Item 1.01. Entry into a Material Definitive Agreement.
Convertible Notes Offering
On March 8, 2023, New Mountain Finance Corporation (the "Company") entered into
private placement purchase agreements (the "Purchase Agreements") with the
several purchasers, each of whom is an "accredited investor" as defined in
Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the
"Securities Act"), or a "qualified institutional buyer" within the meaning of
Rule 144A promulgated under the Securities Act (the "Purchasers"), for the sale
of an additional $60 million in aggregate principal amount of the Company's
7.50% convertible notes due 2025 (the "Notes"). The Notes are being issued at
100.5% of the principal amount per note.
The Notes are an additional issuance of the 7.50% convertible notes due 2025
that the Company issued on November 2, 2022 in an aggregate principal amount of
$200,000,000 (the "Existing Notes"). Subject to the terms and conditions of an
indenture, dated as of August 20, 2018, as supplemented by the third
supplemental indenture, dated November 2, 2022, by and between the Company and
U.S. Bank National Association (as successor in interest to U.S. Bank National
Association) governing the Notes (together, the "Indenture"), the Notes will be
convertible into shares of the Company's common stock (together with cash in
lieu of fractional shares) at a conversion rate of 70.5365 shares of the
Company's common stock per $1,000 principal amount of Notes (subject to
adjustments by the Company as provided in the Indenture), which is equal to a
conversion price of approximately $14.18 per share of our common stock. This
conversion rate and conversion price reflect an adjustment to the initial
conversion rate of 70.4225 and resulting conversion price of $14.20 as a result
of the Company's fourth quarter dividend to stockholders of record as of
December 16, 2022 in the amount of $0.32 per share. A holder may convert its
Notes in whole or in part any time prior to the close of business on the
scheduled business day immediately preceding the maturity date of October 15,
2025. The Notes will accrue interest at an annual rate of 7.50%, and will be
payable semi-annually in arrears on April 15 and October 15 of each year,
commencing on April 15, 2023. The Notes will be treated as a single series with
the Existing Notes under the Indenture and will have the same terms as the
Existing Notes. The Notes will have the same CUSIP number and will be fungible
and rank equally with the Existing Notes. Upon the issuance of the Notes, the
outstanding aggregate principal amount of the Company's 7.50% convertible notes
due 2025 will be $260 million.
The offering was made to the Purchasers in a private placement in reliance on
Section 4(a)(2) of the Securities Act. The Purchase Agreements also include
customary representations, warranties and covenants by the Company. The Notes,
along with the shares of common stock underlying 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 closing of the private placement is expected to occur on March 14, 2023,
subject to customary closing conditions. The Company intends to use the net
proceeds from the Notes to repay outstanding indebtedness and for general
corporate purposes.
The description above is only a summary of the material provisions of the
Purchase Agreement and is qualified in its entirety by reference to the copy of
the form of Purchase Agreement which is filed as Exhibit 10.1 to this current
report on Form 8-K and is incorporated herein by reference thereto.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit
No. Description
10.1 Form of Private Placement Purchase Agreement, dated as of March 8,
2023, by and among New Mountain Finance Corporation and the investor
named therein, on behalf of itself and the accounts listed on Exhibit A
thereto for whom such investor holds contractual and investment
authority, relating to the 7.50% Convertible Notes due October 15,
2025.
99.1 Press Release, dated March 9, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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