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 June 10, 2021, with the earliest event reported on that date. The filing details the entry into a material definitive agreement for a new equity offering and amendments to the company's capital structure.
Key Financial Metrics and Capital Structure
The filing does not provide specific revenue, profit, cash flow, or margin data. The primary financial activity reported is a capital raise through preferred stock:
- Offering Size: 1,060,000 shares of 6.50% Series C Term Preferred Stock due 2031.
- Underwriting Option: Underwriters hold an option to purchase up to an additional 140,000 shares.
- Liquidation Preference: $25 per share.
- Dividend Rate: Fixed annual rate of 6.50% ($1.625 per share per year), payable monthly.
- Closing Date: June 16, 2021.
- Trading Symbol: ECCC (New York Stock Exchange).
Material Changes Versus Prior Period
The filing reports the following material changes to the company's securities:
- New Series Issuance: Designation of 3,100,000 shares of 6.50% Series C Term Preferred Stock due 2031.
- Series B Amendment: Reduction of designated shares of 7.75% Series B Term Preferred Stock due 2026 from 2,840,000 to 2,156,765.
- Capital Structure Ranking: The new Series C stock ranks senior to common stock, equal to other preferred stock (including Series B), and subordinate to existing senior indebtedness (notes due 2027, 2028, and 2031).
Outlook, Risks, and Unusual Items
Management Commentary and Terms:
- Redemption: Mandatory redemption is required on June 30, 2031. Optional redemption is permitted on or after June 16, 2024.
- Dividend Penalty: If the company fails to redeem the stock on the mandatory date or fails to pay a dividend, the dividend rate increases by 2% per annum until cured.
- Voting Rights: Holders of preferred stock (Series B and C) voting as a class are entitled to elect two directors. If dividends are unpaid for two full years, preferred holders may elect a majority of the board.
Risks and Contingencies:
- Dividends are not guaranteed and may be omitted if the board deems it not in the best interest of stockholders or if the company fails to maintain asset coverage required by the Investment Company Act of 1940.
- The company cannot modify the mandatory redemption obligation without unanimous approval of Series C holders.
Key Facts for Investor Verification
- Verify the final closing amount and whether the underwriters exercised the 140,000 share option.
- Confirm the use of proceeds from the Series C offering as disclosed in subsequent filings.
- Monitor the company's asset coverage ratio to ensure compliance with the 1940 Act, which is a prerequisite for dividend payments.
- Review the impact of the reduced Series B designation on the company's overall leverage and capital structure.