XAI Octagon Floating Rate & Alternative Income Trust (NYSE:XFLT), a Chicago-based investment company, has reported the unregistered sale of equity securities, according to a Form 8-K filing with the Securities and Exchange Commission (SEC) dated October 10, 2024.
The Trust has issued 200,000 Series II 2029 Convertible Preferred Shares at $23.25 per share, resulting in net proceeds of approximately $4.65 million before expenses.
This transaction is part of a larger agreement with Eagle Point Credit Management LLC and other purchasers, allowing for the sale of up to 1.8 million shares at the same price, to be completed by December 10, 2025. The sale is exempt from registration under Section 4(a)(2) of the Securities Act of 1933.
Following the sale on Thursday, the Trust now has 1.8 million Series II 2029 Convertible Preferred Shares issued and outstanding. The Series II 2029 Convertible Preferred Shares come with a liquidation preference of $25.00 per share.
In other recent news, XAI Octagon Floating Rate & Alternative Income Trust has issued and sold 400,000 shares of its 6.95% Series II 2029 Convertible Preferred Shares, generating approximately $9.3 million in net proceeds before expenses. This sale is part of an agreement, previously disclosed on June 10, 2024, allowing for the issuance and sale of up to 1,800,000 shares of the same series. The total number of Series II 2029 Convertible Preferred Shares outstanding for XAI Octagon Floating Rate & Alternative Income Trust now stands at 1,600,000.
The issuance of these convertible preferred shares is a strategic move by the trust to raise capital, potentially for further investment opportunities or to strengthen its financial position. This recent development is part of the company's ongoing efforts to expand its capital base. The shares were sold to unnamed purchasers at a price of $23.25 per share, with a liquidation preference of $25.00 each.
InvestingPro Insights
XAI Octagon Floating Rate & Alternative Income Trust's recent equity sale aligns with its attractive dividend profile. According to InvestingPro data, XFLT boasts a substantial dividend yield of 14.83%, with the last ex-dividend date on September 17, 2024. This high yield is consistent with an InvestingPro Tip indicating that XFLT "pays a significant dividend to shareholders."
The Trust's stock has shown resilience, with a 13.71% total return over the past year and a year-to-date return of 7.32%. This performance is reflected in another InvestingPro Tip, which notes that the stock "generally trades with low price volatility." This characteristic may appeal to investors seeking steady income streams in the current market environment.
With a market capitalization of $402.56 million and a fair value estimate of $8.00 per share according to analyst targets, XFLT appears to be trading close to its perceived value, currently at 88.79% of its 52-week high. Investors interested in diving deeper into XFLT's financial health and prospects can access additional insights through InvestingPro, which offers 4 more tips for this stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.