XAI Octagon Floating Rate & Alternative Income Trust Declares its Monthly Common Shares Distribution and Quarterly Preferred Shares Dividend

Rhea-AI Summary

XAI Octagon Floating Rate & Alternative Income Trust (NYSE: XFLT) announced its regular monthly distribution of $0.085 per common share, with key dates set for July 15, 2024 (ex-dividend and record date), and August 1, 2024 (payable date). No change in amount from previous declarations.

The Trust also declared a quarterly dividend of $0.40625 per share for its 6.50% Series 2026 Term Preferred Shares (NYSE: XFLTPRA), with a payable date of July 31, 2024. Distributions may include net investment income, capital gains, and return of capital.

As a registered investment company, the Trust must distribute significant income to avoid excise tax. Preferred shareholders have priority in distributions, and dividend amounts are cumulative. Future distributions will be based on several factors, including financial performance and compliance with covenants.

For more details, shareholders can visit www.xainvestments.com.

Positive

• XAI Octagon declared a consistent monthly distribution of $0.085 per common share.
• Quarterly dividends of $0.40625 per share for preferred shares were declared.
• Stable distribution indicates strong and predictable income for shareholders.

Negative

• Potential tax implications with distributions possibly being a return of capital.
• Uncertainty in future distributions due to reliance on financial performance and compliance with covenants.

CHICAGO--(BUSINESS WIRE)-- XAI Octagon Floating Rate & Alternative Income Trust (the “Trust”) has declared its regular monthly distribution of $0.085 per share of the Trust’s common shares (NYSE: XFLT). The Trust also declared preferred dividends for the quarter of $0.40625 per share of the Trust’s 6.50% Series 2026 Term Preferred Shares (NYSE: XFLTPRA).

The following dates apply to each declaration:

Share Class	Ex-Dividend Date	Record Date	Payable Date	Amount	Change from Previous Declaration
XFLT	July 15, 2024	July 15, 2024	August 1, 2024	$0.085	No Change
XFLTPRA	July 15, 2024	July 15, 2024	July 31, 2024	$0.40625	No Change1

Common share distributions may be paid from net investment income (regular interest and dividends), capital gains and/or a return of capital. The specific tax characteristics of the distributions will be reported to the Trust’s common shareholders on Form 1099 after the end of the 2024 calendar year. Shareholders should not assume that the source of a distribution from the Trust is net income or profit. For further information regarding the Trust’s distributions, please visit www.xainvestments.com.

The Trust’s net investment income and capital gain can vary significantly over time; however, the Trust seeks to maintain more stable common share monthly distributions over time. The Trust’s investments in CLOs are subject to complex tax rules and the calculation of taxable income attributed to an investment in CLO subordinated notes can be dramatically different from the calculation of income for financial reporting purposes under accounting principles generally accepted in the United States (“U.S. GAAP”), and, as a result, there may be significant differences between the Trust’s GAAP income and its taxable income. The Trust’s final taxable income for the current fiscal year will not be known until the Trust’s tax returns are filed.

As a registered investment company, the Trust is subject to a 4% excise tax that is imposed if the Trust does not distribute to common shareholders by the end of any calendar year at least the sum of (i) 98% of its ordinary income (not taking into account any capital gain or loss) for the calendar year and (ii) 98.2% of its capital gain in excess of its capital loss (adjusted for certain ordinary losses) for a one-year period generally ending on January 31 of the calendar year (unless an election is made to use the Trust’s fiscal year). In certain circumstances, the Trust may elect to retain income or capital gain to the extent that the Board of Trustees, in consultation with Trust management, determines it to be in the interest of shareholders to do so.

The common share distributions paid by the Trust for any particular period may be more than the amount of net investment income from that period. As a result, all or a portion of a distribution may be a return of capital, which is in effect a partial return of the amount a common shareholder invested in the Trust, up to the amount of the common shareholder’s tax basis in their common shares, which would reduce such tax basis. Although a return of capital may not be taxable, it will generally increase the common shareholder’s potential gain, or reduce the common shareholder’s potential loss, on any subsequent sale or other disposition of common shares.

Preferred shareholders are entitled to receive cumulative cash dividends and distributions on the Trust’s 6.50% Series 2026 Term Preferred Shares, when, as and if declared by, or under authority granted by, the Board of Trustees of the Trust out of funds legally available for distribution and in preference to dividends and distributions on common shares. If the Trust is unable to distribute the full dividend amount due in a dividend period on the Trust’s 6.50% Series 2026 Term Preferred Shares, the dividends will be distributed on a pro rata basis among the preferred shareholders.

Distributions and dividends shall be paid on the Payable Date listed above unless the payment of such distribution or dividend is deferred by the Board of Trustees upon a determination that such deferral is required in order to comply with applicable law, to ensure that the Trust remains solvent and able to pay its debts as they become due and continue as a going concern or, with regard to the Trust’s regular monthly distribution to common shareholders, to comply with the applicable terms or financial covenants of the Trust’s senior securities.

Future common share distributions will be made if and when declared by the Trust’s Board of Trustees, based on a consideration of number of factors, including the Trust’s continued compliance with terms and financial covenants of its senior securities, the Trust’s net investment income, financial performance and available cash. There can be no assurance that the amount or timing of common share distributions in the future will be equal or similar to that described herein or that the Board of Trustees will not decide to suspend or discontinue the payment of common share distributions in the future.

The investment objective of the Trust is to seek attractive total return with an emphasis on income generation across multiple stages of the credit cycle. The Trust seeks to achieve its investment objective by investing in a dynamically managed portfolio of opportunities primarily within the private credit markets. Under normal market conditions, the Trust will invest at least 80% of its Managed Assets in floating rate credit instruments and other structured credit investments. There can be no assurance that the Trust will achieve its investment objective.

The Trust’s common shares are traded on the New York Stock Exchange under the symbol “XFLT,” and the Trust’s 6.50% Series 2026 Term Preferred Shares are traded on the New York Stock Exchange under the symbol “XFLTPRA.”

About XA Investments

XA Investments LLC (“XAI”) serves as the Trust’s investment adviser. XAI is a Chicago-based firm founded by XMS Capital Partners in April, 2016. In addition to investment advisory services, the firm also provides investment fund structuring and consulting services focused on registered closed-end funds to meet institutional client needs. XAI offers custom product build and consulting services, including development and market research, sales, marketing, fund management and administration. XAI believes that the investing public can benefit from new vehicles to access a broad range of alternative investment strategies and managers. XAI provides individual investors with access to institutional-caliber alternative managers. For more information, please visit www.xainvestments.com.

About XMS Capital Partners

XMS Capital Partners, LLC, established in 2006, is a global, independent, financial services firm providing M&A, corporate advisory and asset management services to clients. It has offices in Chicago, Boston and London. For more information, please visit www.xmscapital.com.

About Octagon Credit Investors

Octagon Credit Investors, LLC (“Octagon”) serves as the Trust’s investment sub-adviser. Octagon is a 25+ year old, $34.2B below-investment grade corporate credit investment adviser focused on leveraged loan, high yield bond and structured credit (CLO debt and equity) investments. Through fundamental credit analysis and active portfolio management, Octagon’s investment team identifies attractive relative value opportunities across below-investment grade asset classes, sectors and issuers. Octagon’s investment philosophy and methodology encourage and rely upon dynamic internal communication to manage portfolio risk. Over its history, the firm has applied a disciplined, repeatable and scalable approach in its effort to generate attractive risk-adjusted returns for its investors. For more information, please visit www.octagoncredit.com.

XAI does not provide tax advice; please consult a professional tax advisor regarding your specific tax situation. Income may be subject to state and local taxes, as well as the federal alternative minimum tax.

Investors should consider the investment objectives and policies, risk considerations, charges and expenses of the Trust carefully before investing. For more information on the Trust, please visit the Trust’s webpage at www.xainvestments.com.

This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.

NOT FDIC INSURED

NO BANK GUARANTEE

MAY LOSE VALUE

¹ The Trust’s 6.50% Series 2026 Term Preferred Shares dividend is calculated based on the preferred shares Liquidation Preference of $25.00 per share and the fixed dividend rate of 6.50%.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240701804627/en/

Kimberly Flynn, Managing Director

XA Investments LLC

Phone: 888-903-3358

Email: KFlynn@XAInvestments.com

www.xainvestments.com

Source: XA Investments LLC

FAQ

What is the monthly distribution for XAI Octagon Floating Rate & Alternative Income Trust (XFLT) common shares?

The monthly distribution for XAI Octagon Floating Rate & Alternative Income Trust (XFLT) common shares is $0.085.

What is the dividend for XAI Octagon Floating Rate & Alternative Income Trust (XFLT) preferred shares?

The dividend for XAI Octagon Floating Rate & Alternative Income Trust (XFLT) preferred shares (6.50% Series 2026 Term Preferred) is $0.40625 per share.

When is the ex-dividend date for XFLT's July 2024 distribution?

The ex-dividend date for XFLT's July 2024 distribution is July 15, 2024.

When is the record date for XFLT's July 2024 distribution?

The record date for XFLT's July 2024 distribution is July 15, 2024.

When will the July 2024 distribution for XFLT common shares be paid?

The July 2024 distribution for XFLT common shares will be paid on August 1, 2024.

When will the quarterly dividend for XFLT preferred shares be paid?

The quarterly dividend for XFLT preferred shares will be paid on July 31, 2024.

What factors influence future distributions for XFLT common shares?

Future distributions for XFLT common shares depend on financial performance, net investment income, available cash, and compliance with financial covenants.