Item 1.01. Entry into a Material Definitive Agreement.
Fourth Supplemental Indenture
On November 4, 2021, in connection with a previously announced private
placement, Gladstone Capital Corporation (the "Company") and U.S. Bank National
Association, as trustee (the "Trustee"), entered into a Fourth Supplemental
Indenture (the "Fourth Supplemental Indenture") to the Indenture, dated
November 6, 2018, between the Company and the Trustee (together with the Fourth
Supplemental Indenture, the "Indenture"). The Fourth Supplemental Indenture
relates to the Company's issuance, offer and sale of $50 million aggregate
principal amount of its 3.75% Notes due 2027 (the "Notes").
The Notes will mature on May 1, 2027, unless previously redeemed or repurchased
in accordance with their terms. The interest rate of the Notes is 3.75% per year
and will be paid semi-annually in arrears on May 1 and November 1 of each year,
commencing May 1, 2022. 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 5.125% Notes due 2026;
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 Fourth Supplemental Indenture) plus 50 basis points;
provided, however, that if the Company redeems any Notes on or after February 1,
2027 (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 Fourth 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
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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 Notes were sold to the several initial purchasers in a private placement in
reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and for the initial resale by the Initial Purchasers to
qualified institutional buyers in transactions exempt from registration under
the Securities Act pursuant to Rule 144A thereunder. The Notes will not be
registered under the Securities Act and may not be offered or sold in the United
States absent registration or an applicable exemption from registration. The
transaction closed on November 4, 2021.
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 description above is only a summary of the material provisions of the Fourth
Supplemental Indenture and the Notes and is qualified in its entirety by
reference to the Fourth Supplemental Indenture and the Notes, respectively, each
filed as exhibits to this Current Report on Form 8-K and incorporated by
reference herein.
Registration Rights Agreement
In connection with the offering, the Company entered into a Registration Rights
Agreement, dated as of November 4, 2021 (the "Registration Rights Agreement"),
with Raymond James & Associates, Inc., as representative of the several initial
purchasers. Pursuant to the Registration Rights Agreement, the Company is
obligated to file with the Securities and Exchange Commission a registration
statement with respect to an offer to exchange the Notes for a new issue of debt
securities registered under the Securities Act with terms substantially
identical to those of the Notes (except for provisions relating to transfer
restrictions and payment of additional interest) and to use its commercially
reasonable efforts to consummate such exchange offer on the earliest practicable
date after the registration statement has been declared effective but in no
event later than 365 days after the initial issuance of the Notes. If the
Company fails to satisfy its registration obligations under the Registration
Rights Agreement, it will be required to pay additional interest to the holders
of the Notes.
The description above is only a summary of the material provisions of the
Registration Rights Agreement and is qualified in its entirety by reference to
the Registration Rights Agreement, filed as an exhibit to this Current Report on
Form 8-K and incorporated by reference herein.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information required by Item 2.03 contained in Item 1.01 of this Current
Report on Form 8-K is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit
No. Description
4.1 Fourth Supplemental Indenture between Gladstone Capital Corporation
and U.S. Bank National Association, dated as of November 4, 2021.
4.2 Form of Global Note with respect to 3.75% Notes due 2027 sold in
reliance on Rule 144A of the Securities Act, incorporated by reference
to Exhibit 4.1.
4.3 Form of Global Note with respect to 3.75% Notes due 2027 sold in
reliance on Rule 501 of the Securities Act, incorporated by reference
to Exhibit 4.1.
4.4 Registration Rights Agreement, dated as of November 4, 2021, by and
between Gladstone Capital Corporation and Raymond James & Associates,
Inc., as representative of the several initial purchasers
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