XAI Octagon Floating Rate & Alternative Income Trust (the
“Trust”) (NYSE: XFLT), a diversified, closed-end management
investment company with an investment objective to seek attractive
total return with an emphasis on income generation across multiple
stages of the credit cycle, has entered into a Purchase Agreement
with certain institutional investors for the purchase and sale of
1,800,000 shares of the Trust’s 6.95% Series II 2029 Convertible
Preferred Shares due December 2029 (the “Convertible Preferred
Shares”), liquidation preference $25.00 per share. Assuming the
issuance and sale of all of the Convertible Preferred Shares, the
Trust expects to receive net proceeds (before expenses) from the
sale of the Convertible Preferred Shares of approximately $41.85
million. No Convertible Preferred Shares are being issued at this
time. Pursuant to the Purchase Agreement, the investors have agreed
to purchase the Convertible Preferred Shares, at one or more
closings on or before December 10, 2025, as determined by the Trust
in its discretion.
The Convertible Preferred Shares, when issued, will pay a
quarterly dividend at a fixed annual rate of 6.95% of the
liquidation preference, or $1.7375 per share, per year.
The Trust will be required to redeem, out of funds legally
available therefor, all outstanding Convertible Preferred Shares on
December 31, 2029, or the “Term Redemption Date,” at a price equal
to the liquidation preference plus an amount equal to accumulated
but unpaid dividends and distributions, if any, on such shares
(whether or not earned or declared, but excluding interest on such
dividends) to, but excluding, the Term Redemption Date.
At any time on or after the date eighteen months after the first
issuance of Convertible Preferred Shares, at the Trust’s sole
option, the Trust may redeem, from time to time, the Convertible
Preferred Shares in whole or in part, out of funds legally
available for such redemption, at a price per share equal to the
sum of the liquidation preference plus an amount equal to
accumulated but unpaid dividends, if any, on such shares (whether
or not earned or declared, but excluding interest on such
dividends) to, but excluding, the date fixed for such
redemption.
Each holder of a Convertible Preferred Share shall have the
right, at such holder’s option, to convert any such Convertible
Preferred Share, at any time on or after the date six months after
the issuance date of the Convertible Preferred Share (the
“Convertibility Date”) and prior to the close of business on the
business day immediately preceding the Term Redemption Date, into
such number of common shares of beneficial interest (“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 accumulated to (but excluding) the date
of exercise, divided by the Conversion Price. The “Conversion
Price” is the greater of (i) the market price per Common Share,
represented by the five-day volume-weighted average price (“VWAP”)
per Common Share ending on the trading day immediately preceding
the date of exercise, or (ii) the Trust’s most recently reported
net asset value per Common Share immediately prior to the date of
exercise.
The Convertible Preferred Shares will not be listed on any
exchange and may not be transferred without the consent of the
Trust.
Additional information regarding the Convertible Preferred
Shares are included in a Current Report on Form 8-K to be filed
with the U.S. Securities and Exchange Commission (“SEC”).
The Convertible Preferred Shares were offered directly to the
purchasers without a placement agent, underwriter, broker or
dealer.
The Convertible Preferred Shares and the Common Shares into
which the Convertible Preferred Shares are convertible are being
issued in reliance upon an exemption from registration under the
Securities Act of 1933 (the “Securities Act”) and have not been
registered under the Securities Act or any state 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 shall not constitute an offer to sell or a
solicitation of an offer to buy the Convertible Preferred Shares,
nor shall there be any sale of Convertible Preferred Shares in any
state or other jurisdiction in which such offer, solicitation or
sale would be unlawful prior to the registration or qualification
under the securities laws of such jurisdiction.
About XA Investments
XA Investments LLC (“XAI”) serves as the Trust’s investment
adviser. 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
consulting services focused on registered closed-end funds to meet
institutional client needs. XAI offers custom product build 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
broad range of alternative investment strategies and managers. XAI
provides individual investors with access to institutional-caliber
alternative managers. For more information, please visit
www.xainvestments.com.
About XMS Capital Partners
XMS Capital Partners, LLC, established in 2006, is a global,
independent financial services firm providing M&A, corporate
advisory and asset management services to clients. 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”) serves as the Trust’s
investment sub-adviser. Octagon is a 25+ year old, $34.4B
below-investment grade corporate credit investment adviser focused
on leveraged loan, high yield bond and structured credit (CLO debt
and equity) investments. Through fundamental credit analysis and
active portfolio management, Octagon’s investment team identifies
attractive relative value opportunities across below-investment
grade asset classes, sectors and issuers. Octagon’s investment
philosophy and methodology encourage and rely upon dynamic internal
communication to manage portfolio risk. Over its history, the firm
has applied a disciplined, repeatable and scalable approach in its
effort to generate attractive risk-adjusted returns for its
investors. For more information, please visit
www.octagoncredit.com.
* * *
The Trust, XAI and Octagon do not provide tax advice; consult a
professional tax advisor regarding your specific tax situation.
Income may be subject to state and local taxes, as well as the
federal alternative minimum tax.
This press release contains certain statements that may include
“forward-looking statements.” Forward-looking statements can be
identified by the words “may,” “will,” “intend,” “expect,”
“estimate,” “continue,” “plan,” “anticipate,” and similar terms and
the negatives of such 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 Trust’s actual results are the performance of the
portfolio of securities held by the Trust, the conditions in the
U.S. and international financial and other markets, the price at
which Preferred Shares trade in the 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
such forward-looking statements are reasonable, actual results
could differ materially from those expressed or implied in such
forward-looking statements. The Trust’s future financial condition
and results of operations, 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 the federal securities laws, the Trust does not intend, and
the Trust undertakes no obligation, to update any forward-looking
statement.
NOT FDIC INSURED
NO BANK GUARANTEE
MAY LOSE VALUE
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version on businesswire.com: https://www.businesswire.com/news/home/20240610307692/en/
Kimberly Flynn, Managing Director XA Investments LLC Phone:
1-888-903-3358 Email: info@xainvestments.com
www.xainvestments.com
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