GREENWICH, CT--(Marketwired - Feb 4, 2016) - Oxford Lane Capital Corp. (
HIGHLIGHTS
- For the quarter ended December 31, 2015, we recorded net investment income, calculated in accordance with generally accepted accounting principles ("GAAP") of approximately $8.2 million, or approximately $0.46 per share. During the quarter, we also recorded unrealized depreciation of approximately $51.0 million and realized losses of approximately $4.1 million. In total we had a net decrease in net assets from operations of approximately $46.9 million, or $2.62 per share.
- Estimated distributable net investment income1 ("EDNII") for the quarter ended December 31, 2015 was approximately $17.3 million or $0.96 per share.
- EDNII represents that portion of our estimated annual taxable net investment income available for distribution to our common shareholders attributable to the quarter. The Fund's distribution policy is based, to a significant extent, on our EDNII.
- EDNII represents that portion of our estimated annual taxable net investment income available for distribution to our common shareholders attributable to the quarter. The Fund's distribution policy is based, to a significant extent, on our EDNII.
- Total investment income, calculated in accordance with generally accepted accounting principles for the quarter ended December 31, 2015 amounted to approximately $16.0 million, which represents an increase of approximately $1.5 million when compared to the quarter ended September 30, 2015.
- For the quarter ended December 31, 2015, we recorded GAAP investment income from our portfolio as follows:
- approximately $15.5 million from our CLO equity investments,
- approximately $0.2 million from our CLO debt investments,
- approximately $0.3 million from all other sources.
- approximately $15.5 million from our CLO equity investments,
- While reportable GAAP earnings from our CLO equity class investments for the three months ended December 31, 2015 was approximately $15.5 million, we received or were entitled to receive approximately $24.5 million in distributions. Our experience has been that cash flows have historically represented a reasonable estimate of CLO equity investment taxable earnings. In general, we currently expect our annual taxable income to be higher than our GAAP earnings on the basis of the difference between cash distributions actually received (and record date distributions to be received) and the effective yield income. Our distribution policy will be based upon our estimate of that taxable income (as required for a regulated investment company).
- For the quarter ended December 31, 2015, we recorded GAAP investment income from our portfolio as follows:
- Our total expenses for the quarter ended December 31, 2015 were approximately $7.8 million, compared to total expenses of approximately $8.6 million for the quarter ended September 30, 2015.
- The decrease in expense is largely driven by lower interest expense resulting from the July 24, 2015 extinguishment of the Series 2017 Preferred Shares.
- The decrease in expense is largely driven by lower interest expense resulting from the July 24, 2015 extinguishment of the Series 2017 Preferred Shares.
- Total assets stood at approximately $315.9 million as of December 31, 2015 compared with total assets of $382.2 million at September 30, 2015.
- As of December 31, 2015, net asset value per share was $8.13 compared with net asset value per share as of September 30, 2015 of $11.33.
- As of December 31, 2015, the weighted average GAAP yield of our CLO debt investments at current cost stood at approximately 9.0%, compared with 8.2% as of September 30, 2015.
- As of December 31, 2015, the weighted average GAAP effective yield of CLO equity investments at current cost was approximately 15.4%, compared with 13.9% as of September 30, 2015.
- As of December 31, 2015, the weighted average cash distribution yield of cash income producing CLO equity investments at current cost was approximately 25.6% which stood at 26.6% as of September 30, 2015.
- On December 2, 2015, the Fund's board of directors authorized a Preferred Stock Repurchase Program. Under this repurchase program, the Fund repurchased 49,268 shares of its Series 2023 Term Preferred Stock, at an average price of $24.14 per share. The Fund may, but is not obligated, to repurchase its outstanding Preferred Stock in the open market from time to time through June 30, 2016.
- As announced previously, the Fund's board of directors had declared distributions for fourth fiscal quarter 2016 and first fiscal quarter 2017 of $0.60 per common share
- Record date is March 16, 2016
- Payable on March 31, 2016
- Record date is June 16, 2016
- Payable June 30, 2016
- Record date is March 16, 2016
Oxford Lane's distribution policy is based primarily upon its estimates of the ultimate taxable earnings for each tax year, which are primarily (but not entirely) based upon the cash flows for each investment. The final taxable amounts cannot be known until the Fund's tax return is filed, but the Fund's experience has been that cash flows have historically represented a reasonable estimate of taxable earnings.
There have historically been significant differences between Oxford Lane's GAAP earnings and its taxable earnings and this is likely to continue, particularly related to CLO equity investments where the Fund's taxable earnings are based upon distributable earnings while GAAP earnings are based upon an effective yield calculation. In general, the Fund currently expects its near-term taxable earnings to continue to be higher than its reportable GAAP earnings.
The Fund's Board of Directors has also declared the required monthly dividends on its Series 2023 and Series 2024 Term Preferred Shares (each, a "Share"), as follows:
| Per Share Dividend Amount Declared | 2016 Record Dates |
2016 Payable Dates |
|||||
| Series 2023 | $ | 0.15625 | March 16, April 15, May 16 | March 31, April 29, May 31 | |||
| Series 2024 | $ | 0.16930 | March 16, April 15, May 16 | March 31, April 29, May 31 | |||
In accordance with their terms, each of the Series 2023 and Series 2024 Shares will pay a monthly dividend at a fixed rate of 7.50% and 8.125%, respectively, of the $25.00 per share liquidation preference, or $1.875 and $2.03125 per share per year, respectively. This fixed annual dividend rate is subject to adjustment under certain circumstances, but will not in any case be lower than 7.50% and 8.125% per year, respectively, for each of the Series 2023 and Series 2024 Shares.
1 Supplemental Information Regarding Estimated Distributable Net Investment Income
On a supplemental basis, we provide information relating to EDNII which is a non-GAAP measure. This measure is provided in addition to, but not as a substitute for, net investment income. Our non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. EDNII represents net investment income adjusted for additional taxable income on our CLO equity investments.
Income from CLO equity investments, for generally accepted accounting purposes, is recorded using the effective yield method. This method requires the calculation of an effective yield to expected redemption based upon an estimation of the amount and timing of future cash flows, including recurring cash flows as well as future principal payments; the difference between the actual cash received (and record date distributions to be received), and the effective yield calculation is an adjustment to cost. Accordingly, investment income recognized on CLO equity investments in the GAAP statement of operations differs from the estimated taxable net investment income (which is generally based upon the cash distributions actually received and record date distributions to be received by us during the period), and the resulting difference is referred to below as "CLO equity additional estimated taxable income."
The following table provides a reconciliation of net investment income to EDNII for the three months ended December 31, 2015:
| Three Months Ended December 31, 2015 |
||||||
| Amount | Per Share Amounts |
|||||
| Net investment income | $ | 8,195,866 | $ | 0.46 | ||
| CLO equity additional estimated taxable income | 9,076,748 | 0.50 | ||||
| Estimated distributable net investment income | $ | 17,272,614 | $ | 0.96 | ||
The Fund expects to file its quarterly report on Form N-Q on February 4, 2016. The Fund is also posting to its website a more detailed summary of its quarterly financials, as well as comparisons to prior quarters. This can be found at oxfordlanepresentation
We will host a conference call to discuss our third quarter results, Thursday, February 4, 2016 at 10:00 AM ET. Please call 888-317-6016 to participate. A replay of the conference call will be available for approximately 30 days. The replay number is 877-344-7529, and the replay passcode is 10080319.
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 unrated or is rated below investment grade.
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, unless required to do so by law.
Contact Information:
Contact:
Bruce Rubin
203-983-5280