As of June 30, 2018, the Company had debt and preferred securities outstanding which totaled approximately 35% of its total assets (less current liabilities). 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. Based on applicable market conditions at any given time, or should significant opportunities present themselves, the Company may incur leverage outside of this range, subject to applicable regulatory limits.

THIRD QUARTER 2018 PORTFOLIO ACTIVITY THROUGH AUGUST 8, 2018 AND OTHER UPDATES

From July 1, 2018 through August 8, 2018, the Company received $20.6 million of cash distributions from its investment portfolio, or $0.93 per weighted average common share, including amounts received from called investments. Excluding proceeds from called investments, the Company received cash distributions of $0.86 per weighted average common share for the same period. As of August 8, 2018, some of the Company’s investments had not yet reached their payment date for the quarter. Also from July 1, 2018 through August 8, 2018, the Company deployed $8.4 million in gross capital in new CLO equity and debt investments. Additionally, in the same period, the Company issued 561,595 shares of its common stock pursuant to the “at-the-market” offering, for total net proceeds to the Company of approximately $10.1 million.

From July 1, 2018 through August 8, 2018, 2 of the Company’s CLO investments were reset and 1 of the Company’s CLOs was refinanced.

As of August 8, 2018, the Company has approximately $32.8 million of cash available for investment.

As previously published on the Company’s website, management’s estimate of the Company’s range of NAV per common share as of July 31, 2018 was $16.64 to $16.74.

PREVIOUSLY DECLARED DISTRIBUTIONS AND ADDITIONAL UPDATES

The Company paid a monthly distribution of $0.20 per common share on July 31, 2018 to stockholders of record as of July 12, 2018. Additionally, and as previously announced, the Company declared distributions of $0.20 per share of common stock payable on August 31, 2018 and September 28, 2018, to stockholders of record as of August 13, 2018 and September 12, 2018, 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, 2018, to stockholders of record as of July 12, 2018. The distributions represented a 7.75% annualized rate, based on the $25 liquidation preference per share for each series of preferred stock. Additionally, and as previously announced, the Company declared distributions of $0.161459 per share on each series of preferred stock, payable on each of August 31, 2018 and September 28, 2018, to stockholders of record as of August 13, 2018 and September 12, 2018, respectively.

The Company elected to account for its ECCX notes issuance utilizing the Fair Value Option (“FVO”) under FASB ASC Subtopic 825-10 Fair Value Option. Upfront offering costs related to instruments for which the FVO has been elected are recognized in earnings as incurred. The Company has changed its accounting policy to allow similar elections in the future.

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, 2018, 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 3678587 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 13, 2018. To hear the replay, please dial (800) 585-8367 (domestic) or (416) 621-4642 (international). For the replay, enter conference ID 3678587.

ADDITIONAL INFORMATION

The Company has made available on its website, www.eaglepointcreditcompany.com (in the financial statements and reports section) its semiannual stockholder report for the period ended June 30, 2018 (which includes the Company’s unaudited consolidated financial statements as of and for the period ended June 30, 2018). The Company has also filed this report with the Securities and Exchange Commission. 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, 2018.

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 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.

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.

Investor and Media Relations:
ICR
203-340-8510
IR@EaglePointCredit.com
www.eaglepointcreditcompany.com

Source: Eagle Point Credit Company Inc.

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