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.
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