Eagle Point Credit Company Inc. (the “Company”) (NYSE:ECC,
NYSE:ECCA, NYSE:ECCB, NYSE:ECCZ) today announced financial results
for the quarter ended March 31, 2017, net asset value (“NAV”) as of
March 31, 2017 and certain portfolio activity through May 15,
2017.
FIRST QUARTER 2017 HIGHLIGHTS
- Net investment income (“NII”) and
realized capital gains of $0.60 per weighted average common
share1.
- NAV per common share of $17.13 as of
March 31, 2017.
- Net income (inclusive of unrealized
mark-to-market losses) of $0.8 million, or $0.05 per weighted
average common share.
- Weighted average effective yield of the
Company’s collateralized loan obligation (“CLO”) equity portfolio
was 16.21% as of March 31, 2017.
- Deployed $13.8 million in net capital
and received $28.9 million in cash distributions from the Company’s
portfolio in the first quarter of 2017.
- Nine of the Company’s CLOs refinanced
their debt tranches and one CLO was reset.
- Began paying monthly distributions of
$0.20 per common share in March 2017, switching from prior
quarterly distributions of $0.60 per common share.
SUBSEQUENT EVENTS
- NAV per common share of $17.71 as of
April 30, 2017 based on management’s estimate.
- Deployed $43.9 million in net capital
from April 1, 2017 to May 15, 2017; received cash distributions
from the Company’s portfolio of $29.3 million over the same
period.
- Completed follow-on offering of 1.553
million shares (including full exercise of the underwriters’
overallotment option), resulting in net proceeds to the Company of
approximately $28.7 million.
“We were pleased with the Company’s first quarter 2017
performance as our portfolio continued to generate strong cash
flows and we opportunistically sold several investments when there
was strong demand. As a result, NII and realized capital gains for
the period equaled our historical $0.60 per quarter run rate
distributions on common shares,” said Thomas Majewski, Chief
Executive Officer. “In addition, capitalizing on strong demand from
CLO debt investors during the quarter, we completed the refinancing
of nine CLOs in our portfolio as well as one CLO reset. The CLO
refinancings will help those investments reduce their future costs
and, after covering transaction costs, we believe should generate
more cash flow to the CLO equity. Finally, subsequent to the
quarter end, the Company completed an equity capital raise at a 14%
gross premium to our March 31 NAV. That capital raise generated net
proceeds of approximately $28.7 million and we continue to work to
create additional long-term value for our shareholders by deploying
the capital into new investments.”
FIRST QUARTER 2017 RESULTS
The Company’s NII and realized capital gains for the quarter
ended March 31, 2017 was $0.60 per weighted average common share,
compared to $0.58 per weighted average common share for the quarter
ended December 31, 2016 (excluding a one-time excise tax charge of
$0.04 per common share), and $0.61 per weighted average common
share for the quarter ended March 31, 2016.
For the quarter ended March 31, 2017, the Company recorded net
income of $0.8 million, or $0.05 per weighted average common share.
Net income was comprised of total investment income of $16.1
million, and realized capital gains on investments of $1.3 million,
partially offset by total expenses of $7.6 million and net
unrealized depreciation (or unrealized mark-to-market loss on
investments) of $9.0 million.
NAV as of March 31, 2017 was $282.5 million, or $17.13 per
common share, a decrease of $0.35 per common share from the
Company’s NAV as of December 31, 2016, but an increase of $4.11 per
common share from the Company’s NAV as of March 31, 2016.
During the quarter ended March 31, 2017, the Company deployed
$51.4 million in gross capital which included $30.5 million in CLO
equity investments. The weighted average effective yield of new CLO
equity investments made by the Company during the quarter was
16.30% as measured at the time of investment. The weighted average
effective yield of these CLO equity investments includes a
provision for credit losses. Additionally, during the quarter, the
Company received $37.6 million of proceeds from the sales of
investments, resulting in $1.3 million of net realized gains, and
converted one of its existing loan accumulation facilities into a
new CLO. Two of the Company’s CLO investments were called during
the quarter.
During the quarter ended March 31, 2017, the Company received
$28.9 million of cash distributions from its investment portfolio
(including the two CLO equity investments that were called), or
$1.75 per weighted average common share.
As of March 31, 2017, the weighted average effective yield on
the Company’s CLO equity portfolio was 16.21%, compared to 17.48%
as of December 31, 2016 and 16.77% as of March 31, 2016.
PORTFOLIO STATUS
As of March 31, 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 1,172 unique corporate
obligors. The largest look-through obligor represented 1.0% of the
Company’s CLO equity and loan accumulation facility portfolio. The
top-ten largest look-through obligors together represented 6.9% of
the Company’s CLO equity and loan accumulation facility
portfolio.
As of March 31, 2017, the Company had debt and preferred
securities outstanding which totaled approximately 35% of its total
assets (less current liabilities).
SECOND QUARTER 2017 PORTFOLIO ACTIVITY THROUGH MAY 15, 2017
AND OTHER UPDATES
From April 1, 2017 through May 15, 2017, the Company received
cash distributions on its investment portfolio totaling $29.3
million, or $1.66 per weighted average common share. Also from
April 1, 2017 through May 15, 2017, the Company made net new
investments totaling $43.9 million, which includes investments in
one primary CLO equity security, one new loan accumulation facility
and $11.7 million in secondary market investments. As of May 15,
2017, some of the Company’s investments had not yet reached their
payment date for the quarter.
The Company continues to be active as it pursues its refinancing
and reset pipeline. In the second quarter, through May 15, 2017,
one CLO in the Company’s portfolio priced a debt refinancing and
another CLO was reset.
As of May 15, 2017, the Company has approximately $26.5 million
of cash available for investment.
As published on the Company’s website earlier this month,
management’s estimate of its NAV per common share as of April 30,
2017 is $17.71.
PREVIOUSLY DECLARED DISTRIBUTIONS
Earlier this year, the Company announced its intention to pay
monthly distributions and began paying $0.20 per common share each
month, converting from prior quarterly distributions of $0.60. For
the three months ended March 31, 2017, the Company declared and
paid distributions on common stock of $0.40 per common share – the
difference from the previous quarterly amount was simply due to the
timing of the conversion and there were no missed distributions.
The Company also paid a monthly distribution of $0.20 per common
share on April 28, 2017 to stockholders of record as of April 17,
2017. Additionally, and as previously announced, the Company
declared a distribution of $0.20 per share of common stock payable
on May 31, 2017 to stockholders of record as of May 15, 2017.
The Company paid distributions of $0.161459 per share of the
Company’s 7.75% Series A Term Preferred Stock due 2022 (the “Series
A Term Preferred Stock”) (NYSE: ECCA) and Series B Term Preferred
Stock due 2026 (the “Series B Term Preferred Stock”) (NYSE: ECCB)
on April 28, 2017, to stockholders of record as of April 17, 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 May 31, 2017 and June 30, 2017,
to stockholders of record as of May 15, 2017 and June 15, 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.
The Company currently estimates its taxable income for the tax
year ending November 30, 2016 will exceed aggregate quarterly
distributions paid to common stockholders with respect to such
year. At present, management estimates a special distribution of
$0.55 to $0.70 per common share will be required to meet the
distribution requirement described above – the range is estimated
based on the increased number of shares of common stock outstanding
today as compared to the number of such shares outstanding in prior
periods. This estimate remains subject to revision as the actual
amount required to be distributed will not be known until the
Company files its tax returns and the distribution amount may
deviate from the above estimated range.
Management expects to target payment of special distributions
pertaining to the Company’s November 30, 2016 tax year in one or
more installments toward the latter part of 2017. 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 March 31, 2017, as well as a portfolio update.
All interested parties may participate in the conference call by
dialing (877) 201-0168 (domestic) or (647) 788-4901
(international), and entering Conference ID
11017420 approximately 10 to 15 minutes prior to the call. An
archived replay of the call will be available shortly afterwards
until June 23, 2017. To hear the replay, please dial (800) 585-8367
(domestic) or (416) 621-4642 (international). For the replay, enter
conference ID 11017420.
ADDITIONAL INFORMATION
The Company has made available on its website,
http://eaglepointcreditcompany.com (in the financial statements and
reports section) its unaudited consolidated financial statements as
of and for the period ended March 31, 2017. 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 March 31,
2017.
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.
FURTHER INFORMATION REGARDING ESTIMATED TAX
INFORMATION
The estimates of the Company’s taxable income and distributions
for the tax year ended November 30, 2016 reflects management’s
judgment as of the date of this press release of conditions it
expects to exist and the course of action it expects the Company to
take with respect to the tax year ended November 30, 2016. The
estimates are based on taxable income reported to date and
assumptions relating to the underlying tax characteristics of
income and other items as reported to the Company. Although the
Company considers its assumptions to be reasonable as of the date
of this press release, such assumptions are subject to a wide
variety of significant uncertainties that could cause actual
results to differ materially from those contained in the estimates,
including risks and uncertainties relating to the completeness and
accuracy of preliminary information reported or received by the
Company from underlying investments, and those described in the
notes to the Company’s audited consolidated financial statements
for the fiscal year ended December 31, 2016 and the Company’s
unaudited consolidated financial statements for the fiscal quarter
ended March 31, 2017. Accordingly, there can be no assurance that
actual results will not differ materially from those presented in
the estimates.
The estimate of taxable income was prepared on a reasonable
basis and reflects the best currently available estimates and
judgment of Company management. However, this estimate is not fact
and readers of this press release should not rely upon this
information or place undue reliance on such estimate.
Neither the Company’s independent registered public accounting
firm nor any other independent accountants has compiled, examined
or performed any procedures with respect to estimated information
contained herein, or expressed any opinion or assurance with
respect to the estimated information or its achievability, and
accordingly each assumes no responsibility for, and disclaims any
association with, the estimates.
1 “Per weighted average common share” data are on a weighted
average basis based on the average daily number of shares
outstanding for the period.
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