U.S. Markets closed
  • S&P 500

    -4.88 (-0.11%)
  • Dow 30

    +73.94 (+0.21%)
  • Nasdaq

    -125.50 (-0.82%)
  • Russell 2000

    -4.91 (-0.21%)
  • Gold

    +11.20 (+0.63%)

    +0.0015 (+0.1281%)
  • 10-Yr Bond

    -0.0210 (-1.25%)
  • Vix

    +0.42 (+2.80%)

    -0.0036 (-0.2601%)

    -0.5080 (-0.4457%)

    -1,742.22 (-2.74%)
  • CMC Crypto 200

    -49.70 (-3.31%)
  • FTSE 100

    +14.25 (+0.20%)
  • Nikkei 225

    +96.25 (+0.34%)

Gladstone (GAIN) Taps Debt Market With $117M Notes Offering

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Gladstone Investment Corporation GAIN recently priced a public offering of notes worth $117 million in aggregate principal amount. The notes, which are set to mature on Nov 1, 2028, will carry an interest of 4.875%.

The company also ceded the underwriters with a 30-day option to buy up to an additional $17.6 million principal amount of notes to cover any overallotments to the offering. Awaiting certain customary closing conditions, this offering is anticipated to close on Aug 18, 2021.

The notes may be redeemed in part from time to time or in whole at any time at the company’s discretion on or after Nov 1, 2023. Gladstone will make interest payment on the notes on a quarterly basis, starting Nov 1, 2021. Such payments will be made on Feb 1, May 1, Aug 1 and Nov 1 of each year.

The company anticipates utilizing the net proceeds from the offering in a number of purposes, including redeeming all of its outstanding 6.375% Series E Cumulative Term Preferred Stock due 2025, repaying part of the amount drawn under its revolving credit facility, funding any new opportunistic endeavors and tapping liquidity for general corporate contingencies.

Gladstone’s efforts to strengthen its near-term liquidity in these testing times, and resorting to raising capital through the debt market amid the current low-interest-rate environment are strategic fits. However, the note offering increases the company’s long-term debt obligation. As of Jun 30, it had $171 million of debt. The notes offering might lead to a further increase in interest expenses, thereby limiting bottom-line growth.

Nonetheless, with an improving times interest earned ratio as well as $26.8 million of cash and cash equivalents (as of Jun 30, 2021), Gladstone carries a lower likelihood of default of interest and debt repayments if the economic situation worsens.

Gladstone currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Shares of the company gained 25.4%, outperforming the industry’s growth of 13.9%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Recently in August 2021, Franklin Resources, Inc. BEN priced a public offering of two series of notes, aggregating $450 million in principal amount.
This includes all or part of its $300-million, 2.800% notes due 2022, along with $250 million of Legg Mason’s 3.950% senior notes maturing in 2024. (Read more: Franklin to Procure Capital With $450M of Notes Offering)

In the same month, Huntington Bancshares Incorporated HBAN also resorted to a private offering of unsecured subordinated notes. The company priced $500 million in principal amount of fixed-to-fixed rate notes at 100% of the aggregate principal amount. The notes carry a coupon rate of 2.487% and are set to mature in 2036.

A Stock to Consider

Main Street Capital Corporation’s MAIN Zacks Consensus Estimate for 2021 earnings has been revised marginally upward over the past seven days. Also, it carries a Zacks Rank #2, at present.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Franklin Resources, Inc. (BEN) : Free Stock Analysis Report

Huntington Bancshares Incorporated (HBAN) : Free Stock Analysis Report

Gladstone Investment Corporation (GAIN) : Free Stock Analysis Report

Main Street Capital Corporation (MAIN) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research