BDC News Of The Day: March 30 2017
Here are the main news items and SEC filings from all the publicly traded BDCs that we track for Thursday March 30 2017 after the close. External links to articles or filings are in blue, internal links to BDC Reporter’s prior posts on the subject are in red. Where appropriate, we add brief comments.
Solar Senior Capital (SUNS): Filed Schedule 14A-Definitive Proxy.
Annual Proxy filed requiring shareholders to vote on electing two directors to the “staggered: Board. The two candidates are Michael Gross SUNS Chairman, and Leonard Potter, an “independent” director. Both have been on the Board since the turn of the decade and are up for re-enlistment. The two vote is whether shareholders agree to permitting the BDC to issue stock below Net Asset Value in the year ahead if deemed necessary. The provision includes a guideline that no stock would be issued at a discount greater than 20%, subject to “extenuating circumstances”. The Proxy points out that such approval has been received in the past several years without ever being exercised.
Solar Capital (SLRC): Filed Schedule 14A-Definitive Proxy
Same as above for sister BDC SLRC. Again, two directors up for approval by shareholders: Mr. Bruce Spohler and Mr. Steven Hochberg. The former is the COO of Solar Capital and a director since 2009. The latter is a “Partner at Deerfield Management, a healthcare investment firm, since 2013. Founder of Ascent Biomedical Ventures and a venture investor in biomedical technology companies, since 2004. Director of Solar Capital Ltd. since 2007, Chairman of the Board of Directors of Biomerix Corporation and is on the board of directors of Heart Repair Technologies, Inc. and Acutus Medical”. SLRC too wants the right to sell shares up to 25% of the current number outstanding below NAV. Again, SLRC mentions that-despite getting such approval previously-they have never issued any below book shares. The Proxy also contains information about the cost of having Price Waterhouse as the BDC’s auditor. The overall cost is up from $743K to $793K. We also learn the 3 independent directors are earning $120K plus a year for accomplishing their duties. However, these same directors only own between 10,000 and 22,229 shares in SLRC. The two “interested” directors Mr Spohler and Mr Gross “own” over 10% of the shares of the BDC they manage between them. As the footnotes show,though, much of that ownership is through entities which they control and may not be the economic beneficiaries.
Main Street Capital (MAIN): Filed an amended Schedule D.
As far as we can make out MAIN has a loan to Glowpoint,Inc. a troubled and publicly traded teleconferencing company. Another MAIN affiliate (Main Street Equity Interests) also already owns owns shares in Glowpoint. (As well as Hercules Capital with a tiny stake). Apparently MAIN is in negotiations with Glowpoint: “Main Street Capital Corporation (MSCC) has been in discussions with the Issuer [Glowpoint] regarding the secured loan that MSCC previously provided to the Issuer. Such discussions have included a potential repurchase of the loan by the Issuer, the refinancing and restructuring of the loan and the possible repurchase of shares of Common Stock beneficially owned by MSCC and its subsidiaries by the Issuer”.
OFS Capital (OFS) : Announced Offering of 3,500,000 shares of common stock
After the close on Wednesday March 29th, the smaller sized, SBIC-oriented BDC announced a secondary stock offering. With the broker over-allotment OFS will be issuing just over 4mn shares.The next day, the BDC announced the stock was priced at $14.57, and the Investment Advisor absorbed some of the expenses involved given that the most recent NAV was $14.82: “The Company’s investment adviser, OFS Capital Management, LLC (the “Adviser”), has agreed to bear the sales load payable to the underwriters. In addition, the Adviser has agreed to pay the underwriters an additional supplemental payment of $0.25 per share, which reflects the difference between the actual public offering price of $14.57 per share and the net proceeds of $14.82 per share received by the Company in this offering. The closing of the offering is subject to customary closing conditions and is expected to take place on April 4, 2017.” The funds are likely to support an expansion of OFS’s SBIC program. By the way, 4mn new shares is a major boost in a BDC with 9.7mn at year end 2016.
Gladstone Capital (GLAD): DA Davidson Initiates GLAD As Buy With $10 Price Target-DJ News Wire and reported on Benzinga.
GLAD was trading at $9.10 at the prior close before the public call by the investment banking firm. The stock jumped 3.4% on the news. GLAD’s latest NAV was $8.36 and the $10.0 target suggests a multiple of 11.9x current recurring earnings of $0.84. GLAD has not traded at $10 since June 2014, and has not been above $11 since (appropriately) 2011.
Alcentra Capital (ABDC): Presentation At Sidoti & Company Investor Conference
Alcentra Capital Corporation announced that Paul Echausse, President and CEO, presented on behalf of the Company at the Sidoti & Co. Investor Conference in New York, NY on Wednesday, March 29th.