Item 1.01. Entry into a Material Definitive Agreement.
Underwriting Agreement
On March 5, 2021, Gladstone Capital Corporation (the "Company") entered into an
underwriting agreement (the "Underwriting Agreement") by and among the Company,
Gladstone Management Corporation, Gladstone Administration, LLC and Raymond
James & Associates, Inc., in connection with the issuance and sale of an
additional $50 million aggregate principal amount of the Company's 5.125% Notes
due 2026 (the "New Notes" and the issuance and sale of the New Notes, the
"Offering").
The description above is only a summary of the material provisions of the
Underwriting Agreement and is qualified in its entirety by reference to a copy
of the Underwriting Agreement, which is filed as Exhibit 1.1 to this Current
Report on Form 8-K and incorporated by reference herein.
2026 Notes
On March 10, 2021, the Company issued the New Notes pursuant to the Third
Supplemental Indenture (the "Third Supplemental Indenture"), dated December 15,
2020, between the Company and U.S. Bank National Association (the "Trustee"), to
the Indenture, dated November 6, 2018, between the Company and the Trustee. The
New Notes are being treated as a single series with the $100 million aggregate
principal amount of the Company's 5.125% Notes due 2026 issued on December 15,
2020 (the "Existing Notes" and, together with the New Notes, the "Notes") and
have the same terms as the Existing Notes. The New Notes have the same CUSIP
number and are fungible and rank equally with the Existing Notes. Following
closing of the Offering on March 10, 2021, the aggregate principal amount of the
Notes is $150 million.
The Notes will mature on January 31, 2026, unless previously redeemed or
repurchased in accordance with their terms. The interest rate of the Notes is
5.125% per year and will be paid semi-annually in arrears on January 31 and
July 31 of each year, commencing July 31, 2021. The Notes are the Company's
direct unsecured obligations and rank pari passu with the Company's existing and
future unsecured, unsubordinated indebtedness, including the Company's 5.375%
Notes due 2024; senior to any series of preferred stock that the Company may
issue in the future; senior to any of the Company's future indebtedness that
expressly provides it is subordinated to the Notes; effectively subordinated to
all of the Company's existing and future secured indebtedness (including
indebtedness that is initially unsecured to which the Company subsequently
grants security), to the extent of the value of the assets securing such
indebtedness; and structurally subordinated to all existing and future
indebtedness and other obligations of any of the Company's existing or future
subsidiaries, including, without limitation, borrowings under the Company's
credit facility.
The Notes may be redeemed in whole or in part at any time or from time to time
at the Company's option, at a redemption price (as determined by the Company)
equal to the greater of the following amounts, plus, in each case, accrued and
unpaid interest to, but excluding, the redemption date: (1) 100% of the
principal amount of the Notes to be redeemed or (2) the sum of the present
values of the remaining scheduled payments of principal and interest (exclusive
of accrued and unpaid interest to the date of redemption) on the Notes to be
redeemed, discounted to the redemption date on a semi-annual basis (assuming
a 360-day year consisting of twelve 30-day months) using the applicable Treasury
Rate (as defined in the Third Supplemental Indenture) plus 50 basis points;
provided, however, that if the Company redeems any Notes on or after October 31,
2025 (the date falling three months prior to the maturity date of the Notes),
the redemption price for the Notes will be equal to 100% of the principal amount
of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but
excluding, the date of redemption. In addition, if a Change of Control
Repurchase Event (as defined in the Third Supplemental Indenture) occurs in
respect of the Company, holders of the Notes may require the Company to
repurchase for cash all or part of their Notes at a repurchase price equal to
100% of the principal amount of the Notes to be repurchased, plus accrued and
unpaid interest to, but excluding, the repurchase date.
The Indenture contains certain covenants, including covenants requiring the
Company to comply with Section 18(a)(1)(A) as modified by Section 61(a)(2) of
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
or any successor provisions, to comply with Section 18(a)(1)(B) as modified by
Section 61(a)(2) of the Investment Company Act, or any successor provisions but
giving effect to any exemptive relief granted by the Securities and Exchange
Commission (the "SEC") to another business development company and upon which
the Company may reasonably rely (or to the Company if the Company determines to
seek such similar no-action or other relief), and to provide financial
information to the holders of the Notes and the Trustee if the Company should no
longer be subject to the reporting requirements under the Securities Exchange
Act of 1934, as amended. These covenants are subject to important limitations
and exceptions that are set forth in the Indenture.
The description above is only a summary of the material provisions of the Third
Supplemental Indenture and the Notes and is qualified in its entirety by
reference to copies of the Third Supplemental Indenture and the Notes,
respectively, each filed as an exhibit to the Company's Current Report on
Form 8-K filed with the SEC on December 15, 2020 and incorporated by reference
herein.
The Offering was made pursuant to the Company's effective shelf registration
statement on Form N-2 (Registration No. 333-228720) previously filed with the
SEC, as supplemented by a preliminary prospectus supplement dated March 5, 2021,
the pricing term sheet dated March 5, 2021 and a final prospectus supplement
dated March 5, 2021. This Current Report on Form 8-K shall not constitute an
offer to sell or a solicitation of an offer to buy any securities, nor shall
there be any sale of these securities in any state or jurisdiction in which such
an offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or other jurisdiction.
The Company intends to use the net proceeds from the offering to repay a portion
of the amount outstanding under its credit facility, to fund new investment
opportunities and for other general corporate purposes. The Company intends
to re-borrow under its credit facility to make investments in portfolio
companies in accordance with its investment objectives depending on the
availability of appropriate investment opportunities consistent with its
investment objectives and market conditions.
--------------------------------------------------------------------------------
Item 2.03 - Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant
The information set forth under Item 1.01 of this Form 8-K is incorporated
herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
1.1 Underwriting Agreement, dated as of March 5, 2021, by and among
Gladstone Capital Corporation, Gladstone Management Corporation,
Gladstone Administration, LLC and Raymond James & Associates, Inc.
5.1 Opinion of Proskauer Rose LLP.
5.2 Opinion of Venable LLP.
23.1 Consent of Proskauer Rose LLP (included in Exhibit 5.1 hereto).
23.2 Consent of Venable LLP (included in Exhibit 5.2 hereto).
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses