Home » Venture Capital » TICC Announces Results of Operations for the Quarter Ended December 31, 2016 and Announces Quarterly Distributions of $0.20 per Share for Each of the Quarters Ending March 31, 2017, June 30, 2017, and September 30, 2017

TICC Announces Results of Operations for the Quarter Ended December 31, 2016 and Announces Quarterly Distributions of $0.20 per Share for Each of the Quarters Ending March 31, 2017, June 30, 2017, and September 30, 2017






GREENWICH, CT — (Marketwired) — 03/02/17 — TICC Capital Corp. (NASDAQ: TICC) (“TICC,” the “Company,” “we,” “us” or “our”) announced today its financial results for the quarter ended December 31, 2016, and announced distributions of $0.20 per share for each of the first, second, and third quarters of 2017.

HIGHLIGHTS

As of December 31, 2016, net asset value per share stood at $7.50 compared with a net asset value per share as of September 30, 2016 of $7.08.

For the quarter ended December 31, 2016, we recorded net investment income of approximately $7.3 million, or approximately $0.14 per share. In the fourth quarter, we also recorded net unrealized appreciation of approximately $30.1 million and net realized capital losses of approximately $1.1 million. Our collateralized loan obligation (“CLO”) positions represented approximately $20.7 million of the net unrealized appreciation for the quarter. In total, we had a net increase in net assets from operations of approximately $36.3 million, or approximately $0.71 per share.

Our core net investment income (“Core NII”), which is a non-GAAP measure, for the quarter ended December 31, 2016 was approximately $11.2 million, or approximately $0.22 per share. The increase in loan prices over the last year (which has led to higher CLO net asset values) has also resulted in tighter loan credit spreads. Combined with an increase in 3-month LIBOR, these tighter loan credit spreads have produced lower current and projected cash distribution payments from many of our CLO equity tranche investments, reducing Core NII.

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 and also excludes any capital gains incentive fees we recognize but have no obligation to pay in any period. ().

Total investment income for the fourth quarter of 2016 amounted to approximately $18.9 million, which represented an increase of approximately $0.8 million from the third quarter of 2016.

For the quarter ended December 31, 2016, we recorded investment income from our portfolio as follows:

approximately $8.3 million from our debt investments,

approximately $10.0 million from our CLO equity investments, and

approximately $0.6 million from all other sources.

While our experience has been that cash flow distributions have historically represented useful indicators of our CLO equity investments– annual taxable income, we now believe that current and future cash flow distributions may provide less useful indications as to the final determination of taxable income with respect to our CLO equity investments. In general, we currently expect our annual taxable income to be higher than our GAAP earnings for the current fiscal year.

Our weighted average credit rating on a fair value basis was 2.2 at the end of the fourth quarter of 2016 (compared to 2.2 at the end of the third quarter of 2016).

Our total expenses for the quarter ended December 31, 2016 were approximately $11.6 million, down by approximately $0.6 million compared to the third quarter of 2016.

Our Board of Directors has declared the following distributions on our common stock:

With the recent rise in 3-month LIBOR (and the corresponding loss of the benefit from the LIBOR floors), and with the recent compression in corporate loan spreads leading to lower projected taxable income, the change to the current distribution level is intended to allow us to retain and compound returns on our capital over longer timeframes. We note that this change is not related to any current or projected cash flow diversions from our CLO equity portfolio, and that all of our CLO equity positions made full distributions during the quarter ended December 31, 2016. Going forward, we intend to declare and pay special distributions to our shareholders on an as-needed basis, in order to comply with our income distribution requirements as a regulated investment company for tax purposes.

During the fourth quarter of 2016:

We made investments of approximately $27.0 million, consisting of approximately $16.6 million in corporate loan investments and approximately $10.4 million in CLO equity, as we continued our rotation of those portfolios. We received proceeds of approximately $21.4 million from sales of our CLO investments.

We received proceeds of approximately $32.1 million from repayments, sales and amortization payments on our corporate loan investments. $23.4 million of those proceeds along with a portion of prior quarter repayments, sales and amortization payments were applied towards a $74.7 million partial redemption of the TICC CLO 2012-1 LLC Class A-1 Notes.

As of December 31, 2016, the weighted average yield of our debt investments at current cost was approximately 8.3%, compared with approximately 8.0% as of September 30, 2016.

As of December 31, 2016, the weighted average effective yield of our CLO equity investments at current cost was approximately 17.0%, compared with approximately 14.0% as of September 30, 2016.

As of December 31, 2016, the weighted average cash distribution yield of our CLO equity investments at current cost was approximately 23.8%, compared with approximately 28.9% as of September 30, 2016.

At December 31, 2016, we had no investments on non-accrual status.

We ended 2016 with approximately $8.3 million of cash on our balance sheet, after the repurchase of $20.5 million of our outstanding convertible notes in December 2016, and we expect that cash on our balance sheet will increase during 2017 in anticipation of the maturity of the remaining $94.5 million of our outstanding convertible notes on November 1, 2017. As of February 28, 2017, we estimate cash on our balance sheet to be approximately $64.9 million.

In late February 2017, SourceHOV LLC (“SourceHOV”), Novitex Holdings Inc. (“Novitex”), and Quinpario Acquisition Corp. 2 publicly announced that they would combine to form Exela Technologies (a NASDAQ listed provider of business process outsourcing services). TICC has debt investments in both SourceHOV and Novitex. If this proposed combination is completed, then all of TICC–s existing 1st and 2nd Lien debt at SourceHOV and 1st Lien debt at Novitex would be repaid in full at par plus any applicable call premium. Pending the successful closing of this transaction (which is expected in the second quarter of 2017, subject to regulatory approval), TICC would receive a payment of 102% of par on its $15 million face value investment in the SourceHOV 2nd lien tranche. We note that, as of December 31, 2016, we ascribed a fair value to this investment equal to approximately 65% of par, which was determined based on available information prior to the notification of the proposed transaction.

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 determined in accordance with GAAP. Our non-GAAP measures 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 and also excludes any capital gains incentive fees we recognize but have no obligation to pay in any period. The Company did not recognize any capital gains incentive fees for the quarter ended December 31, 2016.

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, in order to continue to qualify to be taxed as a regulated investment company (“RIC”), we are required, among other things, to distribute at least 90% of our investment company taxable income annually. Therefore, 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 net investment income for the three months and year ended December 31, 2016:

We will host a conference call to discuss our fourth quarter results today, Thursday, March 2, 2017 at 10:00 AM ET. Please call 1-888-339-0740 to participate. A replay of the conference call will be available for approximately 30 days. The replay number is 1-877-344-7529, and the replay passcode is 10102454.

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

The following financial statements are unaudited and without footnotes. Readers who would like additional information should obtain our Form 10-K for the period ended December 31, 2016, and subsequent reports on Form 10-Q as they are filed.

TICC Capital Corp. is a publicly-traded business development company principally engaged in providing capital to established businesses, investing in syndicated bank loans and purchasing debt and equity tranches of collateralized loan obligation vehicles.

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, except as may be required by law.

Contact:
Bruce Rubin
203-983-5280

Short URL: https://www.88finance.com/?p=527703





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