In February 2019, we terminated the Cantor Sales Agreement and entered into a new equity distribution
agreement with Jefferies LLC (the Jefferies Sales Agreement) under which we have the ability to issue and sell, from time to time, up to an aggregate offering price of $50.0 million shares of our common stock. During the nine months
ended June 30, 2019, we sold 1,399,673 shares of our common stock under the Jefferies Sales Agreement, at a weighted-average price of $9.31 per share and raised $13.0 million of gross proceeds. Net proceeds, after deducting
commissions and offering costs borne by us, were approximately $12.8 million. As of June 30, 2019, we had a remaining capacity to sell up to an additional $37.0 million of our common stock under the Jefferies Sales Agreement.
We anticipate issuing equity securities to obtain additional capital in the future. However, we cannot determine the timing or terms of any future equity
issuances or whether we will be able to issue equity on terms favorable to us, or at all. To the extent that our common stock trades at a market price below our NAV per share, we will generally be precluded from raising equity capital through public
offerings of our common stock, other than pursuant to stockholder and independent director approval or a rights offering to existing common stockholders.
On June 30, 2019, the closing market price of our common stock was $9.38, a 14.0% premium to our June 30, 2019 NAV per share of $8.23.
Term Preferred Stock
In September 2017, we
completed a public offering of approximately 2.1 million shares of our Series 2024 Term Preferred Stock at a public offering price of $25.00 per share. Gross proceeds totaled $51.8 million and net proceeds, after deducting underwriting
discounts, commissions and offering expenses borne by us, were approximately $49.8 million. We incurred approximately $1.9 million in total underwriting discounts and offering costs related to the issuance of the Series 2024 Term Preferred
Stock, which have been recorded as discounts to the liquidation value on our
Consolidated Statements of Assets and Liabilities
and are being amortized over the period from issuance through September 30, 2024, the mandatory redemption
date. The offering proceeds plus borrowings under our Credit Facility were used to voluntarily redeem all 2.4 million outstanding shares of our then existing 6.75% Series 2021 Term Preferred Stock, par value $0.001 per share. In connection with
the voluntary redemption of our Series 2021 Term Preferred Stock, we incurred a loss on extinguishment of debt of $1.3 million, which has been reflected in Realized loss on other in our
Consolidated Statement of Operations
and which is
primarily comprised of the unamortized deferred issuance costs at the time of redemption.
The shares of our Series 2024 Term Preferred Stock are traded
under the ticker symbol GLADN on the Nasdaq Global Select Market. Our Series 2024 Term Preferred Stock is not convertible into our common stock or any other security and provides for a fixed dividend equal to 6.00% per year, payable
monthly (which equates in total to approximately $3.1 million per year). We are required to redeem all of the outstanding Series 2024 Term Preferred Stock on September 30, 2024 for cash at a redemption price equal to $25.00 per share plus
an amount equal to all unpaid dividends and distributions per share accumulated to (but excluding) the date of redemption (the Redemption Price). We may additionally be required to mandatorily redeem some or all of the shares of our
Series 2024 Term Preferred Stock early, at the Redemption Price, in the event of the following: (1) upon the occurrence of certain events that would constitute a change in control, or (2) if we fail to maintain an asset coverage of at
least 200% on our senior securities that are stock (which is currently only our Series 2024 Term Preferred Stock) and the failure remains for a period of 30 days following the filing date of our next quarterly or annual report filed with
the SEC. The asset coverage on our senior securities that are stock as of June 30, 2019 was 242.7%, calculated in accordance with Sections 18 and 61 of the 1940 Act.
We may also voluntarily redeem all or a portion of the Series 2024 Term Preferred Stock at our option at the Redemption Price at any time after
September 30, 2019. If we fail to redeem our Series 2024 Term Preferred Stock pursuant to the mandatory redemption required on September 30, 2024, or in any other circumstance in which we are required to mandatorily redeem our Series 2024
Term Preferred Stock, then the fixed dividend rate will increase by 4.0% for so long as such failure continues. As of June 30, 2019, we have not redeemed, nor have we been required to redeem, any shares of our outstanding Series 2024 Term
Preferred Stock.
Revolving Credit Facility
On July 10, 2019, we, through Gladstone Business Loan, LLC (Business Loan), entered into Amendment No. 5 to our Credit Facility with
KeyBank National Association (KeyBank), which (i) reduced our minimum asset coverage with respect to senior securities representing indebtedness from 200% to 150% (or such percentage as may be set forth in Section 18 of the
1940 Act, as modified by Section 61 of the 1940 Act), (ii) amended the excess concentration limits definition to decrease the limit for
non-first
lien loans from 60% to 50% under certain circumstances and
(iii) amended the distributions covenant to allow a distribution to be applied towards the redemption of our Series 2024 Term Preferred Stock. The Credit Facility continues to include customary terms, covenants, events of default and
constraints on borrowing availability based on collateral tests for a credit facility of its size and nature.
On March 9, 2018, we, through Business
Loan, entered into Amendment No. 4 to our Credit Facility with KeyBank, which increased the commitment amount from $170.0 million to $190.0 million, extended the revolving period end date by approximately two years to January 15,
2021, decreased the marginal interest rate added to
30-day
LIBOR from 3.25% to 2.85% per annum, and changed the unused commitment fee from 0.50% of the total unused commitment amount to 0.50% when the average
unused commitment amount for the reporting period is less than or equal to 50%, 0.75% when the average unused commitment amount for the reporting period is greater than 50% but less than or equal to 65%, and 1.00% when the average unused commitment
amount for the reporting period is greater than 65%. If our Credit Facility is not renewed or extended by January 15, 2021, all principal and interest will be due and payable on April 15, 2022 (15 months after the revolving period end
date). Subject to certain terms and conditions, our Credit Facility may be expanded up to a total of $265.0 million through additional commitments of new or existing lenders. We incurred fees of approximately $1.2 million in connection
with this amendment, which are being amortized through our Credit Facilitys revolving period end date of January 15, 2021.
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