OFS Forms Senior Loan Subsidiary
24 June 2019 - 10:00PM
Business Wire
Debt Facility Designed to Focus on Senior
Secured Loans
Waives 75 Basis Points of Base Management
Fees on Assets Held in Subsidiary
OFS Capital Corporation (NASDAQ:OFS) (“OFS Capital” or the
“Company”), a business development company, announced today that it
has established a $150 million secured revolving credit facility
(the "Credit Facility") through a newly-formed indirect wholly
owned subsidiary of the Company.
The new entity will primarily hold first lien loans, including
unitranche loans. Management believes that the Credit Facility will
provide sponsors and management teams with continued access to
flexible capital and improve OFS Capital’s deal flow.
OFS Capital Management, LLC, the Company’s investment adviser,
has agreed to waive a portion of its base management fee by
reducing it to 1%, from 1.75%, on assets held in the subsidiary.
Such waiver will be renewable on an annual basis and will apply
when statutory leverage exceeds 1.0x debt to equity.
“We are excited to announce this new financing arrangement,
which we believe will improve OFS’s return on equity,” said Bilal
Rashid, OFS Capital's Chairman and Chief Executive Officer. “We
have been gravitating toward more senior loans, and we expect that
this additional credit facility will provide us with the
flexibility to capitalize on the benefits provided by the Small
Business Credit Availability Act. OFS Capital Management manages
$2.2 billion in assets, employs 46 professionals and invests across
the corporate loan market. As a result, we believe that we are well
positioned to benefit from this opportunity.”
The Credit Facility has a five-year term with a three-year
investment period, during which pricing will range from Libor plus
160-250 basis points, depending on asset type.
The Credit Facility is secured by all of the assets held by the
new subsidiary and includes customary covenants, including minimum
asset coverage and minimum equity requirements.
The description above is only a summary of the material
provisions of the Credit Facility and is qualified in its entirety
by reference to the documentation for the Credit Facility.
ABOUT OFS CAPITAL
The Company is an externally managed, closed-end,
non-diversified management investment company that has elected to
be regulated as a business development company. The Company's
investment objective is to provide stockholders with both current
income and capital appreciation primarily through debt investments
and, to a lesser extent, equity investments. The Company invests
primarily in privately held middle-market companies in the United
States, including lower-middle-market companies, targeting
investments of $3 to $20 million in companies with annual EBITDA
between $3 million and $50 million. The Company offers flexible
solutions through a variety of asset classes including senior
secured loans, which includes first-lien, second-lien and
unitranche loans, as well as subordinated loans and, to a lesser
extent, warrants and other equity securities. The Company's
investment activities are managed by OFS Capital Management, LLC,
an investment adviser registered under the Investment Advisers Act
of 1940, as amended, and headquartered in Chicago, Illinois, with
additional offices in New York and Los Angeles.
FORWARD-LOOKING STATEMENTS
Statements in this press release regarding management's future
expectations, beliefs, intentions, goals, strategies, plans or
prospects, including statements relating to: management’s belief
that the Credit Facility will provide sponsors and management teams
with continued access to flexible capital and improve OFS Capital’s
deal flow; management’s belief that the Credit Facility will
benefit OFS Capital or improve return on equity, when there can be
no assurance that such outcomes will occur; expectations that the
Credit Facility will provide flexibility to capitalize on the
benefits provided by the Small Business Credit Availability Act;
and other factors may constitute forward-looking statements for
purposes of the safe harbor protection under applicable securities
laws. Forward-looking statements can be identified by terminology
such as “anticipate,” “believe,” “could,” “could increase the
likelihood,” “estimate,” “expect,” “intend,” “is planned,” “may,”
“should,” “will,” “will enable,” “would be expected,” “look
forward,” “may provide,” “would” or similar terms, variations of
such terms or the negative of those terms. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors including those risks, uncertainties and factors referred
to in OFS Capital’s Annual Report on Form 10-K for the year ended
December 31, 2018 filed with the Securities and Exchange Commission
under the section “Risk Factors,” as well as other documents that
may be filed by OFS Capital from time to time with the Securities
and Exchange Commission. As a result of such risks, uncertainties
and factors, actual results may differ materially from any future
results, performance or achievements discussed in or implied by the
forward-looking statements contained herein. OFS Capital is
providing the information in this press release as of this date and
assumes no obligations to update the information included in this
press release or revise any forward-looking statements, whether as
a result of new information, future events or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190624005173/en/
INVESTOR RELATIONS: Steve Altebrando 646-652-8473
saltebrando@ofsmanagement.com
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