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Eagle Point Credit Company Inc. Announces Third Quarter 2016 Financial Results

ECC | November 16, 2016

Eagle Point Credit Company Inc. Announces Third Quarter 2016 Financial Results

Eagle Point Credit Company Inc. (the “Company”) (NYSE:ECC, NYSE:ECCA, NYSE:ECCB, NYSE:ECCZ) today announced financial results for the fiscal quarter ended September 30, 2016 and net asset value (“NAV”) as of September 30, 2016 in addition to certain portfolio activity through November 11, 2016.

THIRD QUARTER HIGHLIGHTS

The Company’s net investment income (“NII”) and realized capital gains for the quarter ended September 30, 2016 was $0.54 per share of common stock (based on the average daily number of shares outstanding for the period). This compares to NII and realized capital gains per share of $0.57 for the quarter ended June 30, 2016, and $0.51 per share for the quarter ended September 30, 2015.

For the quarter ended September 30, 2016, the Company recorded net income of $42.4 million, or $2.80 per share of common stock (based on the average daily number of shares outstanding for the period). Net income was comprised of total investment income of $13.7 million, net unrealized appreciation, or unrealized mark-to-market gain on investments, of $34.2 million and realized capital gains on investments of $0.5 million, offset by total expenses of $6.0 million.

During the quarter ended September 30, 2016, the Company received $21.6 million of cash flow from its investment portfolio, or $1.43 per share of common stock (based on the average daily number of shares outstanding during the period).

The NAV of the Company as of September 30, 2016 was $255.4 million, or $16.66 per share of common stock. This was an increase of $36.6 million or $2.20 per share from the quarter ended June 30, 2016.

During the quarter ended September 30, 2016, the Company made gross new investments totaling $52.2 million. The weighted average effective yield of new collateralized loan obligation (“CLO”) equity investments made by the Company during the quarter was 20.16% as measured at the time of investment.

As of September 30, 2016, the weighted average effective yield on the Company’s CLO equity portfolio was 17.27%, up from 17.03% as of June 30, 2016 and up from 16.65% as of September 30, 2015. The weighted average effective yield of these CLO equity investments includes a provision for credit losses.

The closing price per share of the Company’s common stock on September 30, 2016 was $17.16, representing a 3.0% premium to NAV as of such date.

As of September 30, 2016 on a look-through basis, and based on the most recent CLO trustee reports received by such date, the Company had indirect exposure to approximately 1,142 unique corporate obligors. The largest look-through obligor represented 1.0% of the Company’s CLO equity and loan accumulation facility portfolio. The top-ten largest look-through obligors represented 7.0% of the Company’s CLO equity and loan accumulation facility portfolio.

As of September 30, 2016, the Company had debt and preferred securities outstanding which totaled approximately 29.6% its total assets (less current liabilities).

FOURTH QUARTER 2016 PORTFOLIO ACTIVITY THROUGH NOVEMBER 11, 2016 AND OTHER UPDATES

From October 1, 2016 and through November 11, 2016, the Company has received cash distributions on its investment portfolio totaling $20.8 million (not all of which represents NII), or $1.36 per share of common stock. Some of the Company’s investments make payments later in the quarter and, as of November 11, 2016, those other investments had not yet reached their payment date for the current quarter.

From October 1, 2016 through November 11, 2016, the Company has made gross new investments totaling $56.7 million, which includes investments in one new CLO equity security and several loan accumulation facility add-on purchases. Additionally, the Company converted two of its existing loan accumulation facilities into new CLOs.

As of November 11, 2016, the Company has approximately $17.3 million of cash available for investment.

As published on the Company’s website last week, Company management’s unaudited estimate of the range of NAV per share of its common stock as of October 31, 2016 is $17.18 to $17.28. This estimate was published for information purposes only and is subject to revision.

In October 2016, the Company issued 1,380,000 shares of its newly designated 7.75% Series B Term Preferred Stock due 2026, which amount includes the exercise of an overallotment option by the underwriters, at a public offering price of $25 per share. The issuance resulted in net proceeds to the Company of approximately $32.8 million after payment of underwriting discounts and commissions and estimated offering expenses payable by the Company. On a pro forma basis to account for this offering, the Company has debt and preferred securities outstanding totaling approximately 35.9% of its total assets (less current liabilities) as of September 30, 2016.

The Company was able to issue its Series B Term Preferred Stock at the same 7.75% rate as its Series A Term Preferred Stock, but with a longer maturity.

REGULAR DISTRIBUTIONS

On October 31, 2016, the Company paid a distribution of $0.60 per share of common stock to stockholders of record as of September 30, 2016. This is consistent with prior distributions paid by the Company. The Company intends to pay a quarterly distribution on its shares of common stock for the fourth quarter of 2016, which the Company expects to declare in early December. The Company expects the upcoming quarterly distribution to be in line with its prior distributions.

The Company paid a distribution of $0.161459 per share of the Company’s 7.75% Series A Term Preferred Stock due 2022 (the “Series A Term Preferred Stock”) (NYSE: ECCA) on October 31, 2016, to stockholders of record as of October 17, 2016. The distribution represented a 7.75% annualized rate, based on the Series A Term Preferred Stock’s $25 liquidation preference per share. Additionally, and as previously announced, the Company declared distributions of $0.161459 per share on its Series A Term Preferred Stock, payable on each of November 30, 2016 and December 30, 2016, to stockholders of record as of November 15, 2016 and December 15, 2016, respectively.

The Company also declared distributions of $0.269098 and $0.161459 per share on its Series B Term Preferred Stock (NYSE: ECCB), payable on each of November 30, 2016 and December 30, 2016, to stockholders of record as of November 15, 2016 and December 15, 2016, respectively. These distributions represent a 7.75% annualized rate, based on the Series B Term Preferred Stock’s $25 liquidation preference per share for the initial dividend period ending November 30, 2016 and for the month of December 2016.

SPECIAL DISTRIBUTIONS

As one of the requirements for the Company to maintain its ability to be taxed as a “regulated investment company” (which it has elected to be), the Company is generally required to pay distributions to holders of its common stock in an amount equal to substantially all of the Company’s taxable income within one year of the end of its tax year, which is November 30, 2016.

The Company preliminarily estimates its taxable income for the tax year ending November 30, 2016 will exceed aggregate quarterly distributions paid to common stockholders. At present, management estimates special distributions totaling between $0.75 to $1.25 per share of common stock will be required to meet the distribution requirement described above. This estimate remains preliminary and is based solely on information currently available to management with respect to approximately 60% of the Company’s portfolio. The actual amounts required to be distributed will not be known until the Company files its tax returns next year and such amount may deviate from the above estimated range.

Management expects to target payment of special distributions pertaining to the Company’s November 30, 2016 tax year in one or more installments toward the latter part of 2017. The Company expects to incur a 4% excise tax on the amount distributed. The amount of such tax is expected to be reported in the Company’s annual report for the fiscal year ending December 31, 2016.

CONFERENCE CALL

As previously announced, the Company will host a conference call at 11:00 a.m. (Eastern Time) on Wednesday, November 16, 2016 to discuss the Company’s financial results for the quarter ended September 30, 2016, and a portfolio update. All interested parties may participate in the conference call by dialing (877) 201-0168 (domestic) or (647) 788-4901 (international), and entering Conference ID 9303653 approximately 10 to 15 minutes prior to the call. An archived replay of the call will be available shortly afterwards until December 16, 2016. To hear the replay, please dial (855) 859-2056 (domestic) or (404) 537-3406 (international). For the replay, enter conference ID 9303653.

ADDITIONAL INFORMATION

The Company filed Form N-Q, which contains additional information about the Company’s portfolio as of September 30, 2016, with the Securities and Exchange Commission (“SEC”). In addition, the Company filed a copy of its unaudited consolidated financial statements as of and for the quarter ended September 30, 2016 with the SEC. These filings are available on the Company’s website (www.eaglepointcreditcompany.com).

ABOUT EAGLE POINT CREDIT COMPANY

The Company is a non-diversified, closed-end management investment company. The Company’s investment objectives are to generate high current income and capital appreciation primarily through investment in equity and junior debt tranches of collateralized loan obligations. The Company is externally managed and advised by Eagle Point Credit Management LLC. The principals of Eagle Point Credit Management LLC are Thomas P. Majewski, Daniel W. Ko and Daniel M. Spinner.

The Company makes certain unaudited portfolio information available each month on its website in addition to making certain other unaudited financial information available on its website (www.eaglepointcreditcompany.com). This information includes (1) an estimated range of the Company’s net investment income (“NII”) and realized capital gains or losses per share of common stock for each calendar quarter end, generally made available within the first fifteen days after the applicable calendar month end, (2) an estimated range of the Company’s NAV per share of common stock for the prior month end and certain additional portfolio-level information, generally made available within the first fifteen days after the applicable calendar month end, and (3) during the latter part of each month, an updated estimate of NAV, if applicable, and, with respect to each calendar quarter end, an updated estimate of the Company’s NII and realized capital gains or losses for the applicable quarter, if available.

FORWARD-LOOKING STATEMENTS

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”). The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

FURTHER INFORMATION REGARDING PROSPECTIVE FINANCIAL INFORMATION

The projection of the Company’s taxable income and distributions for the anticipated tax year ending November 30, 2016 reflects management’s judgment as of the date of this press release of conditions it expects to exist and the course of action it expects the Company to take during or with respect to the anticipated tax year ending November 30, 2016. The projected result is based on taxable income reported to date and assumes that current market conditions continue and that the CLO investments held by the Company comply with their distribution waterfall requirements for the current period. Although the Company considers its assumptions to be reasonable as of the date of this press release, such assumptions are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projection, including risks and uncertainties described in the Company’s filings with the SEC, such as the risks described as under the heading “Risk Factors – Risks Related to Our Investments” in the Company’s most recent prospectus and under the heading “Investment Risk Factors and Concentration of Investments” in the notes to the Company’s unaudited consolidated financial statements included in the Company’s Semi-Annual Report to Stockholders for the six months ended June 30, 2016 and in the notes to the Company’s unaudited consolidated financial statements for the fiscal period ended September 30, 2016. Accordingly, there can be no assurance that the projection is indicative of the Company’s future results or that actual results will not differ materially from those presented in the projection.

The projection of taxable income was not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants and Financial Accounting Standards Board, as modified by Regulation S-X under the Securities Act of 1933, as amended, with respect to prospective financial information, but, in the Company’s view, was prepared on a reasonable basis and reflects the best currently available estimates and judgment of Company management. However, this prospective financial information is not fact and readers of this press release should not rely upon this information as being necessarily indicative of future results or to place undue reliance on such financial information. Inclusion of the prospective financial information in this press release should not be regarded as a representation by any person that the results contained in such financial information will be achieved.

Neither the Company’s independent registered public accounting firm nor any other independent accountants has compiled, examined or performed any procedures with respect to the prospective financial information contained herein, or expressed any opinion or assurance with respect to the prospective financial information or its achievability, and accordingly each assumes no responsibility for, and disclaims any association with, the prospective financial information

Source: Eagle Point Credit Company Inc.