GREENWICH, CT -- (Marketwire) -- 02/27/13 --
Oxford Lane Capital Corp. (NASDAQ:OXLC) ("Oxford Lane," the "Fund" or the "Company") announced today that the Company's Board of Directors has declared a fourth fiscal quarter dividend of $0.55 per share, payable on March 29, 2013 to shareholders of record as of March 15, 2013.
The Company also announced that its unaudited net asset value per share as of December 31, 2012 stood at $17.41.
The Company does not anticipate at this time that any portion of the fourth quarter dividend will constitute a tax return of capital. As previously discussed in our annual report, it should also be noted that, while the Company's net investment income under generally accepted accounting principles is expected to be lower than taxable income, the Company's dividend policy is based upon taxable income, as is required for a regulated investment company.
The Company's quarterly report on Form N-Q is on file with the Securities and Exchange Commission.
The Company is also providing below certain financial information about the Company's investment portfolio as of December 31, 2012. On that date, the Company held 29 investments in Collateralized Loan Obligation ("CLO") vehicles, consisting of 17 junior debt investments and 12 equity investments (presented in the table below with the percentage of each CLO investment shown as a percentage of the Company's Net Asset Value - "NAV").
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S&P / S&P /
Moody's Moody's Stated
Investment Original Current Maturity Manager NAV %**
Ratings Ratings*
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ACA CLO 2007-1 Apidos Capital
- Sub Notes NA/NA NA/NA 7/15/2022 Management 12.8%
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Carlyle GMS CLO
2011-1 - Sub Carlyle Investment
Notes NA/NA NA/NA 8/10/2021 Management 8.5%
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Waterfront CLO
2007 - Class D Grandview Capital
Notes BB/Ba2 BB/Ba3 8/2/2020 Management 7.6%
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Neuberger
Berman CLO XIII Neuberger Berman
Sub Notes NA/NA NA/NA 1/23/2024 Fixed Income 5.4%
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CIFC Funding Commercial
2006-1X Class Industrial Finance
B2L Notes BB/Ba2 BB/Ba2 10/20/2020 Corp. 5.2%
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ACA CLO 2007-1 Apidos Capital
- Class E Notes BB/Ba2 B+/B1 7/15/2022 Management 4.9%
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Neuberger
Berman CLO XIII Neuberger Berman
Class F Notes B+/NA B+/NA 1/23/2024 Fixed Income 4.4%
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Harbourview CLO
2006-1 Sub Harbourview Asset
Notes NA/NA NA/NA 12/27/2019 Management Corp 4.4%
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Mountain
Capital 2005-4X Mountain Capital
Class B2L Notes BB/Ba2 BB+/Ba3 3/15/2018 Advisors 4.3%
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Sargas CLO I
Ltd - Class D Sargas Asset
Notes BB/Ba2 BB/Ba2 8/27/2020 Management 4.2%
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Hewett Island CypressTree
CLO III - Class Investment
D Notes BB/Ba2 CCC- /B2 8/9/2017 Management Co 3.7%
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Kingsland V,
Ltd. 2007-5X Kingsland Capital
Class E Notes BB/Ba2 B/Ba3 7/14/2021 Management 3.6%
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Jersey Street
CLO Income MFS Investment
Notes NA/NA NA/NA 10/20/2018 Management 3.4%
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Bridgeport CLO
II - Class D Deerfield Capital
Notes BB/Ba2 BB/Ba3 6/18/2021 Management 3.3%
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Emporia III,
Ltd. 2007-3A Emporia Capital
Class E Notes BB/Ba2 B+/B1 4/23/2021 Management 3.2%
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Kingsland IV,
Ltd. 2007-4A Kingsland Capital
Sub Notes NA/NA NA/NA 4/16/2021 Management 2.9%
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Colts 2007-1 - Structured Asset
Class E Notes BB/Ba2 BB/Ba1 3/20/2021 Investors 2.8%
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Octagon XI CLO
2007-1A Income Octagon Credit
Notes NA/NA NA/NA 8/25/2021 Investors 2.7%
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Canaras Summit
CLO 2007-1 -
Income Notes NA/NA NA/NA 6/19/2021 Canaras Management 2.2%
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Lightpoint CLO
VII, Ltd. 2007- LightPoint Capital
7X Sub Notes NA/NA NA/NA 5/15/2021 Management 2.0%
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Hillmark
Funding Ltd.
2006-1A Sub HillMark Capital
Notes NA/NA NA/NA 5/21/2021 Management 1.9%
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GSC VIII - GSC Acquisition
Class D Notes BB/Ba2 B+/B1 4/17/2021 Holdings 1.8%
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Rampart CLO
2007-1A Sub Stone Tower Debt
Notes NA/NA NA/NA 10/25/2021 Advisors 1.7%
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Gale Force 4
CLO 2007-4A GSO/Blackstone Debt
Income Notes NA/NA NA/NA 8/20/2021 Funds Management 1.7%
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Hewett's Island CypressTree
CLO V - Class E Investment
Notes BB/Ba2 CCC- /B1 12/5/2018 Management Co 1.6%
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Cent CDO 15 - RiverSource
Class D Notes BB/Ba2 BB/Ba3 3/11/2021 Investments 1.6%
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PPM Grayhawk
CLO 2007 -
Class D Notes BB/Ba2 B-/Ba3 4/18/2021 PPM America 1.6%
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Hewett's Island
CLO IV - Class
E Notes BB/Ba2 CCC+/Ba3 5/9/2018 LCM Asset Management 1.5%
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Canaras Summit
CLO 2007-1 -
Class E Notes BB/Ba2 B+/Ba3 6/19/2021 Canaras Management 0.7%
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Cash 11.1%
Source: Bloomberg L.P. ("Bloomberg"), Standard & Poor's Ratings Services
("S&P"), and Moody's Investors Service, Inc. ("Moody's")
NR - Not Rated.
* Ratings are current as of January 30, 2013
** NAV% adds up to more than 100% due to liabilities on the balance sheet.
Investment Composition
The investments held by the CLO vehicles were primarily in companies domiciled in the United States (approximately 94%(1)). The top 10 aggregate industry exposures of the CLO vehicles accounted for approximately 56%(1) of combined investments while the top 10 aggregate single obligor investments accounted for approximately 3.5%(1) (please refer to the following two tables). This results in a weighted average diversity score of 67(2) for our portfolio (which we believe is broadly comparable to industry diversity scores for other similar CLO vehicles).
Top Ten Industry Exposures*(3) Ten Largest U.S. Debt Securities(3)
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Healthcare, Education & Univision Communications Inc -
Childcare 11.8% TL 0.48%
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Broadcasting and Entertainment 7.5% Asurion LLC - TL 0.43%
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Diversified/Conglomerate
Services 5.3% Cequel Communications - TL 0.35%
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Telecommunications 5.2% Onex Carestream Finance LP - TL 0.35%
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Electronics 4.9% Charter Communications - TL C 0.35%
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Retail Stores 4.8% HCA - TL B3 0.35%
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Chemicals, Plastics & Rubber 4.7% Crown Castle - TL B 0.30%
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Automobile 4.0% Transdigm Inc - TL 0.29%
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Finance 3.9% Del Monte - TL 0.29%
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Oil and Gas 3.5% KAR Auction Services - TL 0.29%
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Total 55.6% Total 3.48%
Source: Intex Source: Intex
* Reflects industry classifications established by Moody's.
CLO Compliance
As of December 31, 2012, each of the CLO vehicles was in compliance with all of its respective collateral and coverage tests that were necessary for full payment to be made to the Company by each CLO vehicle.(4) The current weighted average over-collateralization ("OC") cushion for the Company's CLO equity and debt investments was approximately 2.7% and 6.2%, respectively, as of December 31. 2012 (compared to 2.5% and 5.5%, respectively, as of September 30, 2012). As long as each CLO vehicle maintains a positive OC cushion with respect to the OC test associated with that CLO investment, a full payment is expected to be made to the Company.(5)
CLO Credit Quality
The current weighted average percentage of defaulted securities held by the CLOs (as reported by each CLO) was approximately 0.9% as of December 31. 2012 (compared to 0.9% as of September 30, 2012). The CLO vehicles which the Company has invested in have a weighted average WARF score (Weighted Average Rating Factor) of 2557 (compared to 2545 as of September 30, 2012) which is equivalent to a Moody's credit rating of between B1 and B2 (see ratings charts below), based on a ratings factor scale provided by Moody's. We believe the weighted average WARF score of our portfolio is broadly comparable to industry WARF scores for other similar CLO vehicles.
Company Financial Highlights
The Company received or was entitled to receive cash interest payments of approximately $650k and equity distributions of approximately $3.6mm from its junior debt and equity tranche investments, respectively, for the quarter ending December 31, 2012. These payments represented a quarterly cash return of approximately 1.3% and 8.3% of the junior debt and equity tranche investments at fair value (as of December 31, 2012), respectively, and on a combined basis represented a quarterly cash return of approximately 4.6% of the Company's total portfolio at fair value (as of December 31, 2012). For the quarter ending December 31, 2012 the Company received a full payment from each CLO vehicle (see table below).
% NAV
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Distributions paid by the CLOs for the 3-months ending 12/31/12 100.0%
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Distributions diverted for 3-months ending 12/31/12 0.0%
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The approximate weighted average WAS (Weighted Average Spread above LIBOR) for the CLO vehicles in which the Company has an equity investment was 4.1% and the approximate weighted averaged WACC (Weighted Average Cost of Capital above LIBOR) was 0.9%, resulting in approximately a 3.2% margin (before CLO vehicle expenses) as of December 31, 2012 (compared to a weighted average WAS and WACC of 4.0% and 0.7%, respectively, as of September 30, 2012). The weighted average reinvestment end date for the Company's equity positions was 10/14/14 (with a final legal weighted average maturity date of 10/23/21) which potentially allows, on a weighted average basis, for approximately 1.75 more years of full equity distribution payments followed by up to approximately 7 years of decreasing distribution payments to the Company, subject to CLO covenant compliance. During the quarter ending December 31, 2012, the Company received a weighted average cash distribution payment on its equity portfolio of approximately 8.0% (of par) with a fair value adjustment of approximately -0.11% (of par) from the prior quarter-end valuations (see table below).(6)
Fair Value
Change from
9/30/12 Fair
Payments in Q3 Value or
Stated as a % Purchase Price
Equity Investments Maturity* of par* as a % of par
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ACA CLO 2007-1 - Sub Notes 6/15/2022 9.2% -1.0%
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Canaras Summit CLO 2007-1 -
Income Notes 6/19/2021 11.5% 6.0%
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Carlyle GMS CLO 2011-1 - Sub
Notes 8/10/2021 8.3% 15.0%
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Gale Force 4 CLO 2007-4A
Income Notes 8/20/2021 8.6% 6.3%
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Harbourview CLO 2006-1 Sub
Notes 12/27/2019 8.7% -8.3%
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Hillmark Funding Ltd. 2006-1A
Sub Notes 5/21/2021 9.1% -5.0%
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Jersey Street CLO Income Notes 10/20/2018 8.8% -6.0%
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Kingsland IV, Ltd. 2007-4A Sub
Notes 4/16/2021 9.8% -5.5%
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Lightpoint CLO VII, Ltd. 2007-
7X Sub Notes 5/15/2021 10.7% -2.0%
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Neuberger Berman CLO XIII Sub
Notes(7) 1/23/2024 0.0% 0.0%
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Octagon XI CLO 2007-1A Income
Notes 8/25/2021 11.3% -5.0%
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Rampart CLO 2007-1A Sub Notes 10/25/2021 10.9% -6.0%
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Weighted Average 10/23/2021 8.0% -0.11%
* Source: Bloomberg
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 rated below investment grade or is unrated.
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.
Disclaimer
This document has been prepared by Oxford Lane Capital Corp. and is the sole responsibility of the Company. No liability whatsoever (whether in negligence or otherwise) arising directly or indirectly from the use of this document is accepted and no representation, warranty or undertaking, express or implied, is or will be made by the Company or any of their respective directors, officers, employees, advisers, representatives or other agents ("Agents") for any information or any of the opinions contained herein or for any errors, omissions or misstatements. The Company has relied on certain information provided from Intex, Bloomberg, S&P and Moody's but makes no representation with respect to the accuracy of such information provided by Intex, Bloomberg, S&P or Moody's. Neither the Company nor any of its respective Agents makes or has been authorized to make any representation or warranties (express or implied) in relation to the Company or as to the truth, accuracy or completeness of this document, or any other written or oral statement provided. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, estimates or forecasts contained in this document and nothing in this document is or should be relied on as a promise or representation as to the future.
(1) These percentages are based on the amount of CLO vehicles' underlying assets on a weighted average basis, without regard to the amount of the Company's investments in these CLO vehicles.
(2) Source: Intex Solutions, Inc. ("Intex").
(3) These percentages for each of the respective tables above are calculated by taking the aggregate amount invested in the industries or debt securities and dividing by the aggregate amount of all of the CLO vehicles' underlying assets (excluding cash), without regard to the amount of the Company's investments in each of these CLO vehicles.
(4) The CLO vehicles' indentures have a variety of covenant tests which those CLO vehicles may not be in compliance with in the future should credit markets deteriorate, the loans held by the CLO vehicles fail to make expected payments or otherwise not perform, or for a variety of other reasons. If those covenants are violated, it could result in principal paydowns of the CLO vehicles' higher-rated notes and/or interest diversion which may result in partial or non-payment of the quarterly amounts otherwise due to the Company.
(5) Although we expect each of our current CLO equity and debt investments to maintain a positive OC cushion through maturity, there can be no assurance that such OC cushions will not be reduced to zero (or the CLO vehicle will not be in violation of the OC tests), either as a result of a deterioration in general economic conditions or other factors specific to the industries or specific companies in which such CLOs have invested. If that were to occur, our ability to receive payments on such CLO investments could be impaired, and we may lose a portion or all of our investment in such CLOs.
(6) All calculations in the above paragraph are based on par value.
(7) Since this investment was purchased in the primary market, the first equity payment is not due until the quarter ending June 30, 2013.
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Contact:
Bruce Rubin
203-983-5280
Source: Oxford Lane Capital Corp.