CHICAGO–(BUSINESS WIRE)–XAI Octagon Floating Rate & Alternative Income Term Trust (the “Trust”) (NYSE: XFLT), a diversified closed-end investment company whose investment objective is to seek attractive total return by investing focused on generating income across multiple stages of the credit cycle, entered into a purchase agreement with certain institutional investors for the purchase and sale of 400,000 6.00% Series 2029 Convertible Preferred Shares of the Trust due June 2029 (the “Convertible Preferred Shares”), a liquidation preference of $25.00 per share. The Trust expects to receive net proceeds (before expenses) from the sale of the convertible preferred shares of approximately $9.3 million. The offering is expected to close on or about June 30, 2022, subject to the satisfaction of customary closing conditions. In addition, pursuant to the Purchase Agreement, Investors have agreed to purchase up to an additional 800,000 Convertible Preferred Shares, at one or more subsequent Closings on or before June 30, 2023, as determined by the Trust at its discretion.
The convertible preferred shares pay a quarterly dividend at a fixed annual rate of 6.00% of the liquidation preference, or $1.50 per share, per year.
The Trust is required to redeem, out of funds lawfully available for such purpose, all convertible preferred shares outstanding on June 30, 2029, or the “Forward Redemption Date”, at a price equal to the Liquidation Preference plus one amount equal to accrued but unpaid dividends. and distributions, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) up to, but excluding the forward redemption date -this.
At any time on or after June 30, 2024, at the sole discretion of the Trust, the Trust may redeem, from time to time, the Convertible Preferred Shares in whole or in part, out of funds lawfully available for such redemption, at a price per equal to the sum of the liquidation preference plus an amount equal to accrued but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends ) up to, but excluding, the date fixed for such redemption shares.
Each holder of a Convertible Preferred Share is entitled, at such holder’s option, to convert such Convertible Preferred Share at any time from the date six months after the date of issue of the Convertible Preferred Share (the “Conversion Date”) and prior to the close of business on the business day immediately preceding the Forward Redemption Date, into a number of Beneficial Interest Common Shares (“Common Shares”) equal to the liquidation preference of the Convertible Preferred Share plus an amount equal to all unpaid dividends and distributions on such Share accrued up to (but excluding) the Exercise Date, divided by the Conversion Price. The “Conversion Price” is the greater of (i) the market price per common share, represented by the volume-weighted average price (“VWAP”) per common share over the five days ending on the trading day preceding immediately on the exercise date, or (ii) the most recent net asset value per common share declared by the Trust immediately prior to the exercise date.
The Convertible Preferred Shares will not be listed on any stock exchange and may not be transferred without the consent of the Trust.
Additional information regarding the convertible preferred shares is included in a current report on Form 8-K on file with the United States Securities and Exchange Commission (“SEC”).
The convertible preferred shares were offered directly to purchasers without a placement agent, underwriter, broker or dealer.
The Convertible Preferred Stocks and the common stock into which the Convertible Preferred Stocks are convertible are issued pursuant to an exemption from registration under the Securities Act of 1933 (the “Securities Act”) and have not been registered in under the Securities Act or any national securities laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements.
This press release does not constitute an offer to sell or a solicitation of an offer to buy the Convertible Preferred Shares, and there will be no sale of Convertible Preferred Shares in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful. prior to registration or qualification under the securities laws of that jurisdiction.
Concurrently, the Trust entered into a purchase agreement with certain institutional investors for the purchase and sale of common stock pursuant to a registered direct offering pursuant to the Trust’s effective shelf registration statement filed with the SEC. The Trust has agreed to sell 1,450,000 common shares at a price of $6.90 per common share. The offering is expected to close on or about June 30, 2022, subject to the satisfaction of customary closing conditions. The Trust expects to receive net proceeds (before expenses) from the sale of common shares of approximately $10 million.
The Common Shares were offered directly to purchasers without a placement agent, underwriter, broker or dealer.
The offering of Common Shares may only be made by means of a prospectus.
Investors should carefully consider the Fund’s investment objectives and policies, risk considerations, charges and expenses before investing. The preliminary prospectus supplement, dated June 28, 2022, and the accompanying prospectus, dated February 10, 2022, each of which has been filed with the SEC, contain a description of these matters and other important information about the Trust and should be read carefully before investing.
Copies of the preliminary prospectus supplement and accompanying prospectus may be obtained from: XA Investments, Attn: Investor Relations, 321 N. Clark, Suite 2430, Chicago, IL 60654, or by emailing info @xainvestments.com, or by calling 1-888-903-3358.
Investors may also obtain these documents free of charge from the SEC’s website at www.sec.gov.
The information contained in the preliminary prospectus supplement, the accompanying prospectus and this press release is not complete and is subject to change. This press release does not constitute an offer to sell or a solicitation to buy, and there will be no sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration. or qualification under the laws of such state or jurisdiction.
The Trust intends to use the net proceeds of the offerings for investment in accordance with its investment objective and policies, to repay outstanding borrowings under its credit facility and/or for general fund purposes. rolling.
About XA Investments
XA Investments LLC (“XAI”) acts as the Trust’s investment advisor. XAI is a Chicago-based firm founded by XMS Capital Partners in April 2016. In addition to investment advisory services, the firm also provides investment fund structuring and advisory services focusing on closed-end funds registered for meet the needs of institutional clients. XAI offers custom product creation and consulting services, including development and market research, sales, marketing, fund management and administration. XAI believes that the investing public can benefit from new vehicles to access a wide range of alternative investment strategies and managers. XAI offers individual investors access to institutional-grade alternative managers. For more information, please visit www.xainvestments.com.
About XMS Capital Partners
XMS Capital Partners, LLC, established in 2006, is an independent global financial services firm that provides clients with mergers and acquisitions, corporate advisory and asset management services. It has offices in Chicago, Boston and London. For more information, please visit www.xmscapital.com.
About Octagon Credit Investors
Octagon Credit Investors, LLC (“Octagon”) acts as the Trust’s investment sub-advisor. Octagon is a 25+ year old, $32.1 billion, below investment grade, corporate credit investment adviser focused on leveraged loans, high yield bonds and structured credits (CLO debt and shares). Through fundamental credit analysis and active portfolio management, Octagon’s investment team identifies attractive relative value opportunities in sub-investment grade asset classes, sectors and issuers. ‘investment. Octagon’s investment philosophy and methodology encourages and relies on dynamic internal communication to manage portfolio risk. Throughout its history, the company has applied a disciplined, repeatable and scalable approach in its efforts to generate attractive risk-adjusted returns for its investors. For more information, please visit www.octagoncredit.com.
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The Trust, XAI and Octagon do not provide tax advice; consult a professional tax advisor regarding your particular tax situation. Income may be subject to state and local taxes, as well as federal alternative minimum tax.
This press release contains certain statements which may include “forward-looking statements”. Forward-looking statements may be identified by the words “may”, “will”, “intend”, “expect”, “estimate”, “continue”, “plan”, “anticipate” and terms likes and negatives of these terms. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Many factors that could materially affect the actual results of the Trust are the performance of the portfolio of securities held by the Trust, conditions in the United States and international financial and other markets, the price at which the Preferred Shares trade public markets and other factors discussed in the Trust’s prospectus supplement and accompanying base prospectus and to be discussed in the Trust’s periodic filings with the SEC.
Although the Trust believes that the expectations expressed in these forward-looking statements are reasonable, actual results could differ materially from those expressed or implied by these forward-looking statements. The future financial condition and results of operations of the Trust, as well as any forward-looking statements, are subject to change and are subject to inherent risks and uncertainties. You are cautioned not to place undue reliance on these forward-looking statements, which are made as of the date of this press release. Except for the Trust’s ongoing obligations under federal securities laws, the Trust does not intend, and the Trust assumes no obligation, to update any forward-looking statements.
NOT INSURED BY THE FDIC NO BANK GUARANTEE MAY LOSE VALUE