Oxford Square Capital Corp. Announces Net Asset Value and Selected Financial Results for the Quarter Ended March 31, 2020
April 28 2020 - 7:00AM
Oxford Square Capital Corp. (NasdaqGS: OXSQ) (NasdaqGS: OXSQL)
(NasdaqGS: OXSQZ) (the “Company,” “we,” “us” or “our”) announced
today its financial results and related information for the quarter
ended March 31, 2020.
- As previously announced by the Company, our Board of Directors
had declared monthly common stock distributions through June 30,
2020. While no decision has yet been made with regard to the
Company’s common stock distributions for July, August and
September, we believe that the Company’s Board of Directors will
likely elect to reduce or suspend the Company’s distributions for
those months. In light of current economic and market conditions,
specifically as a result of the global crisis caused by the spread
of the COVID-19 virus, we believe that no reliance should be placed
on the prospect for any particular level of distribution for those
months, or for any other periods.
- During the quarter ended March 31, 2020, the U.S. loan market
exhibited a heightened level of volatility. While U.S. loan prices
remained relatively stable throughout February 2020, the
increasingly negative sentiment associated with the economic
ramifications of the rapid spread of COVID-19 led to a precipitous
decline in U.S. loan prices during March 2020, with the S&P /
LSTA Leveraged Loan Index declining to a low of 76.23% of par value
on March 23, 2020 and ending March 31, 2020 at 82.85% of par value.
We believe that the COVID-19 pandemic represents an extraordinary
circumstance that materially impacts the fair value of the
Company’s investments. As a result, the fair value of the Company’s
portfolio investments may be further negatively impacted after
March 31, 2020 by circumstances and events that are not yet
known.
- As of March 31, 2020 net asset value (“NAV”) per share was
$3.32, compared with the NAV per share of $5.12 at the prior
quarter end.
- For the quarter ended March 31, 2020 we recorded GAAP net
investment income of approximately $6.4 million, or $0.13 per
share, compared to $8.4 million, or $0.18 per share for the quarter
ended December 31, 2019.
- We recorded net realized losses on investments of approximately
$0.3 million and unrealized depreciation of approximately $85.4
million for the quarter ended March 31, 2020 compared to unrealized
depreciation of $13.3 million and no net realized gains or losses
on investments for the quarter ended December 31, 2019. The
increase in unrealized depreciation was due primarily to the
negative economic impact and the increased uncertainty caused by
COVID-19.
- In total, we had a net decrease in net assets from operations
of approximately $79.4 million, or $1.62 per share, for the quarter
ended March 31, 2020, compared with a net decrease in net assets
from operations of $4.9 million, or $0.10 per share, for the
quarter ended December 31, 2019.
- Total investment income for the
quarter ended March 31, 2020 amounted to approximately $10.8
million, which represents a decrease of approximately $2.6 million
from the fourth quarter of 2019. For the quarter ended March 31,
2020 the components of investment income were as follows:
- $5.7 million from our debt investments,
- $4.8 million from our collateralized loan obligation (“CLO”)
equity investments, and
- $0.4 million from all other sources.
- Our total expenses for the quarter
ended March 31, 2020 were approximately $4.5 million, which
represents a decrease of approximately $0.6 million from the fourth
quarter of 2019.
- During the first quarter of 2020,
we made investments of approximately $7.4 million and received, or
were entitled to receive, proceeds of approximately $11.1 million
from sales of investments, and $12.0 million from repayments and
amortization payments on our debt investments.
- As of March 31, 2020 the following
metrics applied (note that none of these values represent a total
return to shareholders):
- The weighted average yield of our debt investments was 8.8% at
current cost, compared with 9.1% as of December 31, 2019.
- The weighted average effective yield of our CLO equity
investments at current cost was 9.7%, compared with 11.0% as of
December 31, 2019.
- The weighted average cash distribution yield of our CLO equity
investments at current cost was 14.4%, compared with 22.1% as of
December 31, 2019.
- Our weighted average credit rating
was 2.2 based on total fair value and 2.5 based on total principal
value at the end of the first quarter of 2020, compared with 2.2
based on total fair value and 2.4 based on total principal value,
as of December 31, 2019.
- As of March 31, 2020, we had two
debt investments on non-accrual status, with a combined fair value
of $5.2 million. Also, as of March 31, 2020, our preferred equity
investments in one of our portfolio companies were on non-accrual
status, with a combined fair value of $0.4 million.
We will host a conference call to discuss our
first quarter results today, Tuesday, April 28, 2020 at 9:00 AM ET.
Please call 1-888-339-0740 to participate. A recording of the
conference call will be available to replay for approximately 30
days following the call. The replay number is 1-877-344-7529, and
the replay passcode is 10142635.
A presentation containing further detail
regarding our quarterly results of operations has been posted under
the Investor Relations section of our website at
www.oxfordsquarecapital.com.
OXFORD SQUARE CAPITAL CORP.
CONSOLIDATED STATEMENTS OF ASSETS AND
LIABILITIES
|
|
March 31, 2020 |
|
|
December 31, 2019 |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Non-affiliated/non-control investments (cost: $450,240,880 and
$467,828,907, respectively) |
|
$ |
261,381,550 |
|
|
$ |
361,985,203 |
|
Affiliated investments (cost: $16,836,822 and $16,836,822,
respectively) |
|
|
384,296 |
|
|
|
2,816,790 |
|
Cash equivalents |
|
|
7,825,820 |
|
|
|
14,410,486 |
|
Restricted cash |
|
|
— |
|
|
|
2,050,452 |
|
Securities sold not settled |
|
|
1,732,979 |
|
|
|
— |
|
Interest and distributions receivable |
|
|
1,566,824 |
|
|
|
3,480,036 |
|
Other assets |
|
|
490,255 |
|
|
|
523,626 |
|
Total assets |
|
$ |
273,381,724 |
|
|
$ |
385,266,593 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
Notes payable – 6.50% Unsecured Notes (net of deferred issuance
costs of $1,299,705 and $1,380,658, respectively) |
|
$ |
63,070,520 |
|
|
$ |
62,989,567 |
|
Notes payable – 6.25% Unsecured Notes (net of deferred issuance
costs of $1,418,749 and $1,476,878, respectively) |
|
|
43,372,001 |
|
|
|
43,313,872 |
|
Notes payable – Credit Facility (net of deferred issuance costs of
$10,051) |
|
|
— |
|
|
|
28,080,550 |
|
Base management fee and net investment income incentive fee payable
to affiliate |
|
|
1,231,210 |
|
|
|
1,480,653 |
|
Accrued interest payable |
|
|
481,498 |
|
|
|
632,235 |
|
Accrued expenses |
|
|
487,944 |
|
|
|
771,174 |
|
Total liabilities |
|
|
108,643,173 |
|
|
|
137,268,051 |
|
|
|
|
|
|
|
|
|
|
NET
ASSETS |
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, 100,000,000 shares authorized;
49,589,607 and 48,448,987 shares issued and outstanding,
respectively |
|
|
495,895 |
|
|
|
484,489 |
|
Capital in excess of par value |
|
|
457,810,322 |
|
|
|
451,839,302 |
|
Total accumulated losses |
|
|
(293,567,666 |
) |
|
|
(204,325,249 |
) |
Total net assets |
|
|
164,738,551 |
|
|
|
247,998,542 |
|
Total liabilities and net assets |
|
$ |
273,381,724 |
|
|
$ |
385,266,593 |
|
Net asset value per common share |
|
$ |
3.32 |
|
|
$ |
5.12 |
|
OXFORD SQUARE CAPITAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
|
|
Three Months Ended
March 31, 2020 |
|
|
Three Months Ended
March 31, 2019 |
|
INVESTMENT
INCOME |
|
|
|
|
|
|
|
|
From non-affiliated investments: |
|
|
|
|
|
|
|
|
Interest income – debt investments |
|
$ |
5,654,255 |
|
|
$ |
7,148,481 |
|
Income from securitization vehicles and investments |
|
|
4,759,070 |
|
|
|
6,846,925 |
|
Other income |
|
|
411,363 |
|
|
|
229,708 |
|
Total investment income from non-affiliated investments |
|
|
10,824,688 |
|
|
|
14,225,114 |
|
Total investment income |
|
|
10,824,688 |
|
|
|
14,225,114 |
|
EXPENSES |
|
|
|
|
|
|
|
|
Interest expense |
|
|
2,173,468 |
|
|
|
2,149,841 |
|
Base management fees |
|
|
1,231,210 |
|
|
|
1,626,538 |
|
Professional fees |
|
|
473,989 |
|
|
|
367,251 |
|
Compensation expense |
|
|
200,348 |
|
|
|
232,928 |
|
General and administrative |
|
|
373,182 |
|
|
|
328,517 |
|
Total expenses before incentive fees |
|
|
4,452,197 |
|
|
|
4,705,075 |
|
Net investment income incentive fees |
|
|
— |
|
|
|
1,156,051 |
|
Total expenses |
|
|
4,452,197 |
|
|
|
5,861,126 |
|
Net investment income |
|
|
6,372,491 |
|
|
|
8,363,988 |
|
Net change in unrealized
(depreciation)/appreciation on investments: |
|
|
|
|
|
|
|
|
Non-Affiliated investments |
|
|
(83,015,626 |
) |
|
|
4,228,650 |
|
Affiliated investments |
|
|
(2,432,494 |
) |
|
|
(1,450,286 |
) |
Total net change in unrealized (depreciation)/appreciation on
investments |
|
|
(85,448,120 |
) |
|
|
5,678,936 |
|
Net realized losses: |
|
|
|
|
|
|
|
|
Non-Affiliated investments |
|
|
(277,173 |
) |
|
|
(1,278,866 |
) |
Extinguishment of debt |
|
|
(5,211 |
) |
|
|
(14,106 |
) |
Total net realized losses |
|
|
(282,384 |
) |
|
|
(1,292,972 |
) |
Net (decrease)/increase in net
assets resulting from operations |
|
$ |
(79,358,013 |
) |
|
$ |
12,749,952 |
|
Net increase in net assets
resulting from net investment income per common share (Basic and
Diluted) |
|
$ |
0.13 |
|
|
$ |
0.18 |
|
Net (decrease)/increase in net
assets resulting from operations per common share (Basic and
Diluted) |
|
$ |
(1.62 |
) |
|
$ |
0.27 |
|
Weighted average shares of
common stock outstanding |
|
|
|
|
|
|
|
|
(Basic and Diluted) |
|
|
49,137,570 |
|
|
|
47,650,959 |
|
Distributions per share |
|
$ |
0.20 |
|
|
$ |
0.20 |
|
FINANCIAL HIGHLIGHTS – (unaudited)
Financial highlights for the three months ended March 31, 2020
and 2019, respectively, are as follows:
Per Share Data |
|
Three Months Ended March 31, 2020 |
|
|
Three Months Ended March 31, 2019 |
|
Net asset value as of
beginning of period |
|
$ |
5.12 |
|
|
$ |
6.60 |
|
Net investment income(1) |
|
|
0.13 |
|
|
|
0.18 |
|
Net realized and unrealized
(losses)/gains(2) |
|
|
(1.73 |
) |
|
|
0.09 |
|
Net increase in net asset
value from operations |
|
|
(1.60 |
) |
|
|
0.27 |
|
Distributions per share from
net investment income |
|
|
(0.17 |
) |
|
|
(0.17 |
) |
Tax return of capital
distributions(3) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
Total distributions |
|
|
(0.20 |
) |
|
|
(0.20 |
) |
Effect of shares
issued/repurchased, gross |
|
|
— |
|
|
|
— |
|
Net asset value at end of
period |
|
$ |
3.32 |
|
|
$ |
6.67 |
|
Per share market value at
beginning of period |
|
$ |
5.44 |
|
|
$ |
6.47 |
|
Per share market value at end
of period |
|
$ |
2.55 |
|
|
$ |
6.50 |
|
Total return based on Market
Value(4) |
|
|
(50.73 |
)% |
|
|
3.55 |
% |
Total return based on Net
Asset Value(5) |
|
|
(31.25 |
)% |
|
|
4.09 |
% |
Shares outstanding at end of
period |
|
|
49,589,607 |
|
|
|
47,650,959 |
|
|
|
|
|
|
|
|
|
|
Ratios/Supplemental
Data(8) |
|
|
|
|
|
|
|
|
Net assets at end of period
(000’s) |
|
$ |
164,739 |
|
|
$ |
317,944 |
|
Average net assets
(000’s) |
|
|
207,092 |
|
|
|
316,334 |
|
Ratio of operating expenses to
average net assets(6) |
|
|
8.60 |
% |
|
|
7.41 |
% |
Ratio of net investment income
to average net assets(6) |
|
|
12.31 |
% |
|
|
10.58 |
% |
Portfolio turnover
rate(7) |
|
|
2.17 |
% |
|
|
0.91 |
% |
(1)Represents per share net investment income for the period,
based upon average shares outstanding.(2)Net realized and
unrealized gains include rounding adjustments to reconcile change
in net asset value per share.(3)Management monitors available
taxable earnings, including net investment income and realized
capital gains, to determine if a tax return of capital may occur
for the year. To the extent the Company’s taxable earnings fall
below the total amount of the Company’s distributions for that
fiscal year, a portion of those distributions may be deemed a tax
return of capital to the Company’s stockholders. The ultimate tax
character of the Company’s earnings cannot be determined until tax
returns are prepared after the end of the fiscal year.(4)Total
return based on market value equals the increase or decrease of
ending market value over beginning market value, plus
distributions, divided by the beginning market value, assuming
distribution reinvestment prices obtained under the Company’s
distribution reinvestment plan, excluding any discounts. Total
return is not annualized.(5)Total return based on net asset value
equals the increase or decrease of ending net asset value over
beginning net asset value, plus distributions, divided by the
beginning net asset value. Total return is not
annualized.(6)Annualized.(7)Portfolio turnover rate is calculated
using the lesser of the year-to-date cash investment sales and debt
repayments or year-to-date cash investment purchases over the
average of the total investments at fair value.(8)The following
table provides supplemental performance ratios (annualized)
measured for the three months ended March 31, 2020 and 2019:
|
|
Three Months Ended March 31, 2020 |
|
|
Three Months Ended March 31, 2019 |
|
Ratio of operating
expenses to average net assets: |
|
|
|
|
|
|
|
|
Operating expenses before
incentive fees |
|
|
8.60 |
% |
|
|
5.95 |
% |
Net investment income
incentive fees |
|
|
— |
% |
|
|
1.46 |
% |
Ratio of expenses, excluding
interest expense |
|
|
4.40 |
% |
|
|
4.69 |
% |
About Oxford Square Capital Corp.
Oxford Square Capital Corp. is a publicly-traded business
development company principally investing in syndicated bank loans
and debt and equity tranches of collateralized loan obligation
(“CLO”) vehicles. CLO investments may also include warehouse
facilities, which are financing structures intended to aggregate
loans that may be used to form the basis of a CLO vehicle.
Forward-Looking Statements This press release
contains forward-looking statements subject to the inherent
uncertainties in predicting future results and conditions. Any
statements that are not statements of historical fact (including
statements containing the words “believes,” “plans,” “anticipates,”
“expects,” “estimates” and similar expressions) should also be
considered to be forward-looking statements. These statements are
not guarantees of future performance, conditions or results and
involve a number of risks and uncertainties, including the impact
of COVID-19 and related changes in base interest rates
and significant market volatility on our business, our portfolio
companies, our industry and the global economy. Certain
factors could cause actual results and conditions to differ
materially from those projected in these forward-looking
statements. These factors are identified from time to time in our
filings with the Securities and Exchange Commission. We undertake
no obligation to update such statements to reflect subsequent
events, except as may be required by law.
Contact:Bruce Rubin203-983-5280
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