Sound Point Meridian Capital, Inc Announces Fourth Fiscal Quarter 2024 Common Distributions and Fiscal Second Quarter 2024 Financial Results

Rhea-AI Summary

Sound Point Meridian Capital, Inc. (NYSE: SPMC) has announced its Q4 2024 common distributions and Q2 2024 financial results. The company declared monthly distributions of $0.22 per share for October, November, and December 2024. Key financial highlights include:

- Net asset value per share: $19.91 as of June 30, 2024
- Net investment income: $1.54 million ($0.08 per share)
- Net loss: $1.47 million ($0.07 per share)
- Weighted average effective yield of CLO equity portfolio: 17.0%
- Completed $80 million public offering at $20 per share
- Entered into a $100 million revolving credit facility with CIBC
- Deployed $77.8 million in investments and received $18.7 million in cash distributions

Positive

• Declared monthly distributions of $0.22 per share for Q4 2024
• Completed $80 million public offering at $20 per share
• Entered into a $100 million revolving credit facility with CIBC
• Deployed $77.8 million in investments
• Received $18.7 million in cash distributions from investment portfolio
• Weighted average effective yield of CLO equity portfolio at 17.0%

Negative

• Net loss of $1.47 million ($0.07 per share) for the period from June 13, 2024 through June 30, 2024
• Realized and unrealized loss on investments of $3.01 million ($0.15 per share)

Insights

Financial Analyst

Sound Point Meridian Capital's Q2 2024 results present a mixed picture. The company's NAV of $19.91 per share is slightly below its IPO price of $20, indicating minimal growth. The NII of $0.08 per share for the short period since IPO is positive, but the net loss of $0.07 per share due to realized and unrealized losses on investments is concerning.

The $0.22 monthly distribution seems aggressive given the current earnings, with a payout ratio exceeding 100% of NII. This could be unsustainable if investment performance doesn't improve. However, the 17.0% weighted average yield on the CLO equity portfolio is impressive and could support future distributions if maintained.

The new $100 million credit facility provides liquidity for growth, but investors should monitor leverage usage carefully. Overall, while the company shows potential with its CLO strategy, the initial performance warrants caution.

Market Research Analyst

Sound Point Meridian Capital's entry into the public market comes at an interesting time for CLO investments. The company's strategy of focusing on CLO equity, known for higher yields but also higher risks, aligns with the current market appetite for yield in a rising rate environment.

The company's indirect exposure to 1,595 unique corporate obligors through its CLO investments provides significant diversification, which is important in mitigating default risks. The fact that the top ten obligors represent only 4.4% of the underlying loans is a positive sign for risk management.

However, investors should be aware that CLO equity performance can be volatile, especially in economic downturns. The company's ability to maintain its 17.0% yield and navigate market cycles will be important for long-term success. The recent $45 million deployment in primary and secondary investments and $32.8 million in loan accumulation funds shows active management, but the outcomes of these investments will be key to watch.

NEW YORK--(BUSINESS WIRE)-- Sound Point Meridian Capital, Inc. (the “Company”) (NYSE: SPMC) today is pleased to announce the declaration of distributions on shares of the Company’s common stock, financial results for the period ended June 30, 2024 and certain additional activity through July 31, 2024.

DISTRIBUTIONS

The Company is declaring a monthly distribution of $0.22 per share on its common stock on each of October 31, November 29 and December 31.

The distributions are payable based on the following schedule:

Record Date	Payable Date	Amount per common share
October 15, 2024	October 31, 2024	$0.22
November 15, 2024	November 29, 2024	$0.22
December 16, 2024	December 31, 2024	$0.22

Distributions on common stock are generally paid from net investment income (“NII”) (regular interest and dividends) and may also include capital gains and/or a return of capital. The specific tax characteristics of the distributions will be reported to the Company’s stockholders on Form 1099 after the end of the 2024 calendar year.

SECOND QUARTER 2024 RESULTS

• Net asset value per share of common stock $19.91 as of June 30, 2024.
• NII for the period from the Company’s initial public offering (“IPO”) on June 13, 2024 through June 30, 2024 was $1.54 million, or $0.08 per share of common stock, comprised of $2.4 million of investment income, or $0.12 per share, and $0.88 million of expenses, or $0.04 per share.
• For the period from June 13, 2024 through June 30, 2024, realized and unrealized loss on investments was $3.01 million, or a loss of $0.15 per share of common stock.
• Net loss for the period from June 13, 2024 through June 30, 2024 was $1.47, or $0.07 per share of common stock.
• The Company had no leverage as of June 30, 2024.
• As of June 30, 2024:
  • The weighted average effective yield of the Company’s collateralized loan obligation (“CLO”) equity portfolio, based on amortized cost, was 17.0%.¹
• Completed an underwritten public offering of $80 million at $20 per share, or four million shares.
• As of June 30, 2024, on a look-through basis, and based on the most recent trustee reports received by such date:
  • The Company, through its CLO investments, had indirect exposure to approximately 1,595 unique corporate obligors.
  • The largest look-through obligor represented 0.6% of the loans underlying the Company’s CLO debt and equity portfolio.
  • The top ten largest look-through obligors together represented 4.4% of the loans underlying the Company’s CLO debt and equity portfolios.

THIRD QUARTER PORTFOLIO ACTIVITY THROUGH JULY 31, 2024 AND OTHER UPDATES

• Entered into a $100.0 million “net asset value” revolving credit facility with Canadian Imperial Bank of Commerce “CIBC,” which may be increased up to $125.0 million.
• Deployed $45 million in primary and secondary investments.
• Deployed $32.8 million in new loan accumulation funds.
• Received $18.7 million of cash distributions from the Company’s investment portfolio.²
• Issued an additional 175,000 shares, or $3.5 million, in connection with the closing of the overallotment option relating to the IPO.

CONFERENCE CALL

The Company will host a conference call at 11:00 a.m. (Eastern Time) this today to discuss these results for the period from June 13, 2024 – June 30, 2024.

All interested parties are welcome to participate in the conference call via the below:

Date/Time:	Thursday, August 15, 2024 – 11:00 a.m. ET
Participant Dial-In Numbers:
(United States):	(800) 225-9448
(International):	(203) 518-9708

To access the call, please dial-in approximately five minutes before the start time and, if asked, provide the operator with Conference ID “SOUNDQ2”.

An accompanying slide presentation is available in pdf format via the “Events and Presentations” section of the Company’s website (https://www.soundpointmeridiancap.com).

The call will also be simultaneously webcast over the internet via the “Events and Presentations” section of the Company’s website (https://www.soundpointmeridiancap.com). Please go to the “Events and Presentations” section of the Company’s website at least 15 minutes prior to the call to register for the call and download and install any necessary audio software.

ABOUT THE COMPANY

The Company is an externally managed, non-diversified closed-end management investment company. The Company’s investment objective is to generate high current income, with a secondary objective to generate capital appreciation, by investing primarily in third-party collateralized loan obligation (“CLO”) equity and mezzanine tranches of predominately U.S. dollar-denominated CLOs backed by corporate leveraged loans issued primarily to U.S. obligors. The Company is externally managed and advised by Sound Point Meridian Management Company, LLC. The Company’s public filings are available free of charge by writing to the Company at Sound Point Meridian Capital, Inc., 375 Park Avenue, 34^th Floor, New York, NY 10152, Attention: Investor Relations, or by telephone at (833) 217-6665.

Web: www.soundpointmeridiancap.com

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 prospectus and the Company’s other filings with the Securities and Exchange Commission. 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.

Source: Sound Point Meridian Capital, Inc.

NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

¹ Weighted average effective yield is based on investments’ amortized cost and expected future cash flows as of the applicable period end.

² “Cash distributions” refers to the quarterly distributions received by the company from its CLO debt, CLO equity and other investments.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240815999508/en/

Investor Relations:

Garrett Edson – ICR; Julie Smith – Sound Point Capital

(833) 217-6665

ir@soundpointmeridiancap.com

www.soundpointmeridiancap.com

Source: Sound Point Meridian Capital, Inc.

FAQ

What is Sound Point Meridian Capital's (SPMC) dividend distribution for Q4 2024?

Sound Point Meridian Capital (SPMC) declared monthly distributions of $0.22 per share for October, November, and December 2024.

What was SPMC's net asset value per share as of June 30, 2024?

SPMC's net asset value per share was $19.91 as of June 30, 2024.

How much did SPMC deploy in investments during Q3 2024 through July 31?

SPMC deployed $77.8 million in investments, including $45 million in primary and secondary investments and $32.8 million in new loan accumulation funds.

What was the weighted average effective yield of SPMC's CLO equity portfolio as of June 30, 2024?

The weighted average effective yield of SPMC's CLO equity portfolio was 17.0% as of June 30, 2024, based on amortized cost.