Fidus Investment Corporation Prices Public Offering of $100 Million of 6.750% Notes Due 2030

Rhea-AI Summary

Fidus Investment (NASDAQ: FDUS) has priced a $100 million public offering of 6.750% notes due 2030. The notes will mature on March 19, 2030, with interest payable semi-annually beginning September 19, 2025. The offering is expected to close on March 19, 2025.

The notes can be redeemed before September 19, 2029, at par plus a make-whole premium, and at par thereafter. Raymond James & Associates is serving as the book-runner, with several other firms acting as passive book-runners and co-managers.

The company plans to use the net proceeds to repay a portion of its outstanding $125.0 million borrowings under its senior secured revolving credit facility, with the possibility of re-borrowing to invest in lower middle-market companies and for working capital purposes.

Positive

• New $100M notes offering provides additional long-term financing
• Fixed interest rate of 6.750% provides certainty in debt servicing costs
• Potential for reinvestment in lower middle-market companies for growth

Negative

• Increases overall debt burden with new $100M notes
• Higher interest expense with 6.750% rate on new notes
• May lead to additional borrowing if credit facility is re-accessed

Insights

Financial Analyst

Fidus Investment 's $100 million notes offering at 6.750% represents a significant debt restructuring move that converts a substantial portion of their variable-rate credit facility borrowings into fixed-rate, longer-term debt. This transaction extends their debt maturity profile to 2030, providing certainty in their capital structure during a period of interest rate volatility.

For context, this $100 million offering represents approximately 13.6% of FDUS's $735 million market capitalization, making it a material financing decision. The company is effectively refinancing most of its existing $125 million credit facility borrowings while maintaining the flexibility to re-borrow for future investments.

The fixed 6.750% coupon locks in Fidus's borrowing costs until 2030, eliminating near-term interest rate risk but potentially creating opportunity cost should rates decline significantly. The make-whole provision before September 2029 effectively ensures the company commits to this rate structure, providing predictability for both the company and investors.

This refinancing doesn't fundamentally alter FDUS's business strategy of investing in lower middle-market companies, but does optimize their capital structure by extending maturities and creating a more balanced debt profile. Semi-annual interest payments create predictable cash flow obligations that the company will need to manage against investment income from their portfolio companies.

Corporate Finance Expert

This notes offering exemplifies classic capital structure optimization for a Business Development Company (BDC). By transitioning $100 million from revolving credit to five-year notes, Fidus is trading some financial flexibility for stability and predictability in its funding sources.

The strategic relevance comes from how this restructuring affects FDUS's investment capacity. With $125 million previously outstanding on their credit facility and now $100 million being refinanced through these notes, the company maintains approximately $25 million in existing debt while potentially freeing up capacity on their revolving facility for future investments.

The explicit statement that Fidus may "re-borrow under the Credit Facility" to fund investments in lower middle-market companies confirms this isn't about deleveraging but rather about optimizing their debt structure. For BDCs, which typically operate with regulatory leverage constraints, having diversified funding sources with staggered maturities represents sound financial management.

What's particularly noteworthy is the involvement of multiple underwriters and co-managers (Raymond James, KBW, Oppenheimer, ING, B. Riley, and Ladenburg Thalmann), suggesting strong institutional interest in FDUS's debt. The ability to access capital markets on reasonable terms is important for BDCs, whose business model depends on borrowing at lower rates than what they earn on their investments in private companies.

While this transaction doesn't fundamentally change Fidus's business trajectory, it does strengthen their financial foundation by extending their debt maturity profile and diversifying funding sources.

EVANSTON, Ill., March 12, 2025 (GLOBE NEWSWIRE) --  Fidus Investment Corporation (NASDAQ: FDUS) (“Fidus” or the “Company”) today announced that it has priced an underwritten public offering of $100 million aggregate principal amount of 6.750% notes due 2030 (the “Notes”).

The Notes will mature on March 19, 2030, and may be redeemed in whole or in part at the Company’s option at any time prior to September 19, 2029 at par plus a “make-whole” premium, and at par thereafter. The Notes will bear interest at a rate of 6.750% per year payable semi-annually on March 19 and September 19 of each year, beginning September 19, 2025.

The offering is expected to close on March 19, 2025, subject to the satisfaction of customary closing conditions.

Raymond James & Associates, Inc. is acting as book-runner for this offering. Keefe, Bruyette & Woods, Inc., Oppenheimer & Co. Inc., and ING Financial Markets LLC are acting as passive book-runners for this offering. B. Riley Securities, Inc. and Ladenburg Thalmann & Co. Inc. are acting as co-managers for this offering. The Company intends to use the net proceeds from this offering to repay a portion of the outstanding borrowings under its senior secured revolving credit facility (the “Credit Facility”). However, the Company may re-borrow under the Credit Facility and use such borrowings to invest in lower middle-market companies in accordance with its investment objective and strategies and for working capital and general corporate purposes. As of March 11, 2025, the Company had $125.0 million of outstanding indebtedness under the Credit Facility.

Investors are advised to consider carefully the investment objective, risks and charges and expenses of the Company before investing. The preliminary prospectus supplement dated March 12, 2025 and the accompanying prospectus dated May 8, 2024, each of which has been filed with the Securities and Exchange Commission (the “SEC”), contain a description of these matters and other important information about the Company and should be read carefully before investing.

This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of the Notes referred to in this press release, in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction. A registration statement (File No. 333-277540) relating to the Notes was filed and has been declared effective by the SEC.

This offering is being made solely by means of a written prospectus forming part of the effective registration statement and a related preliminary prospectus supplement, which may be obtained for free by visiting the SEC’s website at www.sec.gov or from Raymond James & Associates, Inc., 880 Carillon Parkway, St. Petersburg, Florida 33716, email: prospectus@raymondjames.com or by calling 800-248-8863.

ABOUT FIDUS INVESTMENT CORPORATION

Fidus Investment Corporation provides customized debt and equity financing solutions to lower middle-market companies, which management generally defines as U.S. based companies with revenues between $10 million and $150 million. The Company’s investment objective is to provide attractive risk-adjusted returns by generating both current income from debt investments and capital appreciation from equity related investments. Fidus seeks to partner with business owners, management teams and financial sponsors by providing customized financing for change of ownership transactions, recapitalizations, strategic acquisitions, business expansion and other growth initiatives.

Fidus is an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended. In addition, for tax purposes, Fidus has elected to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. Fidus was formed in February 2011 to continue and expand the business of Fidus Mezzanine Capital, L.P., which commenced operations in May 2007 and is licensed by the U.S. Small Business Administration as a Small Business Investment Company (SBIC).

FORWARD-LOOKING STATEMENTS

Statements included herein contain certain “forward-looking statements” within the meaning of the federal securities laws, including statements with regard to the offering of the Notes and the anticipated use of the net proceeds of the offering. Forward-looking statements can be identified by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or negative versions of those words, other comparable words or other statements that do not relate to historical or factual matters. The forward-looking statements are based on our beliefs, assumptions and expectations of future events and our future performance, taking into account all information currently available to us. These statements are not guarantees of future events, performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including, but not limited to, changes in the financial, capital, and lending markets; general economic, geopolitical, and industry trends and other factors; dependence of the Company’s future success on the general economy and its impact on the industries in which it invests; and those described from time to time in our filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. The Company undertakes no duty to update any forward-looking statements made herein, whether as a result of new information, future developments or otherwise, except as required by law.

Company Contact:		Investor Relations Contact:
Shelby E. Sherard		Jody Burfening
Chief Financial Officer		Alliance Advisors IR
(847) 859-3938		(212) 838-3777
ssherard@fidusinv.com		jburfening@allianceadvisors.com

FAQ

What is the interest rate and maturity date for FDUS's new notes offering?

The notes offer a 6.750% interest rate and will mature on March 19, 2030, with semi-annual interest payments.

How much debt does FDUS currently have under its Credit Facility?

As of March 11, 2025, FDUS had $125.0 million of outstanding indebtedness under its Credit Facility.

What is the redemption policy for FDUS's 2030 notes?

The notes can be redeemed before September 19, 2029, at par plus a make-whole premium, and at par thereafter.

How will FDUS use the proceeds from the $100 million notes offering?

FDUS will use the proceeds to repay part of its credit facility debt, with potential re-borrowing for lower middle-market investments and working capital.