OFS Credit Company, Inc. Prices Preferred Stock Offering

Rhea-AI Summary

OFS Credit Company (Nasdaq: OCCI) has priced an underwritten public offering of 1,040,000 shares of 7.875% Series F Term Preferred Stock due 2029 at $25.00 per share, raising $26.0 million in gross proceeds. The company granted underwriters a 30-day option to purchase up to 156,000 additional shares. Expected net proceeds are approximately $25.0 million, or $28.8 million if the overallotment option is fully exercised.

The Preferred Stock is expected to trade on Nasdaq Capital Market under the symbol 'OCCIM' within 30 days from the issue date. OFS Credit Company plans to use the net proceeds to acquire investments aligned with its objectives and strategies. The offering is expected to close on October 2, 2024, subject to customary conditions.

Positive

• Raised $26.0 million in gross proceeds from preferred stock offering
• Potential for additional $3.8 million if overallotment option is exercised
• New preferred stock to be listed on Nasdaq Capital Market
• Net proceeds to be used for acquiring new investments

Negative

• Potential dilution for existing shareholders
• Additional debt obligation with 7.875% interest rate

Insights

Financial Analyst

OFS Credit Company's pricing of $26 million in preferred stock offering is a significant capital raise for this $124.8 million market cap company. The 7.875% yield on the Series F Term Preferred Stock is attractive in the current interest rate environment, potentially indicating strong demand. This capital injection will bolster the company's ability to acquire new investments, potentially driving future growth and income generation.

The overallotment option for an additional $3.9 million could further strengthen the company's position if exercised. The expected net proceeds of $25 million (or $28.8 million with full overallotment) represent a substantial increase in investable capital, which could significantly impact the company's earning potential.

Investors should note that while this offering provides growth capital, it also increases the company's leverage and preferred dividend obligations. The success of this strategy will depend on management's ability to deploy the capital effectively and generate returns exceeding the 7.875% cost of the preferred stock.

Market Research Analyst

The pricing of this preferred stock offering reveals several key market insights:

• Investor appetite for high-yield instruments remains strong, as evidenced by the successful pricing at a 7.875% yield.
• The involvement of multiple underwriters (Lucid Capital Markets, B. Riley Securities, Janney Montgomery Scott, InspereX and Ladenburg Thalmann) suggests broad market interest and distribution capabilities.
• The expected listing on Nasdaq Capital Market within 30 days indicates confidence in meeting listing requirements and potential for increased liquidity for investors.

This offering could impact the broader business development company (BDC) sector, potentially setting a benchmark for similar capital raises. The success of this offering may encourage other small to mid-sized BDCs to consider similar preferred stock issuances to fund growth initiatives.

CHICAGO--(BUSINESS WIRE)-- OFS Credit Company, Inc. (the “Company”) (Nasdaq: OCCI, OCCIN, OCCIO) today announced the pricing of an underwritten public offering of 1,040,000 shares of 7.875% Series F Term Preferred Stock due 2029 (the “Preferred Stock”) at a public offering price of $25.00 per share, raising $26.0 million in gross proceeds. In addition, the Company has granted the underwriters a 30-day option to purchase up to an additional 156,000 shares of Preferred Stock on the same terms and conditions to cover overallotments, if any. The closing of the transaction is subject to customary closing conditions and the shares are expected to be delivered on October 2, 2024.

The Company has applied to list the Preferred Stock on the Nasdaq Capital Market under the trading symbol “OCCIM”. The Company expects the Preferred Stock to begin trading within 30 days from the original issue date.

The Company expects to receive net proceeds from the offering, excluding the exercise of the underwriters’ option to purchase additional shares of Preferred Stock, of approximately $25.0 million, after deducting payment of underwriting discounts and estimated offering expenses payable by the Company. Assuming the full exercise of the underwriters’ option to purchase additional shares of Preferred Stock, the net proceeds will be approximately $28.8 million, after deducting payment of underwriting discounts and estimated offering expenses payable by the Company.

The Company intends to use the net proceeds of the offering to acquire investments in accordance with its investment objectives and strategies.

Lucid Capital Markets, LLC, B. Riley Securities, Inc., Janney Montgomery Scott LLC, InspereX LLC are acting as joint bookrunners and Ladenburg Thalmann & Co. Inc. is acting as a co-manager for the offering.

Investors are advised to carefully consider the investment objectives, risks and charges and expenses of the Company before investing. The preliminary prospectus supplement, dated September 24, 2024, and accompanying prospectus, dated May 29, 2024, each of which has been filed with the Securities and Exchange Commission, 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 the securities in this offering or any other securities nor will there be any sale of these securities or any other securities 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 shelf registration statement relating to these securities is on file with and has been declared effective by the Securities and Exchange Commission. The offering may be made only by means of a prospectus and a related prospectus supplement, copies of which may be obtained, when available, from the following investment banks: Lucid Capital Markets, LLC, 570 Lexington Avenue, 40th Floor, New York, New York 10022; B. Riley Securities, Inc., 299 Park Avenue, 21st Floor, New York, New York 10171; Janney Montgomery Scott LLC, 1717 Arch Street, Philadelphia, PA 19103; InspereX LLC, 25 SE 4th Avenue, Suite 400, Delray Beach, FL 33483; Ladenburg Thalmann & Co. Inc., 640 5th Avenue, 4th Floor, New York, NY 10019; copies may also be obtained by visiting EDGAR on the Securities and Exchange Commission Web site, at www.sec.gov.

About OFS Credit Company, Inc.

The Company is a non-diversified, externally managed closed-end management investment company. The Company’s primary investment objective is to generate current income, with a secondary objective to generate capital appreciation, which it seeks to achieve primarily through investments in collateralized loan obligation equity and debt securities. The Company’s investment activities are managed by OFS Capital Management, LLC, an investment adviser registered under the Investment Advisers Act of 1940¹, as amended, and headquartered in Chicago, Illinois with additional offices in New York and Los Angeles.

Forward-Looking Statements

Statements included herein may constitute “forward-looking statements,” which relate to future events or our future operations, performance or financial condition. Forward-looking statements include statements regarding our intentions related to the offering discussed in this press release, including the use of proceeds from the offering. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties, including elevated interest and inflation rates, the ongoing war between Russia and Ukraine, the escalated armed conflict in the Middle East, instability in the U.S. and international banking systems, uncertainties related to the 2024 U.S. presidential election, the risk of recession or a shutdown of U.S. government services and related market volatility on our business, our portfolio companies, our industry and the global economy. Actual results and outcomes may differ materially from those anticipated in the forward-looking statements as a result of a variety of factors, including those described from time to time in the Company’s filings with the Securities and Exchange Commission or factors that are beyond the Company’s control. The Company is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

¹ Registration does not imply a certain level of skill or training

OFS® and OFS Credit® are registered trademarks of Orchard First Source Asset Management, LLC
OFS Capital Management™ is a trademark of Orchard First Source Asset Management, LLC.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240924881510/en/

INVESTOR RELATIONS:

OFS Credit Company, Inc.

Steve Altebrando

847-734-2085

investorrelations@ofscreditcompany.com

Source: OFS Credit Company, Inc.

FAQ

What is the pricing of OFS Credit Company's (OCCI) new preferred stock offering?

OFS Credit Company (OCCI) priced its 7.875% Series F Term Preferred Stock due 2029 at $25.00 per share in a public offering.

How many shares of preferred stock is OFS Credit Company (OCCI) offering?

OFS Credit Company (OCCI) is offering 1,040,000 shares of preferred stock, with an option for underwriters to purchase up to an additional 156,000 shares.

What are the expected net proceeds from OCCI's preferred stock offering?

OFS Credit Company (OCCI) expects net proceeds of approximately $25.0 million, or $28.8 million if the overallotment option is fully exercised.

What is the intended use of proceeds from OCCI's preferred stock offering?

OFS Credit Company (OCCI) intends to use the net proceeds to acquire investments in accordance with its investment objectives and strategies.

When is the expected closing date for OCCI's preferred stock offering?

The preferred stock offering by OFS Credit Company (OCCI) is expected to close on October 2, 2024, subject to customary closing conditions.