Gladstone Investment Prices Baby Bonds

Business development company Gladstone Investment (GAIN) has priced their previously announced baby bonds.

The coupon is a rock bottom 5.00%. The issue is rated BBB by Egan-Jones.

The issue will not trade OTC grey market, but should start exchange trading in a about a week.

The company did announce a conditional call of the GAINM 6.25% term preferred shares yesterday with an effective date of 3/3/2021.

The pricing term sheet can be read here.

9 thoughts on “Gladstone Investment Prices Baby Bonds”

  1. GAIN also announced a strange one on the calling of GAINM. Their announcement @ https://finance.yahoo.com/news/gladstone-investment-announces-conditional-redemption-210500640.html says the following and my question is how can they call these on March 3 when they have a 30 notification clause in the prospectus and even this announcement does not constitute a notice of redemption? GAINN is supposed to close March 2 so maybe they’re saying a call notice for 30 days can be expected on March 3?

    Tue, February 23, 2021, 4:05 PM

    MCLEAN, VA / ACCESSWIRE / February 23, 2021 / Gladstone Investment Corporation (NASDAQ:GAIN) (the “Company”) today announced that it plans to redeem all outstanding shares of its 6.25% Series D Cumulative Term Preferred Stock due 2023 (the “Series D Term Preferred Stock”), contingent upon the Company’s successful completion of its previously announced public offering of unsecured notes.

    A notice of redemption on a conditional basis will be mailed to all registered holders of the Series D Term Preferred Stock by Computershare, Inc., as the Redemption and Paying Agent, in accordance with the requirements of the Company’s Certificates of Designation of Series D Term Preferred Stock. The anticipated redemption date is March 3, 2021 at a redemption price of $25.00 per share, which represents the liquidation preference per share, plus an amount equal to all unpaid dividends and distributions on such share of Series D Term Preferred Stock accumulated up to, but excluding, the date of redemption (whether or not earned or declared by the Company, but excluding interest thereon).

    This communication does not constitute a notice of redemption under the Certificates of Designation of Series D Term Preferred Stock, nor an offer to tender for, or purchase of, any shares of Series D Term Preferred Stock or any other security.

    1. This might be overkill to post but I got an interesting response from IR regarding GAINM call…. It WILL be on March 3, thus departing from the 30 day notification one would expect. Given it’s past x-div for end of Feb coupon payment, the call should most probably have no more than 1¢ accrued. Current market at 25.09 is not taking this into account imho.

      Thank you for your inquiry. The March 3, 2021 redemption date is accurate.

       

      As you correctly point out the 1940 Act includes a 30-day notice period, however, the SEC can permit a shorter notice period.  Under the N-23c we filed with the SEC via Edgar on February 23, 2021 we note that we “…[are] filing this notice with the Commission fewer than 30 days prior to the date set for the redemption in reliance on no-action relief granted by the Commission staff.”  A link to that filing is here: https://www.sec.gov/Archives/edgar/data/1321741/000119312521051652/d313729dn23c2.htm.  SEC no action relief for a redemption of this kind by a Business Development Company subject to the 1940 Act is typical.

       

      The language in the press release “This communication does not constitute a notice of redemption under the Certificates of Designation of Series D Term Preferred Stock” is included because the press release is not considered a formal notice.  Since the Company does not have information for all shareholders (i.e. shareholders in street name) the formal notice is distributed by Computershare and DTC directly to holders of record.

      1. In other words, they can announce whenever they want by claiming “no action relief”, regardless what the prospectus says?

        1. I think that quite fortunately for shareholders across the BDC universe, their statement, “SEC no action relief for a redemption of this kind by a Business Development Company subject to the 1940 Act is typical” is, uh, an exaggeration.

          I’ll be very curious to see what happens on Wednesday…. If any III’ers are still holding GAINM, please post whether or not you have received your usual end of the month dividend or if it’s posted on Monday.

          1. I received my usual dividend on Friday. I sold out Wednesday at 25.11 after I saw the March 3 date. It’ll be interesting to see what really happens.

            1. Thanks for the post, Irish..That makes it all the more interesting to see what happens Wednesday. I had managed to buy 400 @ 25.03 on Thurs but sold at 25.10 first thing Friday after receiving GAIN’s IR response. I’ll be on my way to Burger King later today to treat my wife and me to Impossible Whoppers to help save the planet.. I might even spring for fries…

  2. The $111 million initial principal valuation of this new issue is roughly double the current valuation of GAINM. They’re adding about $55 million in new (albeit cheaper) debt.

    1. not very, more like a rating agency of last resort. they’re no Moody’s or S&P, and those guys aren’t the greatest either (see 2007-2009 crash ratings).

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