Eagle Point Credit Company Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Eagle Point Credit Company Inc. on November 19, 2021. The filing reports the entry into a material definitive agreement and amendments to the Company's Articles of Incorporation regarding the issuance of new preferred stock.
Key Financial Metrics and Capital Structure
The filing details a new equity offering rather than operational financial results. Key metrics include:
- Offering Size: 1,000,000 shares of 6.75% Series D Term Preferred Stock, with an option for an additional 150,000 shares.
- Liquidation Preference: $25.00 per share.
- Dividend Rate: Fixed annual rate of 6.75% ($1.6875 per share per year), payable monthly.
- Trading Symbol: ECC PRD (expected listing on the New York Stock Exchange).
- Closing Date: Expected November 29, 2021.
The filing does not provide current revenue, profit, cash flow, or debt levels for the Company.
Material Changes
The primary material change is the authorization and issuance of the Series D Preferred Stock. On November 24, 2021, the Company filed a Certificate of Designation with the State of Delaware, designating a total of 3,500,000 shares of Series D Preferred Stock. This action modifies the rights of security holders by creating a new class of senior securities.
Terms, Risks, and Management Commentary
Ranking and Seniority: The Series D Preferred Stock ranks senior to common stock and equal to other existing preferred stock (Series B and Series C). It is subordinate to all senior indebtedness, including notes due in 2027, 2028, and 2031.
Dividend Mechanics: Dividends are cumulative. If the Company fails to pay a dividend, the rate increases by 2% per annum until the dividend is paid or the stock is redeemed.
Redemption: The Company may redeem the shares at its option on or after November 29, 2026, at the liquidation preference plus accumulated unpaid dividends.
Voting Rights: Holders vote together with other preferred and common stockholders as a single class. However, preferred stockholders voting separately as a class can elect two directors. If dividends are unpaid for two full years, preferred holders gain the right to elect a majority of the board.
Risks: The Company may be precluded from paying dividends if it fails to maintain asset coverage required by the Investment Company Act of 1940.
Investor Verification Checklist
- Verify the final closing date of the offering (expected November 29, 2021) and the total number of shares sold, including any exercise of the underwriters' option.
- Confirm the listing status and trading symbol (ECC PRD) on the New York Stock Exchange.
- Review the full text of the Underwriting Agreement (Exhibit 1.1) and Certificate of Designation (Exhibit 3.1) for complete terms.
- Assess the impact of the new dividend obligation on the Company's asset coverage ratio under the 1940 Act.
- Monitor the Company's ability to pay monthly dividends to avoid the 2% per annum penalty rate increase.