SOURCE: Oxford Lane Capital Corp.

November 16, 2015 16:50 ET

Oxford Lane Capital Corp. Announces Net Asset Value and Selected Financial Results as of September 30, 2015 and Third Fiscal Quarter 2016 Distribution of $0.60 per Common Share

GREENWICH, CT--(Marketwired - Nov 16, 2015) - Oxford Lane Capital Corp. (NASDAQ: OXLC) (NASDAQ: OXLCN) (NASDAQ: OXLCO) (the "Fund," "we," "us," or "our") announced today its financial results for the quarter ended September 30, 2015, and announced a distribution of $0.60 per share for the quarter ending December 31, 2015.

HIGHLIGHTS

  • For the quarter ended September 30, 2015, we recorded net investment income, calculated in accordance with generally accepted accounting principles ("GAAP") of approximately $5.9 million, or approximately $0.33 per share. The net investment income was impacted by a one-time $0.5 million write-off of unamortized deferred issuance costs in connection with the July 24, 2015 redemption of all of the Series 2017 Term Preferred Shares. During the quarter, we also recorded unrealized depreciation of approximately $41.1 million. In total we had a net decrease in net assets from operations of approximately $35.2 million, or $1.97 per share.

  • Estimated distributable net investment income(1) ("EDNII") for the quarter ended September 30, 2015 was approximately $13.2 million or $0.74 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.

  • Total investment income, calculated in accordance with generally accepted accounting principles for the quarter ended September 30, 2015 amounted to approximately $14.5 million, which represents a decrease of approximately $0.8 million when compared to the quarter ended June 30, 2015.

    • For the quarter ended September 30, 2015, we recorded GAAP investment income from our portfolio as follows:

      • approximately $13.9 million from our CLO equity investments,

      • approximately $0.2 million from our CLO debt investments,

      • approximately $0.4 million from all other sources.

    • While reportable GAAP earnings from our CLO equity class investments for the three months ended September 30, 2015 was approximately $13.9 million, we received or were entitled to receive approximately $21.2 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).

  • Our total expenses for the quarter ended September 30, 2015 were approximately $8.6 million, compared to total expenses of approximately $8.0 million for the quarter ended June 30, 2015.

    • In connection with the July 24, 2015 redemption of the 632,450 Series 2017 Term Preferred Shares issued by OXLC on November 28, 2012, we wrote-off approximately $0.5 million of unamortized deferred issuance costs.

  • Total assets stood at approximately $382.2 million as of September 30, 2015 compared with total assets of $443.5 million at June 30, 2015.

  • As of September 30, 2015, net asset value per share was $11.33 compared with net asset value per share as of June 30, 2015 of $13.88.

  • As of September 30, 2015, the weighted average GAAP yield of our CLO debt investments at current cost stood at approximately 8.2%, compared with 7.9% as of June 30, 2015. 

  • As of September 30, 2015, the weighted average GAAP effective yield of CLO equity investments at current cost was approximately 13.9%, compared with 16.1% as of June 30, 2015.

  • As of September 30, 2015, the weighted average cash distribution yield of cash income producing CLO equity investments at current cost was approximately 26.6% which stood at 27.3% as of June 30, 2015. 

  • The Fund's board of directors has declared a third fiscal quarter 2016 distribution of $0.60 per common share

    • Record date is December 16, 2015

    • Payable on December 31, 2015

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   2015 - 2016
Record Dates
  2015 - 2016
Payable Dates
             
Series 2023   $0.15625   December 16, January 15, February 15   December 31, January 29, February 29
             
Series 2024   $0.16930   December 16, January 15, February 15   December 31, January 29, February 29
             

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 September 30, 2015:

         
    Three Months Ended
September 30, 2015
    Amount   Per Share
Amounts
Net investment income   $ 5,913,352   $ 0.33
CLO equity additional estimated taxable income     7,242,299     0.41
Estimated distributable net investment income   $ 13,155,651   $ 0.74
             

The Fund filed its semi-annual report on Form N-CSR on November 16, 2015. 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 second quarter results today, Tuesday, November 17, 2015 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 10076313.

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