SOURCE: Oxford Lane Capital Corp.

November 08, 2013 08:00 ET

Oxford Lane Capital Corp. Announces Dividend Declaration and Financial Results as of September 30, 2013

GREENWICH, CT--(Marketwired - Nov 8, 2013) - Oxford Lane Capital Corp. (NASDAQ: OXLC) ("Oxford Lane" or the "Company") announced today that the Company's Board of Directors has declared a third fiscal quarter dividend of $0.55 per share, payable on December 31, 2013 to shareholders of record as of December 17, 2013. The Company also announced that its unaudited net asset value per share as of September 30, 2013 stood at $16.13, based upon net assets of $123.9 million.

The Company's total assets at September 30, 2013 were $163.1 million, up from $145.9 million at March 31, 2013. For the six month period, GAAP net investment income for reporting purposes was $4.8 million, and its net increase in net assets from operations was $8.0 million, including realized gains of $6.1 million and unrealized depreciation of $2.9 million.

The Company has accumulated taxable earnings in excess of its cash distributions since inception. For the years ended March 31, 2012 and 2013, respectively, the Company generated taxable earnings of approximately $6.5 million and $15.0 million (including net investment income and net realized capital gains) compared to dividend distributions of $4.7 million and $12.4 million, respectively. 

Oxford Lane's dividend distribution policy is based upon its estimates of the ultimate taxable earnings for each respective period, which are based upon the cash flows for each investment. The final taxable amounts cannot be known until the tax return is filed, but the Company's experience has been that cash flows have historically represented a reasonable estimate of taxable earnings.

The Company estimates that its distributable net investment income for the six month period ended September 30, 2013 approximates $8.0 million, calculated on a taxable basis, compared to dividend distributions of $8.4 million.

There may be significant differences between Oxford Lane's GAAP earnings and its taxable earnings, particularly related to CLO equity investments where its taxable earnings are based upon distributable earnings and GAAP earnings are based upon an effective yield calculation. In general, the Company currently expects its taxable earnings to be higher than its reportable GAAP earnings.

GAAP Earnings vs. Taxable Earnings

             
(FYE March 31, $ in 000s)   FY 2012     FY 2013  
GAAP net investment income   $ 2,631     $ 5,925  
GAAP realized gain on investments     -       2,374  
  Total GAAP earnings   $ 2,631     $ 8,299  
                 
Taxable net investment income   $ 6,166     $ 11,278  
Taxable realized gain on investments     346       3,761  
  Total taxable earnings   $ 6,512     $ 15,039  
                 
Total dividends paid on common stock   $ 4,736     $ 12,415  
Excess of taxable earnings over common stock dividends     37 %     21 %
                 
                 

Investment Portfolio Update

As of September 30, 2013, Oxford Lane's investment portfolio stood at $146.8 million, at fair value, composed of 83% CLO equity across 23 different CLO structures and 17% CLO debt across 8 different CLO structures. The top 10 aggregate industry exposures of the CLO vehicles represent approximately 50% of combined investments as of September 30, 2013. The top 10 aggregate single obligor investments represent approximately 6% of combined investments as of September 30, 2013.

During the Company's ownership, each of its CLO investments has been and remains in compliance with those coverage tests necessary for undiverted payments to be made to their respective equity tranches. From inception through September 30, 2013, Oxford Lane has invested approximately $175 million, has received cash flows (including sales) of approximately $79 million and has current investments of approximately $147 million at fair value.

Oxford Lane had approximately $114.6 million of cash income producing securities, both debt and equity, which generated approximately $7.2 million of distributions for the quarter ended September 30, 2013. Oxford Lane had approximately $35.5 million of CLO equity securities which were not cash income producing for the quarter ended September 30, 2013 (due to the "ramp up" period for those investments), but all of which are currently projected to make their inaugural distribution payments no later than the quarter ended March 31, 2014.

From June 2009 through October 2013, the Company's management team has made over $500 million of aggregate cash investments in over 125 CLO investments with aggregate par value over $650 million (including investments made at affiliated entities).

CLO Equity Investment Highlights

                               
                               
                               
(FYE March 31, $ in millions)   Q2-14     Q1-14     Q4-13     Q3-13     Q2-13  
Cash Income producing CLO equity at cost1   $ 85.2     $ 51.8     $ 34.6     $ 33.4     $ 33.4  
Non-cash income producing CLO equity at cost2   $ 35.5     $ 36.9     $ 46.1     $ 4.7     $ -  
Total CLO Equity1   $ 120.7     $ 88.7     $ 80.7     $ 38.1     $ 33.4  
% CLO 2.0 Equity3     80.9 %     69.6 %     65.3 %     26.5 %     16.0 %
% CLO 1.0 Equity3     19.1 %     30.4 %     34.7 %     73.5 %     84.0 %
                                         
                                         
 
Breakdown of Non-Cash Income Producing CLO Equity as of September 30, 20132
       
($ in millions)      
Inaugural distribution payment by 12-31-13   $ 32.2
Inaugural distribution payment by 3-31-14   $ 3.3
Total non-cash income producing CLO equity at cost   $ 35.5
       
1. Includes CLO equity investments which made a distribution payment to the Company during the quarter but were sold before quarter end. (approximately $3.5mm for Q2-14 and approximately $3.5mm for Q1-14).
2. Represents CLO equity investments which did not make a distribution payment to OXLC during the quarter. It can generally take up to two quarters to receive the inaugural distribution payment from the time a CLO equity investment is purchased by the Company in the primary market.
3. Percentage as of quarter end at cost.
   

The Company expects to file its semi-annual report on Form N-CSR prior to November 29, 2013.

About Oxford Lane Capital Corp.

Oxford Lane Capital Corp. is a publicly-traded registered closed-end management investment company. It currently seeks to achieve its investment objective of maximizing total return by investing in securitization vehicles which, in turn, primarily invest in senior secured loans made to companies whose debt is rated below investment grade or is unrated.

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. 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.

Contact Information

  • Contact:
    Bruce Rubin
    203-983-5280