Main Street Prices Public Offering of $350 Million of 6.95% Notes due 2029

Rhea-AI Summary

Main Street Capital Corporation (MAIN) announces a $350 million public offering of 6.95% notes due 2029, with net proceeds intended for debt repayment and investment purposes.

Insights

Financial Analyst

The pricing of Main Street Capital Corporation's $350 million notes offering at a 6.95% interest rate is a strategic financial move, indicative of the company's approach to capital management. The decision to repay existing debts, particularly the Corporate Facility and the 5.20% senior notes due in 2024, suggests a focus on optimizing the capital structure. This refinancing could potentially lead to interest expense savings, given the current rate is lower than the new notes, which may improve net interest margins and ultimately enhance shareholder value.

Investors should note the implications of a 'make-whole' premium, which protects bondholders by ensuring they receive a specified amount if the company decides to redeem the notes before maturity. This feature might make the notes more attractive to conservative investors seeking predictable returns, potentially broadening the investor base.

Furthermore, the use of proceeds to support Main Street's investment objectives could signal confidence in their strategic growth plans. However, the effectiveness of these investments will be a critical factor in determining the long-term impact on the company's performance and stock valuation.

Market Research Analyst

Main Street's engagement of multiple prestigious financial institutions as joint bookrunners and co-managers reflects positively on the offering's credibility and the company's standing in the market. The diversity and caliber of these institutions may enhance investor confidence and facilitate a successful capital raise.

It is also worth considering the broader market context, including interest rate trends and investor appetite for corporate debt. With a 6.95% yield, the offering is competitive, particularly if market rates for similar maturities and credit ratings are lower. This could attract yield-seeking investors in a potentially low-interest-rate environment. However, if market rates are higher, Main Street may have to navigate challenges in selling the notes at the desired price.

Investors should also evaluate the timing of the offering and the potential impact on Main Street's stock. If the market perceives the debt issuance as a sign of strong future investments and financial prudence, it could lead to a positive reaction. Conversely, if the market views this as a move to manage troubling debt levels, the stock could face negative pressure.

Economist

The decision by Main Street to issue notes in the current economic climate can be seen as a response to macroeconomic conditions. Interest rates are a function of monetary policy and economic indicators and the 6.95% rate must be contextualized within the prevailing federal funds rate and inflation expectations. If the rate offered by Main Street is above the current risk-free rate by a margin that compensates for the default risk, it could be an attractive proposition for investors.

The company's strategy to reallocate capital towards investments that align with its objectives may stimulate economic activity in the sectors where it operates. This could have a ripple effect on employment, productivity and growth within those sectors, contributing to the broader economy.

However, the long-term economic impact will also depend on the company's ability to manage the additional debt load without compromising its financial stability. A misstep in this regard could lead to adverse microeconomic and macroeconomic consequences, affecting not only Main Street but also the stability of the financial markets in which it operates.

HOUSTON, Jan. 10, 2024 /PRNewswire/ -- Main Street Capital Corporation (NYSE: MAIN) ("Main Street") is pleased to announce that it has priced an underwritten public offering of $350 million in aggregate principal amount of 6.95% notes due 2029 (the "Notes"). The Notes will bear interest at a rate of 6.95% per year, payable semiannually, will mature on March 1, 2029 and may be redeemed in whole or in part at Main Street's option at any time at par plus a "make-whole" premium, if applicable. The offering is subject to customary closing conditions and is expected to close on January 12, 2024.

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"), its special purpose vehicle revolving credit facility (the "SPV Facility" and, together with the Corporate Facility, the "Credit Facilities") or its 5.20% senior notes due 2024 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.

SMBC Nikko Securities America, Inc., J.P. Morgan Securities LLC, RBC Capital Markets, LLC and Truist Securities, Inc. are acting as joint bookrunners for this offering. Raymond James & Associates, Inc., TCBI Securities, Inc., Hancock Whitney Investment Services, Inc., Oppenheimer & Co. Inc., Zions Direct, Inc., Regions Securities LLC, Comerica Securities, Inc. and B. Riley Securities, Inc. 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 January 10, 2024, the preliminary prospectus supplement dated January 10, 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 SMBC Nikko Securities America, Inc. at 277 Park Avenue, New York, New York 10172, Attn: Debt Capital Markets, 1-888-868-6856, or e-mail: prospectus@smbcnikko-si.com; J.P. Morgan Securities LLC, 383 Madison Avenue, New York, NY 10179, Attn: Investment Grade Syndicate Desk, 212-834-4533; RBC Capital Markets, LLC, Attention: Investment Grade Syndicate Desk, 200 Vesey Street, 8th Floor, New York, NY 10281, telephone: 866-375-6829, or e-mail: rbcnyfixedincomeprospectus@rbccm.com; or Truist Securities, Inc., Attention: Prospectus Department, 303 Peachtree Street, Atlanta, GA 30308, telephone: 800-685-4786, or e-mail: TSIdocs@Truist.com.

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 companies generally have annual revenues between $10 million and $150 million. Main Street's middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies.

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 Main Street Capital Corporation's recent announcement?

Main Street Capital Corporation (MAIN) has announced a $350 million public offering of 6.95% notes due 2029.

What is the intended use of the net proceeds from the offering?

The net proceeds from the offering are intended for debt repayment, investment in accordance with its investment objective and strategies, marketable securities and idle funds investments, operating expenses, and general corporate purposes.

Who are the joint bookrunners for this offering?

The joint bookrunners for this offering are SMBC Nikko Securities America, Inc., J.P. Morgan Securities LLC, RBC Capital Markets, LLC, and Truist Securities, Inc.

What should investors consider before investing in Main Street's offering?

Investors should carefully consider Main Street's investment objective and strategies, as well as the risks related to Main Street and the offering before investing.