Jonathan Cohen - Chief Executive Officer Bruce Rubin - Chief Financial Officer.

Mickey Schleien - Ladenburg Thalmann Christopher Testa - National Securities Corporation.

Good morning and welcome to the TICC Capital Corp Second Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jonathan Cohen, CEO. Please go ahead..

Good morning, and welcome everyone to the TICC Capital Corp second quarter 2017 earnings conference call. I'm joined today by Saul Rosenthal, our President and Chief Operating Officer; and Bruce Rubin, our Chief Financial Officer.

Bruce, could you open the call today with a discussion regarding forward-looking statements?.

Sure, Jonathan. Today's call is being recorded. An audio replay of the conference call will be available for 30 days. The replay information is included in our press release that was released earlier this morning. Please note that this call is the property of TICC Capital Corp. Any unauthorized rebroadcast of this call in any form is strictly prohibited.

I would also like to call your attention to the customary disclosure in our press release this morning regarding forward-looking information.

Today's conference call includes forward-looking statements and projections, and we ask that you refer to our most recent filings at the SEC, for important factors that could cause actual results to differ materially from those projections. We do not undertake to update our forward-looking statements, unless required to do so by law.

To obtain copies of our latest SEC filings, please visit our website at www.ticc.com. With that, I'll turn the presentation back over to Jonathan..

Thanks very much, Bruce. We generated a total return of approximately 2.4% for shareholders during the second quarter of 2017 representing the change in TICC's book value per share plus distributions paid to our common stockholders. Our book value per share was $7.53 at the end of the March 2017 quarter, compared to $7.51 at June 30.

We paid distributions of $0.20 per share during the second quarter. For the quarter ended June 30, we recorded GAAP net investment income of approximately $7.5 million or approximately $0.15 per share.

In the second quarter, we also recorded net unrealized appreciation of approximately $1 million and net realized capital losses of approximately $500,000. In total, we had a net increase in net assets from operations of approximately $9.1million or $0.18 per share.

Our core net investment income for the quarter ended June 30 was approximately $9.3 million or approximately $0.18 per share. Please see the earnings release we issued today for a reconciliation of net investment income with core net investment income. We note that we continue to have no investments on non-accrual status as of June 30.

During the second quarter of 2017, we continued to execute our strategy of rotating out more broadly syndicated corporate loans and into a combination of club deals and narrowly syndicated loans through purchases in both the primary and secondary markets.

Moreover, our corporate loan investment activity continues to focus on the rotation of the portfolio into higher yielding loans. As of June 30, the weighted average yield of our debt investments at current cost was approximately 9.5%, compared to 8.4% as of March 31, 2017.

We also continued our active rotation of our CLO investment portfolio with opportunistic purchases and sales. Several of our CLOs executed refinancing transactions, which decreased the weighted average cost of their respective liabilities and in certain instances executed resets which also lengthened the reinvestment period of those CLOs.

During the second quarter we submitted a notice of voluntary redemption to the trustee of our TICC 2012-1 CLO, beginning the redemption process for that vehicle. The redemption of our 2012-1 CLO will provide us with the ability to continue the rotation of our corporate loan portfolio into higher yielding assets.

With that redemption, we will eliminate approximately $73.4 million of debt shown on our balance sheet as of June 30, 2017.

Additionally, previously announced issuance of approximately $64 million of 6.5% seven year notes we executed during the second quarter, the proceeds of which will be utilized in the repayment of our 7.5% 2017 convertible senior note issue, will result in a lower cost of capital for the Company going forward.

We continue to view our mandate as maximizing the risk adjusted return on our shareholder's investment in TICC. As such, we have and continue to focus on portfolio management strategies designed to maximize our total return as opposed to generating a certain level of income over a particular timeframe.

We view the market opportunity currently available to us as strong and as a permanent capital vehicle that have historically been able to take a longer term view towards our investments. We believe this perspective serviced well during the second quarter of 2017.

We note that additional information about TICC's second quarter performance has been posted to our website at www.ticc.com and with that operator we're happy to open the call up for any questions..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Mickey Schleien with Ladenburg. Please go ahead..

Good morning, Jonathan. My first question, you sort of alluded to this in your prepared remarks, but wanted a little more color. We see spreads to continue to compress even going into this quarter, which is offsetting the benefit of higher LIBOR for CLO assets, but I do see that the cash yield on your CLO equity investments was up.

So can you give us a sense of how quickly CLO managers in your portfolio are refinancing or resetting liabilities to balance that trend? And within your portfolio, how many CLO's do you actually control where you can influence that process?.

Sure, Mickey. Generally speaking, the rate of refinancings and resets across the CLO universe and specifically in our portfolio has been very strong.

The benefit of lower spreads on the liability side of CLO's balance sheet is a fairly important factor, probably the driving factor in that equation and we continue to see that trend play out, so that certainly has been a benefit to us.

In terms of how many of our transactions we control, I would say that it's - there's a number that kind of schedule investment, but more to the point, we would like to think that we've got a meaningful feed at the table in the context of these various discussions, given the size of our investments in this sector.

So collateral managers are behaving in economically rational ways, CLO debt and equity holders and investors are behaving in economically rational ways and the nexus of those forces are resulting in continued resets and refinancings across that sector..

Just a follow up then, were those refinancings the main reason for the higher CLO equity cash yields that we saw or if it wasn't, then what drove those increase during the quarter?.

No, Mickey. You're exactly right. That was the principle driver..

Thank you. Our next question comes from Christopher Testa with National Securities Corporation Please go ahead..

Hi, good morning. Thanks for taking my questions.

Jonathan, just wondering if you could touch on how much of any of the portfolio is within let's say, 50 or 40 basis points or so of failing the weighted average spread test?.

Within 50 basis points of failing the spread test, weighted average spread test would result in a diversion of cash or - I'm sorry Chris, can you clarify the question a little bit..

Yeah, just how much is within proximity of failing the weighted average spread test would then cause a diversion of cash from the equity portion of the CLO..

Yeah, I think there may be a nomenclature issue Chris. I think you're talking about OC test not the way -.

No, I didn't mean the OC test, I meant the weighted average spread test. Just given where spreads are and obviously the reinvestment opportunity as being more challenging..

Sure, Chris. But just to be clear, a failure of the weighted average spread test in this typical CLO structure would not result in a diversion of the cash flows.

I think you're actually meaning to ask and I don't mean to be presumption at all, is what portion of our CLO equity portfolio maybe close to tripping a diversion test which would impact the OC test and in that case it's negligible to zero..

Got it. Great, thank you.

And then just, I know kind of touching on Mickey's questions on the refinances, I know in June the average discount margin was about 125 bps, is that kind of in line with what your experience has been or have you seen it to be a bit higher or lower and where do you see in kind of quarter-to-date as well in terms of the resize?.

Resize has continued to tighten, so again the driving dynamic behind this trend towards resets and resize continues to be tighter spreads in the liability sides of CLO balance sheet. That dynamic continues to play out essentially in lockstep or possibly even in front of spread compression on corporate loans.

Yeah and one of the group is actually saying, we've seen double digits on AAA's , meaning below 100 basis points spreads on AAAs which is fairly remarkable. And I thank you Chris very much for those questions.

One sort of derivative question talking about spread compression really revolves around the weighted average yield on our debt investments on our corporate loan book.

That spread is obviously been increasing fairly dramatically, so if you look back to the first quarter of 2016, when the weighted average yield on our corporate loan investment stood at about 7.1%.

The progression has been from 7.1% to 7.5% in the second quarter of 2016 to 8% in the third quarter of 2016, 8.3% in the fourth quarter of 2016, 8.4% in the first quarter of 2017 and now 9.5% in the second quarter of calendar 2017 to roughly 240 basis point widening in the weighted average yield on our corporate loan book, obviously a fairly meaningful increase and very much consistent with our stated objectives for that portfolio..

Thank you..

We now have a follow-up question from Mickey Schleien. Please go ahead..

Jonathan, wanted to follow up by asking about non-qualified investments, obviously we haven't seen the Q yet, but based on the presentation looks like you're well above the 30% limit as of June.

Can you tell me what your strategy is to cure that so that you can declare dividends beyond September?.

Sure, Mickey, thank you. We actually as of June 30 are below the 30% non-qualified asset test basket. So we can go through whatever you're looking at offline, but could in fact that test does not need to be cured by virtue of the fact that we're in full compliance..

Okay. I must have read the presentation wrong.

And a broader question at a very high level, Jonathan, do you see any signs of equilibrium developing in the middle market - for middle market loans? And what are they, I mean, we've seen this wave of spread compression I don't know its couple of years I would suppose and there doesn't seem to be any sign of that abating, so just curious on your very high level view of the market in general..

Sure, Mickey, thank you. I would say that spreads on the whole in our part of the market the lower end of the middle market continuum. The secondly market, the market that we are more focused on club deals, narrowly syndicated transactions have actually been fairly stable.

I wouldn't because perhaps suffice to say there's been a bifurcation in the corporate loan market between broadly syndicated, narrowly syndicated club deals etcetera, but there certainly has been some divergence and I think as you can see from our spread widening over the course of the last year and a half, we have I believe benefited at least in part from that dynamic..

Thank you. We now have a follow up question from Christopher Testa. Please go ahead..

Hey, Jonathan.

I just want to follow up and also ask given the exempt of relief that you and Oxford Lane have received, how does this kind of enhance your ability to do more primary and sizable originations in the CLO equity market?.

Chris, thank you. And that is a very important question and an important topic for us.

As you know and as I think others on the call know we have historically not operated with the benefit, the exempt relief with respect to our three funds we have, TICC, Oxford Lane Capital Corp and Oxford Bridge, which is the private fund each of those three do somewhat different things but each of those three funds to invest in the CLO junior debt and equity markets.

We have not been a historically to participate generally in the primary market between more than one of those three funds. The secondary market we're able to participate and we have been able to participate in through mass mutual.

So the receipt of this exemptive relief now allows us Chris just as you've said to participate in the primary market between one, two or three of the funds, which gives us a bigger footprint, it gives us greater scale, it gives us superior in my view negotiating capability as we originate structure and ultimately execute against the primary market where we continue to see fairly strong opportunities for that business, for primary CLO issuance so..

Got it..

The answer I think is significantly..

Okay.

And as a result of that is it fair to say that we should expect less concentrated CLO equity positions as well as potentially more fee rebates on what you're paying the collateral managers?.

Hopefully, sure, I mean that would be a reasonable expectation although as you know the CLO market in particular, the CLO primary market is volatile and somewhat unpredictable and I certainly wouldn't want to commit to any definitive path, but it certainly gives us greater optionality and greater flexibility as we as we face this market going forward.

So, yes..

Great. Thanks for taking my question..

Thanks, Chris, very much..

Thank you. I'm showing no further questions in the queue. So I will now turn the call back over to Jonathan Cohen..

All right, well, I'd like to thank everyone for their participation in our June 30 TICC earnings call. We appreciate everyone's interest and participation. We look forward to talking to you in the future. Thanks very much again..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..