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Oxford Lane Capital Corp. Announces Net Asset Value and Selected Financial Results for the Fourth Fiscal Quarter

GREENWICH, Conn., May 04, 2020 (GLOBE NEWSWIRE) -- Oxford Lane Capital Corp. (OXLC) (OXLCO) (OXLCM) (OXLCP) (“Oxford Lane,” the “Company,” “we,” “us” or “our”) announced today the following financial results and related information: 

  • As previously announced by the Company, our Board of Directors had declared monthly common stock distributions through June 30, 2020 (payment information is repeated below). While no decision has yet been made with regard to the Company’s common stock distributions for July, August and September, we believe that the Company’s Board of Directors will likely elect to reduce or suspend the Company’s distributions for those months. In light of current economic and market conditions, specifically as a result of the global crisis caused by the spread of the COVID-19 virus, we believe that no reliance should be placed on the prospect for any particular level of common stock distributions for those months, or for any other periods.
  Month Ending Record Date Payment Date Amount Per Share
 
  May 31, 2020 May 14, 2020 May 29, 2020 $0.135  
  June 30, 2020 June 15, 2020 June 30, 2020 $0.135  
  • During the quarter ended March 31, 2020, the U.S. loan and CLO markets exhibited heightened levels of volatility. While U.S. loan prices remained relatively stable throughout February 2020, the increasingly negative sentiment associated with the economic ramifications of the rapid spread of COVID-19 led to a precipitous decline in U.S. loan prices during March 2020, with the S&P / LSTA Leveraged Loan Index declining to a low of 76.23% of par value on March 23, 2020 and ending March 31, 2020 at 82.85% of par value. We believe that the COVID-19 pandemic represents an extraordinary circumstance that materially impacts the fair value of and prospective cashflows from the Company’s investments. As a result, the fair value of the Company’s portfolio investments may be further negatively impacted after March 31, 2020 by circumstances and events that are not yet known.
     
  • Net asset value (“NAV”) per share as of March 31, 2020 stood at $3.58, compared with a NAV per share on December 31, 2019 of $6.81.
     
  • Net investment income (“NII”), calculated in accordance with generally accepted accounting principles (“GAAP”), was approximately $20.4 million, or $0.29 per share, for the quarter ended March 31, 2020.
     
  • Our core net investment income (“Core NII”) was approximately $32.3 million, or $0.45 per share, for the quarter ended March 31, 2020.
     
    • Core NII represents NII adjusted for additional applicable cash distributions received, or entitled to be received (if any, in either case), on our collateralized loan obligation (“CLO”) equity investments. See additional information under “Supplemental Information Regarding Core Net Investment Income” below.

    • We emphasize that our taxable income may materially differ from our GAAP NII and/or our Core NII, and that neither GAAP NII nor Core NII should be relied upon as indicators of our taxable income.

  • Total investment income for the fourth fiscal quarter amounted to approximately $33.9 million, which represented an increase of approximately $1.4 million from the quarter ended December 31, 2019.

    • For the quarter ended March 31, 2020 we recorded investment income from our portfolio as follows:

      • $32.0 million from our CLO equity investments, and

      • $1.9 million from our CLO debt investments and other income.

  • As of March 31, 2020 the following metrics applied (note that none of these metrics represented a total return to shareholders):
     
    • The weighted average yield of our CLO debt investments at current cost was 11.6%, compared with 12.4% as of December 31, 2019.
       
    • The weighted average effective yield of our CLO equity investments at current cost was 15.5%, compared with 16.4% as of December 31, 2019.
       
    • The weighted average cash distribution yield of our CLO equity investments at current cost was 20.0%, compared with 25.2% as of December 31, 2019. 
       
  • For the quarter ended March 31, 2020 we recorded a net decrease in net assets resulting from operations of approximately $223.3 million, or $3.14 per share, comprised of:
     
    • Net investment income of $20.4 million;
       
    • Net realized loss of $1.6 million (of which approximately $1.5 million resulted from the acceleration of unamortized deferred issuance costs); and
       
    • Net unrealized depreciation of $242.1 million. 
       
  • During the quarter ended March 31, 2020 we made additional CLO investments of approximately $127.2 million, and received approximately $22.6 million from sales and repayments of our CLO investments.
     
  • We note that as of March 31, 2020, we held no investments in warehouse facilities.
     
  • For the quarter ended March 31, 2020, we issued a total of approximately 5.9 million shares of common stock pursuant to an “at-the-market” offering. After deducting the sales agent’s commissions and offering expenses, this resulted in net proceeds of approximately $49.8 million. As of March 31, 2020, we had approximately 75.2 million shares of common stock outstanding.
     
  • On February 11, 2020, we completed an underwritten public offering of 3,500,000 shares of our newly designated 6.25% Series 2027 Term Preferred Stock at a public offering price of $25 per share, raising approximately $84.7 million in net proceeds. On March 10, 2020, an additional 164,000 shares were issued pursuant to an exercise of the over-allotment option granted to the underwriters, resulting in net proceeds of approximately $4.0 million.
     
  • On March 12, 2020, we redeemed 1.2 million shares (an aggregate of approximately $30.0 million) of our 7.5% Series 2023 Term Preferred Stock.

On April 30, 2020, our Board of Directors declared the required monthly dividends on our Series 2023 Term Preferred Shares, Series 2024 Term Preferred Shares and Series 2027 Term Preferred Shares (each, a “Share”) as follows:

Preferred
 Shares Type
Per Share
Dividend Amount Declared
Record Dates Payment Dates
Series 2023 $           0.15625000 June 15, July 17, August 17 June 30, July 31, August 31
Series 2024 $           0.14062500 June 15, July 17, August 17 June 30, July 31, August 31
Series 2027 $           0.13020833 June 15, July 17, August 17 June 30, July 31, August 31

In accordance with their terms, each of the Series 2023 Term Preferred Shares, Series 2024 Term Preferred Shares and Series 2027 Term Preferred Shares will pay a monthly dividend at a fixed rate of 7.50%, 6.75% and 6.25%, respectively, of the $25.00 per share liquidation preference, or $1.875, $1.6875 and $1.5625 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%, 6.75% and 6.25% per year, respectively, for each of the Series 2023 Term Preferred Shares, Series 2024 Term Preferred Shares and Series 2027 Term Preferred Shares.

Supplemental Information Regarding Core Net Investment Income 

We provide information relating to Core NII (a non-GAAP measure) on a supplemental basis. This measure is not provided as a substitute for GAAP NII, but in addition to it. Our non-GAAP measures may differ from similar measures by other companies, even in the event of similar terms being utilized to identify such measures. Core NII represents GAAP NII adjusted for additional applicable cash distributions received, or entitled to be received (if any, in either case), on our CLO equity investments. OXLC’s management uses this information in its internal analysis of results and believes that this information may be informative in gauging the quality of OXLC’s financial performance, identifying trends in its results and providing meaningful period-to-period comparisons.

Income from investments in the “equity” class securities of CLO vehicles, for GAAP purposes, is recorded using the effective interest method; this is based on an effective yield to the expected redemption utilizing estimated cash flows, at current cost, including those CLO equity investments that have not made their inaugural distribution for the relevant period end. The result is an effective yield for the investment in which the difference between the actual cash received, or distributions entitled to be received, and the effective yield calculation is adjusted to the cost. Accordingly, investment income recognized on CLO equity securities in the GAAP statement of operations differs from the cash distributions actually received by the Company during the period (referred to below as “CLO equity adjustments”). 

Furthermore, in order for the Company to continue qualifying as a regulated investment company (“RIC”) for tax purposes, we are required, among other things, to distribute at least 90% of our investment company taxable income annually. Therefore, Core NII may provide a better indication of our estimated taxable income for a reporting period than GAAP NII; we can offer no assurance that will be the case, however, as the ultimate tax character of our earnings cannot be determined until after tax returns are prepared at the close of a fiscal year. We note that this non-GAAP measure may not serve as a useful indicator of taxable earnings, particularly during periods of market disruption and volatility, and, as such, our taxable income may differ materially from our Core NII.    

The following table provides a reconciliation of GAAP NII to Core NII for the three months ended March 31, 2020:

   Three Months Ended
March 31, 2020
          Per Share
  Amount   Amount
GAAP Net investment income $ 20,384,517     $ 0.29  
CLO equity adjustments   11,931,060       0.16  
Core Net investment income $ 32,315,577     $ 0.45  

We will host a conference call to discuss our fourth fiscal quarter results today, Monday, May 4, 2020 at 9:00 AM ET. Please call 1-844-792-3730 to participate. A recording of the conference call will be available for replay for approximately 30 days following the call. The replay number is 1-877-344-7529, and the replay passcode is 10143573.  

A presentation containing additional details regarding our quarterly results of operations has been posted under the Investor Relations section of our website at www.oxfordlanecapital.com

About Oxford Lane Capital Corp. 

Oxford Lane Capital Corp. is a publicly-traded registered closed-end management investment company principally investing in debt and equity tranches of collateralized loan obligation (“CLO”) vehicles. CLO investments may also include warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle.

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. These statements are not guarantees of future performance, conditions or results and involve a number of risks and uncertainties, including the impact of COVID-19 and related changes in base interest rates and significant market volatility on our business, our portfolio companies, our industry and the global economy.  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, except as may be required by law. 

Contact:
Bruce Rubin
203-983-5280