SOURCE: Oxford Lane Capital Corp.

August 10, 2016 08:00 ET

Oxford Lane Capital Corp. Announces Net Asset Value and Selected Financial Results for the Quarter Ended June 30, 2016 and Second Fiscal Quarter 2017 Distribution of $0.60 per Common Share

GREENWICH, CT--(Marketwired - Aug 10, 2016) -  Oxford Lane Capital Corp. ("Oxford Lane", "Fund", "we", "us" or "our") (NASDAQ: OXLC) (NASDAQ: OXLCO) (NASDAQ: OXLCN) announced today the following financial results and related information:

  • Net asset value per share as of June 30, 2016 was $8.78 compared with a net asset value per share at March 31, 2016 of $7.04.

  • Net investment income, calculated in accordance with generally accepted accounting principles ("GAAP"), was approximately $5.7 million, or $0.30 per share, for the quarter ended June 30, 2016.

    • For the quarter ended June 30, 2016, we recorded approximately $618,000 of non-recurring expenses, or $0.03 per common share, in conjunction with our preferred share repurchase program.

  • Our core net investment income ("Core NII") was approximately $19.5 million, or $1.04 per share, for the quarter ended June 30, 2016.

    • Core NII represents net investment income adjusted for additional cash distributions received, or entitled to be received (if any, in either case), on our CLO equity investments. (See additional information under "Supplemental Information Regarding Core Net Investment Income" below).

  • Total investment income, calculated in accordance with GAAP, amounted to approximately $12.4 million for the quarter ended June 30, 2016.

    • For the quarter ended June 30, 2016, we recorded GAAP investment income from our portfolio as follows:

      • approximately $12.0 million from our CLO equity investments,

      • approximately $0.2 million from our CLO debt investments, and

      • approximately $0.2 million from all other sources.

    • While reportable GAAP earnings from our CLO equity class investments for the three months ended June 30, 2016 was approximately $12.0 million, we received or were entitled to receive approximately $25.8 million in distributions from these investments. While our experience has been that cash flows have historically represented our view of a reasonable estimate of CLO equity investment taxable income, we believe there to be significantly less certainty as to the final determination of taxable income with respect to our CLO equity investments in light of recent volatility in the corporate loan market. 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. 

    • The weighted average GAAP yield of our CLO debt investments at current cost was approximately 8.9% as of June 30, 2016.

    • The weighted average GAAP effective yield of our CLO equity investments at current cost was approximately 15.4% as of June 30, 2016.

    • The weighted average cash distribution yield of our cash income producing CLO equity investments at current cost was approximately 33.9% as of June 30, 2016.

  • Net increase in net assets from operations was approximately $44.0 million, or $2.34 per share, for the quarter ended June 30, 2016, including:

    • Net investment income of approximately $5.7 million;

    • Net realized losses of approximately $3.3 million; and

    • Net unrealized appreciation of approximately $41.6 million.

  • During the quarter ended June 30, 2016 we made additional CLO equity investments of approximately $20.5 million.

    • Also, during the quarter ended June 30, 2016, we sold approximately $21.0 million of our investments.

  • During the quarter ended June 30, 2016, we issued a total of 54,975 shares of common stock pursuant to an "at the market" offering, resulting in net proceeds of approximately $458,000.

  • For the quarter ended June 30, 2016, we repurchased 609,537 shares of our Series 2023 Term Preferred Stock and 2,712 shares of our Series 2024 Term Preferred Stock pursuant to a previously announced Preferred Stock Repurchase Program. We currently have 3,016,001 shares of our Series 2023 Term Preferred Stock and 2,018,879 shares of our Series 2024 Term Preferred Stock issued and outstanding. In connection with the repurchased Series 2023 Term Preferred Shares and Series 2024 Term Preferred Shares, we recognized as interest expense a net extinguishment loss of approximately $618,000, consisting of previously unamortized issuance costs of approximately $492,000 and repurchases at a premium to par of approximately $126,000.

  • Our Board of Directors declared a distribution for the quarter ending September 30, 2016 of $0.60 per common share.

    • Record date is September 16, 2016
    • Payable on September 30, 2016

Our Board of Directors has also declared the required monthly dividends on our Series 2023 Term Preferred Shares 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   September 16, October 14, November 16   September 30, October 28, November 30
               
Series 2024   $ 0.16930   September 16, October 14, November 16   September 30, October 28, November 30
               

In accordance with their terms, each of the Series 2023 Shares 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 Shares and Series 2024 Shares.

Supplemental Information Regarding Core Net Investment Income

On a supplemental basis, we provide information relating to core net investment income, 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 measure may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core net investment income represents net investment income adjusted for additional cash distributions received, or entitled to be received (if any, in either case), on our CLO equity investments.

Income from investments in the "equity" class securities of CLO vehicles, for GAAP purposes, is recorded using the effective interest method based upon an effective yield to the expected redemption utilizing estimated cash flows, compared to the cost resulting in an effective yield for the investment; the difference between the actual cash received or distributions entitled to be received and the effective yield calculation is an adjustment to cost. Accordingly, investment income recognized on CLO equity securities in the GAAP statement of operations differs from the cash distributions actually received by us during the period (referred to below as "CLO equity additional distributions").

Further, as the RIC requirements are to distribute taxable earnings, core net investment income may provide a better indication of estimated taxable income for a reporting period than does GAAP net investment income, although we can offer no assurance that will be the case as the ultimate tax character of our earnings cannot be determined until tax returns are prepared after the end of a fiscal year. We note that these non-GAAP measures may not be useful indicators of taxable earnings, particularly during periods of market disruption and volatility. 

The following table provides a reconciliation of net investment income to Core NII for the three months ended June 30, 2016:

     
    Three Months Ended
June 30, 2016
    Amount   Per Share
Amounts
Net investment income   $ 5,666,503   $ 0.30
CLO equity additional distributions     13,835,449     0.74
Core net investment income   $ 19,501,952   $ 1.04
             

A presentation containing further detail regarding our quarterly results of operations has been posted under the Investor Relations section of our website at oxfordlanepresentation

We will host a conference call to discuss our first fiscal quarter results today, Wednesday, August 10, 2016 at 10:00 AM. Please call 1-844-792-3730 to participate. A replay of the call will be available for 30 days. If you are interested in hearing the replay, please dial 1-877-344-7529. The replay passcode is 10091135.

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