Main Street Prices Public Offering of $300 Million of 6.50% Notes due 2027
Main Street Capital (NYSE: MAIN) has announced an underwritten public offering of $300 million in 6.50% notes due 2027. The notes, which will bear interest at 6.50% per year and mature on June 4, 2027, can be redeemed at any time at par plus a premium. The offering is expected to close on June 4, 2024, subject to customary conditions.
Net proceeds will be used initially to repay outstanding indebtedness under Main Street's corporate and special purpose vehicle revolving credit facilities. Subsequently, funds will be re-borrowed for investments, operating expenses, and general corporate purposes.
Joint bookrunners for this offering include Truist Securities, J.P. Morgan Securities, RBC Capital Markets, and SMBC Nikko Securities America. Co-managers include Raymond James, Regions Securities, Zions Direct, Hancock Whitney Investment Services, Texas Capital Securities, Comerica Securities, B. Riley Securities, Oppenheimer, and WauBank Securities.
Investors are advised to review the preliminary prospectus supplement and other related documents filed with the SEC before investing.
- Successful pricing of a $300 million public offering.
- The 6.50% interest rate is attractive for investors.
- Funds to be used for strategic investments and operational expenses.
- Strong syndicate of joint bookrunners and co-managers involved.
- Offering scheduled to close as soon as June 4, 2024.
- Increased indebtedness could impact financial stability.
- Potential for higher interest expense due to new notes.
- Market conditions might affect the success of subsequent investments.
- Dependence on credit facilities for initial fund usage.
Insights
Main Street Capital Corporation's decision to price a public offering of
From a strategic perspective, utilizing the proceeds to repay outstanding debt and then re-borrow under existing credit facilities allows Main Street to optimize its capital structure. This move could reduce overall interest expenses, assuming the new debt is cheaper than existing liabilities. However, it also adds a layer of complexity to the company's financial management, emphasizing the need for efficient use of capital.
Retail investors should take note of the semiannual interest payments, which offer a predictable income stream. However, the option for early redemption at a 'make-whole' premium could impact the total returns if the company chooses to refinance the debt under more favorable conditions before maturity.
The choice of underwriters, including major players like J.P. Morgan Securities and RBC Capital Markets, underscores the credibility and market confidence in Main Street's offering. The involvement of these prominent institutions suggests robust demand and provides a level of assurance to potential investors. The use of proceeds for general corporate purposes and new investments aligns well with Main Street’s strategy to maintain growth and operational agility.
Retail investors should be aware that while the proceeds will initially be used to repay debt, the subsequent re-borrowing aligns with Main Street's objectives to fund new investments and operational needs. This strategic layer ensures that the company remains on its growth trajectory while managing its debt effectively.
However, potential investors should also recognize that the reliance on re-borrowing exposes the company to interest rate risks and financial market volatility. This could affect the company’s financial health and its ability to service debt if market conditions change adversely.
Main Street intends to initially use the net proceeds from this offering to repay outstanding indebtedness, including amounts outstanding under Main Street's corporate revolving credit facility (the "Corporate Facility") or its special purpose vehicle revolving credit facility (the "SPV Facility" and, together with the Corporate Facility, the "Credit Facilities"), and then, through re-borrowing under the Credit Facilities, to make investments in accordance with its investment objective and strategies, to make investments in marketable securities and idle funds investments, to pay operating expenses and other cash obligations, and for general corporate purposes.
Truist Securities, Inc., J.P. Morgan Securities LLC, RBC Capital Markets, LLC and SMBC Nikko Securities America, Inc. are acting as joint bookrunners for this offering. Raymond James & Associates, Inc., Regions Securities LLC, Zions Direct, Inc., Hancock Whitney Investment Services, Inc., Texas Capital Securities, Comerica Securities, Inc., B. Riley Securities, Inc., Oppenheimer & Co. Inc. and WauBank Securities LLC are acting as co-managers for this offering.
Investors should carefully consider, among other things, Main Street's investment objective and strategies and the risks related to Main Street and the offering before investing. The pricing term sheet dated May 28, 2024, the preliminary prospectus supplement dated May 28, 2024, the accompanying prospectus dated March 3, 2022, each of which has been filed with the Securities and Exchange Commission, any related free writing prospectus, and any information incorporated by reference in each, contain this and other information about Main Street and should be read carefully before investing.
A shelf registration statement relating to these securities is on file with the Securities and Exchange Commission and effective. The offering may be made only by means of a preliminary prospectus supplement and an accompanying prospectus, copies of which may be obtained from Truist Securities, Inc., Attention: Prospectus Department, 303 Peachtree Street,
The information in the pricing term sheet, the preliminary prospectus supplement, the accompanying prospectus and this press release is not complete and may be changed. The pricing term sheet, the preliminary prospectus supplement, the accompanying prospectus and this press release do not constitute offers to sell or the solicitation of offers 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.
ABOUT MAIN STREET CAPITAL CORPORATION
Main Street (www.mainstcapital.com) is a principal investment firm that primarily provides long-term debt and equity capital to lower middle market companies and debt capital to middle market companies. Main Street's portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. Main Street seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its lower middle market investment strategy. Main Street's lower middle market portfolio companies generally have annual revenues between
Main Street, through its wholly owned portfolio company MSC Adviser I, LLC ("MSC Adviser"), also maintains an asset management business through which it manages investments for external parties. MSC Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements which are based upon Main Street management's current expectations and are inherently uncertain. The forward-looking statements may include statements as to Main Street's notes offering, the expected net proceeds from the offering and the anticipated use of the net proceeds of the offering. Any such statements other than statements of historical fact are likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under Main Street's control, and that Main Street may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual performance, events and results could vary materially from these estimates and projections of the future as a result of a number of factors, including those described from time to time in Main Street's filings with the Securities and Exchange Commission. Such statements speak only as of the time when made and are based on information available to Main Street as of the date hereof and are qualified in their entirety by this cautionary statement. Main Street assumes no obligation to revise or update any such statement now or in the future.
Contacts:
Main Street Capital Corporation
Dwayne L. Hyzak, CEO, dhyzak@mainstcapital.com
Jesse E. Morris, CFO and COO, jmorris@mainstcapital.com
713-350-6000
Dennard Lascar Investor Relations
Ken Dennard / ken@dennardlascar.com
Zach Vaughan / zvaughan@dennardlascar.com
713-529-6600
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SOURCE Main Street Capital Corporation
FAQ
What is the interest rate on Main Street's new notes?
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What is the purpose of Main Street's $300 million public offering?
When is the closing date for Main Street's public offering?
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What credit facilities will Main Street initially repay with the offering's proceeds?
