OFS Credit Company Provides February 2026 Net Asset Value Update Mar 16, 2026 5:00 PM Eastern Daylight Time OFS Credit Company Provides February 2026 Net Asset Value Update Share CHICAGO--(BUSINESS WIRE)--OFS Credit Company, Inc. (Nasdaq: OCCI) ("OFS Credit†, the "Company†, "we†, "us†or "our†), an investment company that primarily invests in collateralized loan obligation ("CLO†) equity and debt securities, today announced the following net asset value ("NAV†) estimate at February 28, 2026. Mana ...

___________________________________________________ || --- |Expand## ContactsINVESTOR CLO vehicles, for GAAP purposes, is recorded using the effective interest method; this is based on an estimated effective yield, at current amortized cost, to the expected redemption of the security utilizing assumed cash flows, including those CLO equity investments that have not made their inaugural distribution for the relevant period end. The result is an estimated effective yield for the investment in which the respec ...

Financial Data and Key Metrics Changes - Net Investment Income decreased to $0.20 per share from $0.22 per share in the prior quarter, primarily due to a lower net interest margin resulting from higher interest rates on new unsecured notes [4] - Net Asset Value per share declined to $9.19 from $10.17, attributed to markdowns of non-performing loans [4][12] - Total investment income decreased approximately 11% to $9.4 million, driven by a decrease in non-recurring dividend fees and certain interest income [15] Business Line Data and Key Metrics Changes - The loan portfolio remained stable, with one loan placed on non-accrual status and one loan returned to accrual status during the quarter [12][17] - The weighted average performing investment income yield increased modestly to 13.5%, up about 0.2% quarter-over-quarter, primarily due to increased yields on structured finance securities [18] Market Data and Key Metrics Changes - The regulatory asset coverage ratio decreased to 156%, down one percentage point from the prior quarter [13] - The macroeconomic environment remains uncertain, with potential for further interest rate cuts impacting the floating rate loan portfolio [7][16] Company Strategy and Development Direction - The company is focused on preserving capital and strengthening its balance sheet by extending debt maturities and reducing overall debt, with the earliest maturity now in 2028 [19] - Efforts to monetize the equity investment in Fansteel are ongoing, with a fair value of approximately $79.4 million [5][11] - The company aims to maintain a diversified loan portfolio, avoiding highly cyclical industries and focusing on senior secured loans [8][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the credit portfolio despite the uncertain macroeconomic environment [5][19] - The company anticipates further net interest margin compression due to lower reference rates following recent Fed rate cuts [16] - Management remains committed to increasing Net Investment Income over the long term while navigating the current economic landscape [19][20] Other Important Information - The company successfully reduced its total debt balance by $18.8 million during the quarter [9] - A new credit facility with Natixis was established, maturing in 2031, which strengthens the balance sheet [14] Q&A Session Summary - No questions were asked during the Q&A session, and the call concluded without any inquiries [21][22]

Financial Data and Key Metrics Changes - Net Investment Income decreased to $0.20 per share from $0.22 per share in the prior quarter, primarily due to a lower net interest margin resulting from higher interest rates on new unsecured notes [4] - Net Asset Value per share declined to $9.19 from $10.17, attributed to markdowns of non-performing loans [4][12] - Total investment income decreased approximately 11% to $9.4 million, driven by a decrease in non-recurring dividend fees and certain interest income [15] Business Line Data and Key Metrics Changes - The loan portfolio remained stable, with one loan placed on non-accrual status and one loan returned to accrual status during the quarter [12][17] - The weighted average performing investment income yield increased modestly to 13.5%, primarily due to increased yields on structured finance securities [18] Market Data and Key Metrics Changes - The regulatory asset coverage ratio decreased to 156%, down one percentage point from the prior quarter [13] - The macroeconomic environment remains uncertain, with potential for further interest rate cuts impacting the floating rate loan portfolio [7][16] Company Strategy and Development Direction - The company is focused on preserving capital and strengthening its balance sheet by extending debt maturities and reducing overall debt [19] - Efforts to monetize the equity investment in Fansteel are ongoing, with a fair value of approximately $79.4 million [5][11] - The company aims to maintain a diversified loan portfolio, avoiding highly cyclical industries and focusing on senior secured loans [8][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the credit portfolio despite the uncertain macroeconomic environment [5][19] - The company anticipates further net interest margin compression due to lower reference rates following recent Fed rate cuts [16] - Management remains committed to increasing Net Investment Income over the long term while navigating the current economic landscape [19][20] Other Important Information - The company successfully reduced its total debt balance by $18.8 million during the quarter [9] - A new credit facility with Natixis was established, maturing in 2031, which strengthens the balance sheet [9][14] Summary of Q&A Session Questions and Answers - No questions were raised during the Q&A session, leading to the conclusion of the conference call [21][22]

Financial Data and Key Metrics Changes - Net Investment Income decreased to $0.20 per share from $0.22 per share in the prior quarter, primarily due to a lower net interest margin resulting from higher interest rates on new unsecured notes [4] - Net Asset Value at December 31 was $9.19 per share, down from $10.17 per share in the prior quarter, mainly due to markdowns of non-performing loans [4][11] - Total investment income decreased approximately 11% to $9.4 million, driven by a decrease in non-recurring dividend fees and certain interest income [13] Business Line Data and Key Metrics Changes - The loan portfolio remained stable quarter-over-quarter, with one loan placed on non-accrual status and one loan returned to accrual status following restructuring [11][16] - The weighted average performing investment income yield increased modestly to 13.5%, up about 0.2% quarter-over-quarter, attributed to increased yields on structured finance securities [17] Market Data and Key Metrics Changes - The regulatory asset coverage ratio was 156%, a decrease of one percentage point from the prior quarter [12] - The macroeconomic environment remains uncertain, with potential for further interest rate cuts impacting the floating rate loan portfolio [6][15] Company Strategy and Development Direction - The company is focused on preserving capital and strengthening its balance sheet by extending debt maturities and reducing overall debt, with the earliest maturity now in 2028 [7][18] - Efforts to monetize the equity investment in Fansteel are ongoing, with a fair value of approximately $79.4 million at quarter end [5][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the credit portfolio despite the uncertain macroeconomic environment and potential for further interest rate cuts [6][18] - The company remains committed to investing higher in the capital structure, with 95% of loan holdings in first lien positions based on fair value [7][16] Other Important Information - The company has successfully reduced its total debt balance by $18.8 million and extended the maturity of its credit facilities to enhance operational flexibility [8][12] - The advisor's experience and alignment with shareholders, holding approximately 23% ownership in the BDC, is emphasized as a strength [19] Q&A Session Summary - No questions were asked during the Q&A session, leading to the conclusion of the conference call [20]

Investment Strategy - The company focuses on investments in middle-market companies in the United States, targeting individual investments generally ranging from $3.0 million to $25.0 million[71]. - The investment portfolio is expected to continue comprising a significant portion of Senior Secured First Lien Loans, which provide security interests in the assets of portfolio companies[72]. - Unitranche loans are anticipated to represent a significant growth opportunity, allowing for a blended interest rate that reflects the risk of both secured and unsecured components[73]. - The company categorizes its investments into various types, including First Lien Debt, Second Lien Debt, and Subordinated Debt, with specific characteristics and risk profiles[75][76][77]. - The company expects to hold most middle-market debt investments to maturity or repayment, with potential early sales based on relative value decisions or liquidity needs[83]. - Structured Finance Securities, including mezzanine and subordinated note securities, are part of the investment strategy, representing beneficial interests in portfolios of below-investment-grade senior secured loans[80]. - Investments in Broadly Syndicated Loans are typically used for leveraged buyouts, mergers, and acquisitions, with a diverse group of investors involved[75]. - The company anticipates that subordinated loans will provide significant current interest income, although they carry a higher risk of loss compared to secured loans[76]. Risk Management - The company employs a risk management strategy that includes selecting investments with a low probability of loss and negotiating covenants to protect capital[84]. - The investment committees are responsible for evaluating and approving investments, ensuring adherence to the company's core investment philosophy and policies[68]. Management Fees and Incentives - OFS Advisor's base management fee is set at an annual rate of 1.75%, calculated based on the average value of total assets, excluding cash and cash equivalents[85]. - For the years ended December 31, 2025, 2024, and 2023, the base management fee for OFSCC-FS Assets was reduced to 0.25% per quarter, resulting in reductions of $1.0 million, $1.1 million, and $1.2 million respectively[86]. - The incentive fee consists of an Income Incentive Fee based on pre-incentive fee net investment income and a Capital Gains Fee based on realized capital gains[87]. - The hurdle rate for pre-incentive fee net investment income is set at 2.0% per quarter (8.0% annualized), with no accumulation of amounts from quarter to quarter[89]. - The Income Incentive Fee is calculated quarterly, with 100% of pre-incentive fee net investment income exceeding the hurdle rate up to 2.5% being subject to a catch-up provision[95]. - For the year ended December 31, 2025, the base management fees recognized were $5.769 million, while the Income Incentive Fee was $1.758 million[94]. - The Capital Gains Fee is calculated at 20.0% of the positive difference between cumulative realized capital gains and cumulative realized capital losses[91]. - The Investment Advisory Agreement remains effective annually if approved by the Board and a majority of outstanding voting securities[102]. - OFS Advisor is not entitled to recoup any reduced base management fees related to OFSCC-FS Assets[86]. Operational Costs - The Company bears all out-of-pocket costs and expenses of operations, while OFS Advisor covers the compensation and overhead expenses of its personnel[100]. - Administration fees for the years ended December 31 were $1,557,000 in 2025, $1,521,000 in 2024, and $1,680,000 in 2023, indicating a decrease of 7.3% from 2023 to 2025[104]. - The Board approved the continuation of the Investment Advisory Agreement on April 3, 2025, after reviewing the fee structures of comparable externally managed BDCs[106]. Regulatory Compliance - The company is regulated as a BDC under the 1940 Act, which requires that qualifying assets represent at least 70% of total assets[109]. - The company has received an existing Order from the SEC allowing greater flexibility for co-investment transactions with certain Affiliated Funds[112]. - The company may enter into repurchase agreements with counterparties, with no percentage restriction on the proportion of assets invested in such agreements[120]. - The company has a license agreement with OFSAM to use the name "OFS" as long as OFS Advisor remains the investment adviser[108]. - The company provides managerial assistance to portfolio companies to meet regulatory requirements for qualifying assets[119]. - The company’s investment policies are not fundamental and may be changed without stockholder approval[117]. - The company received approval on May 3, 2018, to reduce its minimum required asset coverage ratio from 200% to 150%, effective May 3, 2019[123]. - The company must derive at least 90% of its gross income from specific sources to maintain its qualification as a RIC[149]. - The company is generally prohibited from participating in certain transactions with affiliates without prior approval from independent directors and, in some cases, the SEC[127]. - The SEC granted the company an existing Order on August 4, 2020, allowing greater flexibility for co-investment transactions with certain Affiliated Funds[128]. - The company has submitted a new application for exemptive relief to allow co-investment under different conditions, but approval is not guaranteed[129]. - The company is required to maintain a bond issued by a reputable fidelity insurance company to protect against larceny and embezzlement[132]. - The company has adopted a code of ethics to establish procedures for personal investments and restrict certain personal securities transactions[135]. Financial Performance - The net investment income (NII) is a key performance metric aimed at providing current income to stockholders, with a focus on increasing NII to enhance distributions[507]. - As of December 31, 2025, the total proceeds from principal payments, sales or redemptions, and distributions received from portfolio investments were $88.6 million, down from $128.8 million in 2024[500]. - The net increase (decrease) in net assets resulting from operations is a key metric for assessing performance and overall profit or loss[509]. - As of December 31, 2025, the portfolio yield is a gross figure that does not account for changes in costs, including debt and other expenses[511]. - The company had no Structured Finance Securities that have been optionally redeemed as of December 31, 2025[499]. - Total investment income for the year ended December 31, 2025, was $40.7 million, a decrease of $7.3 million (15.2%) compared to $47.9 million in 2024[513]. - Total interest income decreased by $4.9 million (11.3%) to $38.4 million in 2025, primarily due to a decrease in cash interest income[514]. - Dividend income decreased by $2.2 million (53.3%) to $1.9 million in 2025, largely due to non-recurring dividends recognized in the prior year[515]. - Total expenses for the year ended December 31, 2025, were $28.3 million, a decrease of $2.9 million (9.3%) compared to $31.3 million in 2024[522]. - Net investment income for 2025 was $12.4 million, down $4.3 million (25.8%) from $16.7 million in 2024[513]. - The company experienced a net loss on investments of $45.0 million in 2025, compared to a net gain of $11.7 million in 2024[530]. - Net unrealized depreciation of $32.8 million in 2025 was primarily due to $23.0 million on equity investments and $8.9 million on non-accrual loans[531]. - Interest expense for 2025 decreased by $0.1 million (0.6%) to $16.5 million, attributed to a decrease in average outstanding debt balances[523]. - The Income Incentive Fee for 2025 decreased by $2.4 million (57.5%) to $1.8 million, primarily due to a decrease in net investment income[524]. Debt and Equity Management - The company is authorized to borrow funds and sell assets to satisfy distribution requirements, but asset disposals may be limited by portfolio illiquidity and RIC status requirements[152]. - The company’s taxable C-corporation subsidiary held equity investments valued at $4.8 million and $4.6 million as of December 31, 2025, and 2024, respectively, to mitigate non-qualifying income impacts[156]. - If the company fails to maintain RIC qualification, it will face corporate tax on all ICTI and Net Capital Gains, and distributions would be taxable as ordinary income to stockholders[157]. - The company is required to diversify holdings such that at least 50% of assets consist of cash, government securities, and other securities, with limits on individual issuer investments[155]. - The company may elect to treat investments in Passive Foreign Investment Companies (PFICs) as "qualified electing funds," requiring annual income recognition of ordinary earnings and net capital gains[153]. - The company may face conflicts of interest when investing alongside Affiliated Accounts, particularly in distressed situations, affecting decision-making on claims and restructuring[161]. - The company’s ability to co-invest is contingent on compliance with regulatory requirements and the interests of stockholders[166]. - The company may need to allocate investment opportunities based on various factors, including investment guidelines, tax restrictions, and the status of investment vehicles[169]. Portfolio Composition - As of December 31, 2025, 89% of the total loan portfolio, at fair value, consisted of variable rate investments, generally indexed to SOFR[494]. - The total debt and equity investments amounted to $280.4 million at fair value as of December 31, 2025, compared to $332.8 million in 2024, indicating a decrease of approximately 15.7%[494]. - The three largest industries of debt and equity investments by fair value as of December 31, 2025, were Manufacturing (34.6%), Health Care and Social Assistance (17.5%), and Real Estate and Rental and Leasing (8.0%), totaling approximately 60.1% of the investment portfolio[496]. Quarterly Performance - Total investment income decreased by $1.2 million to $9.369 million for the three months ended December 31, 2025, compared to $10.551 million for the prior quarter[544]. - Total expenses decreased by $0.9 million to $6.673 million for the three months ended December 31, 2025, primarily due to a $0.6 million decrease in the Income Incentive Fee[547]. - Net loss on investments increased to $13.5 million for the three months ended December 31, 2025, compared to a net loss of $7.8 million in the prior quarter[549]. - The weighted-average performing income yield on debt investments increased to 11.9% for the three months ended December 31, 2025, from 11.8% in the prior quarter[551]. Cash Management - Cash and cash equivalents decreased by $2.7 million during the year ended December 31, 2025, with net cash provided by operating activities amounting to $43.6 million[562]. - As of December 31, 2025, the company had $220.5 million of outstanding debt with a weighted-average effective interest rate of 7.1%[564]. - The company held cash of $3.4 million as of December 31, 2025, including $2.4 million held by OFSCC-FS[553]. - The company had an unused commitment of $20.5 million under its Banc of California Credit Facility as of December 31, 2025[554]. - The asset coverage ratio for senior securities was 156% as of December 31, 2025, exceeding the minimum requirement of 150%[558]. - The company had unfunded commitments of $13.2 million to fund outstanding commitments to portfolio companies as of December 31, 2025[557]. Debt Instruments - As of December 31, 2025, the Banc of California Credit Facility had an outstanding principal of $4.5 million, with an unused commitment of $20.5 million and an interest rate of 5.00%[568]. - The BNP Facility had an outstanding principal of $50.95 million as of December 31, 2025, with a stated interest rate of SOFR + 2.65% and a maturity date of June 20, 2027[575]. - The total assets held by OFSCC-FS were $132.9 million as of December 31, 2025[575]. - The aggregate principal debt of Unsecured Notes totaled $165.0 million as of December 31, 2025, down from $180.0 million in 2024[577]. - On July 23, 2025, the company closed a public offering of $69.0 million in Unsecured Notes due July 2028, with net proceeds of $67.3 million after fees[578]. - The company redeemed $94.0 million of Unsecured Notes due February 2026 using proceeds from the issuance of new Unsecured Notes, resulting in a leverage-neutral refinancing[580]. - As of December 31, 2025, the company had $16.0 million of outstanding Unsecured Notes due February 2026, which were fully redeemed on February 9, 2026[581]. - The company may purchase Unsecured Notes in the open market to reduce future cash interest payments and amounts due at maturity[583]. - The Banc of California Credit Facility was amended on January 9, 2026, to extend the maturity date to February 28, 2028[571]. - The BNP Facility's reinvestment period expired on September 30, 2025, and all outstanding obligations were repaid on February 18, 2026[574].

Financial Performance - Net investment income decreased to $0.20 per common share for the quarter ended December 31, 2025, down from $0.22 per common share for the quarter ended September 30, 2025[5]. - Net loss on investments was $1.01 per common share for the quarter ended December 31, 2025, primarily due to net unrealized depreciation of $0.96 per common share[5]. - Total investment income decreased by $1.2 million to $9.369 million for the quarter ended December 31, 2025, compared to $10.551 million for the quarter ended September 30, 2025[13]. - Net investment income for the year ended December 31, 2025, was $12,384,000, down from $16,712,000 in 2024, reflecting a decrease of approximately 25.5%[23]. - Net realized loss on investments for the year was $12,158,000, compared to a loss of $17,121,000 in 2024, indicating an improvement in investment performance[23]. Asset and Liability Management - Net asset value per common share decreased to $9.19 at December 31, 2025, from $10.17 at September 30, 2025[5]. - Total assets decreased to $346,706,000 in 2025 from $428,123,000 in 2024, a reduction of about 19.0%[22]. - Total liabilities decreased to $223,518,000 in 2025 from $255,898,000 in 2024, a reduction of about 12.6%[22]. - Total outstanding debt decreased to $220.5 million as of December 31, 2025, down from $239.2 million at September 30, 2025[6]. Investment Portfolio - Total investments at fair value were $342.0 million, which was approximately 104% of amortized cost[12]. - Total investments at fair value decreased to $342,015,000 in 2025 from $409,665,000 in 2024, representing a decline of approximately 16.5%[22]. Distributions - A distribution of $0.17 per common share for the first quarter of 2026 was declared, payable on March 31, 2026[5]. - Distributions declared per common share for the year were $1.19, down from $1.36 in 2024, a decrease of approximately 12.5%[23]. Cash and Cash Equivalents - As of December 31, 2025, the company had $3.4 million of cash and cash equivalents[17]. Investment Strategy - The company targets investments of $3 million to $20 million in privately held middle-market companies with annual EBITDA between $5 million and $50 million[24]. - OFS Capital's investment activities are managed by OFS Capital Management, LLC, which is registered under the Investment Advisers Act of 1940[24]. Forward-Looking Statements - Forward-looking statements indicate potential risks and uncertainties that may affect future results, as detailed in the Annual Report filed with the SEC[25]. Yield Information - The weighted-average performing income yield increased to 13.5% from 13.3% during the quarter ended September 30, 2025[7]. Expense Management - Total expenses decreased by $0.9 million to $6.673 million for the quarter ended December 31, 2025, compared to $7.611 million for the quarter ended September 30, 2025[15].

Group 1 - OFS Credit (OCCI) is an externally managed closed-end fund that primarily focuses on CLO equity and debt, with the majority of its assets consisting of CLO [1] - The fund includes some CLO debt, but its main investment strategy revolves around CLO equity [1] - The Investment Doctor emphasizes a portfolio strategy that combines dividend and growth stocks, targeting a 5-7 year investment horizon [1] Group 2 - The Investment Doctor leads the investment group European Small Cap Ideas, which provides exclusive access to actionable research on European small-cap investment opportunities [1] - The focus of the investment group is on high-quality small-cap ideas, emphasizing capital gains and dividend income for continuous cash flow [1] - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]

Core Viewpoint - OFS Credit Company, Inc. has announced an estimated net asset value (NAV) per share of its common stock for January 31, 2026, ranging between $4.31 and $4.41 [1] Company Summary - OFS Credit Company primarily invests in collateralized loan obligation (CLO) equity and debt securities [1] - The NAV estimate provided by management is unaudited and does not represent a comprehensive statement of the company's financial position [1]

Core Insights - OFS Credit Company, Inc. has announced an estimated net asset value (NAV) per share of its common stock to be between $5.01 and $5.11 as of November 30, 2025, which is subject to change based on future evaluations [1] - The company primarily invests in collateralized loan obligation (CLO) equity and debt securities, aiming to generate current income and capital appreciation [3] Financial Condition - The NAV estimate is unaudited and does not reflect the company's comprehensive financial condition for the month ending November 30, 2025, and may differ from future NAV estimates [1] - The financial condition and results of operations may be significantly affected by various factors, including interest rate changes, inflation, geopolitical tensions, and economic instability [1] Company Overview - OFS Credit is a non-diversified, externally managed closed-end management investment company, with its investment activities managed by OFS Capital Management, LLC [3] - The company is headquartered in Chicago, Illinois, with additional offices in New York and Los Angeles [3]