Gladstone Investment (NASDAQ:GAIN) Corporation (NASDAQ:GAIN), a business development company with a notable 20-year track record of maintaining dividend payments, has entered into a Material Definitive Agreement, according to a recent 8-K filing with the Securities and Exchange Commission.
According to InvestingPro data, the company has raised its dividend for three consecutive years, demonstrating consistent shareholder returns despite market fluctuations. On Tuesday, the company, in connection with a public offering, executed a Fifth Supplemental Indenture to its existing Indenture with UMB Bank, National Association, as trustee.
The agreement pertains to the issuance and sale of $126.5 million in aggregate principal amount of 7.875% Notes due 2030. These notes will mature on February 1, 2030, and pay interest quarterly starting February 1, 2025. The notes are unsecured and rank equally with the company's other unsecured, unsubordinated debt.
Gladstone Investment Corporation's new notes may be redeemed at the company's discretion on or after February 1, 2027, at 100% of the outstanding principal plus accrued interest. The Indenture includes covenants that require the company to meet certain conditions set by the Investment Company Act of 1940, and to provide financial information to the note holders and the trustee if it ceases to be required to file reports under the Securities Exchange Act of 1934.
The offering of the notes was made under Gladstone Investment Corporation's shelf registration statement and was supplemented by a final prospectus on December 10, 2024. The transaction closed on the same day as the report, December 17, 2024.
The company plans to use the net proceeds from the offering to repay a portion of the outstanding amount under its credit facility, fund new investment opportunities, and for other general corporate purposes. While InvestingPro analysis indicates the company has been profitable over the last twelve months, it also highlights that short-term obligations exceed liquid assets, making this debt restructuring particularly significant. It also intends to re-borrow under its credit facility for future investments in portfolio companies, subject to market conditions.
In other recent news, Gladstone Investment Corporation has reported steady financial results, including an adjusted net investment income (NII) of $0.24 per share and a consistent monthly distribution of $0.08 per share. However, the company's net asset value (NAV) per share saw a decrease. In a major development, Gladstone Investment announced a $110 million notes offering, with Oppenheimer & Co. Inc. serving as the representative of the underwriters. The company also reported the resignation of board member Paul W. Adelgren, with a successor not yet named.
Gladstone Investment made significant strategic moves, including a successful exit from Nth Degree, realizing capital gains of $42.3 million. Additionally, the company partnered with Scott Dunlop and Pyrotek Special Effects, Inc.'s executive management to acquire Pyrotek, providing both equity and senior secured debt for the transaction. As part of its recent initiatives, Gladstone Investment initiated a new $75 million ATM program to fund deals and maintain financial flexibility. Lastly, a leadership transition was announced, with CFO Rachael Easton being succeeded by Taylor Ritchie.
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