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BDC Gladstone Capital Selling Notes in a Refi Transaction–UPDATED

UPDATE–The company priced their new $1,000 notes at 5.125%. Press release is here.

Additionally the company has called the 6.125% baby bonds (GLADD) on 1/7/2021.

Business Development Company Gladstone Capital (GLAD) will be selling an issue of $1,000 notes.

Unfortunately the company will be calling all or a portion of the $25/share 6.125% GLADD notes due in 2023. The early redemption period for these notes started on 11/1/2020.

So another decent issue ‘bites the dust’. GLADD is trading at $25.33 right now so there will be no loss on the call.

The preliminary prospectus with the call language can be found here.

18 thoughts on “BDC Gladstone Capital Selling Notes in a Refi Transaction–UPDATED”

  1. Here is an interesting private placement of 5 year convertible notes from Uber. they are really playing on the low yield to calls:

    Uber Announces Pricing of $1.0 Billion Convertible Senior Notes Offering

    7:58 PM , Business Wire
    Uber Technologies, Inc. (NYSE: UBER) today announced the pricing of $1.0
    billion principal amount of 0% Convertible Senior Notes due 2025 (the
    “notes”) in a private placement to qualified institutional buyers pursuant
    to Rule 144A under the Securities Act of 1933, as amended (the “Securities
    Act”). Uber also granted the initial purchasers of the notes an option to
    purchase up to an additional $150 million principal amount of the notes. The sale of the notes is expected to close on December 11, 2020, subject to
    customary closing conditions.

    The notes will be senior unsecured obligations of Uber, will not bear regular interest, and the principal amount of the notes will not accrete. The noteswill mature on December 15, 2025, unless earlier converted, redeemed or
    repurchased. The conversion rate of the notes will initially be 12.3701 shares of Uber’s common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $80.84 per share of Uber’s common stock). The initial conversion price of the notes represents a premium of approximately 52.5% over the last reported sale price of Uber’s common stock on the New York Stock Exchange on December 8, 2020. The notes will be convertible into cash, shares of Uber’s common stock or a combination of cash and shares of Uber’s common stock, at Uber’s election.

  2. For point of comparison, BB- subprime consumer lender Onemain priced an an up-sized offering of $850 million of 10-year notes at 4% today. Also a non-exchange issue.

    5% good by comparison.

    1. True, but that is a common feature of institutional issues. There is a “make whole” provision so it’s not the case that it’s a free option for the company.

        1. The make whole provision covers the entire term of the note except for the last 3 months. Standard institutional terms.

          The amount of the make whole is a function of Treasury rate (in this case) on the 2025 Treasuries and time to maturity. It could be small or large but point being it’s intended to make the holder “whole” if called early. It’s not a perfect mechanism but it does provide some compensation in the event of an early call. Again, totally standard term with institutional issues.

          The institutional market, both notes and preferred, have different terms than the exchange traded issues.

    1. Attractive rate for six year notes but the lack of marketability and absence of call protection as well as Gladstone’s credit may require such a premium.

      Shorter term issues with a decent rate are hard to find.

  3. Surprising to see a Gladstone company issuing a non-exchange traded issue. They tend to be very retail oriented.

    1. GLADD will be FULL CALL, January 7th – https://www.gladstonecapital.com/investors/sec-filings/all-sec-filings##document-1636-0001193125-20-312839-2

      On December 8, 2020, Gladstone Capital Corporation (the “Company”) announced that it will redeem all of its outstanding 6.125% Notes due 2023 (the “2023 Notes”). The Company will redeem 100% (or $57,500,000 aggregate principal amount) of the outstanding 2023 Notes on January 7, 2021 (the “Redemption Date”). The redemption price for the 2023 Notes equals 100% of the $57,500,000 aggregate principal amount of the Notes being redeemed, plus accrued and unpaid interest otherwise payable for the current quarterly interest period accrued to, but excluding, the Redemption Date. The 2023 Notes will be delisted from the Nasdaq Global Select Market. This Current Report on Form 8-K does not constitute notice of redemption of the 2023 Notes.

  4. On a slightly different note SCHWAB has come out with a brand new preferred today with a coupon of 4.375%. Sometimes these things change a little but thats what my Schwab Rep just told me.

  5. Six year maturity for sub debt. A smart play on the current condition of yield to call. Rate expectations?

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