RiverNorth Capital and Income Fund, Inc. Announces Non-Transferable Rights Offering

Rhea-AI Summary

RiverNorth Capital and Income Fund, Inc. (RSF) announces a rights offering to purchase additional shares of common stock. The offering will issue non-transferable rights to stockholders of record as of April 1, 2024, allowing the purchase of new shares at a subscription price determined by net asset value or market price. The subscription period expires on April 22, 2024. The Fund aims for a high level of current income and had approximately $56.9 million of net assets and 3.4 million shares outstanding as of February 29, 2024.

Insights

Financial Analyst

The recent announcement by RiverNorth Capital and Income Fund regarding a rights offering to existing shareholders presents a strategic capital raising initiative. This move allows the fund to potentially increase its net asset value by issuing new shares at a discount to either the net asset value or market price, whichever is higher. The decision to offer the rights non-transferable ensures that current shareholders are the ones who benefit, potentially reducing the dilutive effect on their holdings.

From a financial perspective, the offering price set at 90% of the net asset value or 95% of the market price is designed to incentivize participation while maintaining value for the existing shareholders. Investors should note that the new shares will not be entitled to distributions for March or April 2024, which could influence the timing of their investment decisions. The possibility of an over-subscription and the proportional allocation of additional shares add an element of potential upside for participating investors.

It is also important to consider the Fund's performance and investment strategy, particularly its focus on high current income and investments in Alternative Credit Instruments, which carry a high degree of risk. The Fund's closed-end structure and secondary market trading can lead to price discrepancies between the market value and net asset value, which investors should monitor closely.

Market Research Analyst

The rights offering by RiverNorth Capital and Income Fund can have implications for market dynamics, particularly for the closed-end fund sector. The fund's choice of a rights offering, a relatively less common method of capital raising compared to secondary public offerings, suggests a targeted approach to raise funds while attempting to minimize shareholder dilution and maintain stock liquidity.

Investors and market participants should be attentive to the fund's net asset value and market price leading up to the expiration of the rights offering, as these will determine the subscription price. The market's reaction to the rights offering could influence the fund's share price volatility in the short term. Additionally, the fund's ability to increase the number of shares offered by up to 100% provides flexibility in capital raising, which could be a response to investor demand or market conditions.

The closed-end fund's performance is subject to interest rate fluctuations and general economic conditions, which are particularly relevant given the current environment of rising interest rates. This could affect the attractiveness of the offering and the fund's future income-generating capabilities.

Legal Expert

The rights offering is subject to regulatory compliance and RiverNorth Capital and Income Fund's adherence to SEC regulations is crucial. The offering is made under an effective shelf registration statement, which allows for a more expedited process. However, the final prospectus supplement and accompanying prospectus must be filed and disseminated to potential investors for the offering to proceed legally.

Investors should be aware that the rights offering is non-transferable, which has legal implications for their liquidity and tradability. Additionally, the lack of entitlement to distributions for the first two months post-issuance may have contractual implications that should be reviewed in the prospectus supplement.

The legal structure of investments in Alternative Credit Instruments is complex and the Fund's limited recourse in the event of borrower default should be a consideration for risk assessment. The disclosure that platforms generally do not verify borrower information underscores the importance of legal due diligence in understanding the risks associated with these investments.

WEST PALM BEACH, Fla.--(BUSINESS WIRE)-- RiverNorth Capital and Income Fund, Inc. (NYSE: RSF) (the “Fund”) announces that its Board of Directors (the “Board”) has authorized and set the terms of an offering to the Fund’s stockholders of rights to purchase additional shares of common stock of the Fund.

In this offering, the Fund will issue non-transferable rights (the “Rights”) to its stockholders of record as of April 1, 2024 (the “Record Date” and such stockholders, “Record Date Stockholders”) allowing the holder to subscribe for new shares of common stock of the Fund (the “Primary Subscription”). Record Date Stockholders will receive one Right for each share of common stock held on the Record Date. For every three Rights held, a holder of Rights may buy one new share of common stock of the Fund. The number of Rights to be issued to a Record Date Stockholder will be rounded up to the nearest number of Rights evenly divisible by three. Fractional shares will not be issued upon the exercise of the Rights. Accordingly, new Common Shares may be purchased only pursuant to the exercise of Rights in integral multiples of three.

Record Date Stockholders who exercise their Rights will not be entitled to distributions payable during March or April 2024 on shares issued in connection with the rights offering, but they will be entitled to distributions payable during May 2024 on these shares.

Record Date stockholders who fully exercise their Rights will be entitled to subscribe for additional shares of common stock (“Over-Subscription Shares”), subject to the limitations set forth in the prospectus supplement. The Over-Subscription Shares will be allocated pro rata to stockholders who over-subscribe based on the number of Rights originally issued to them. The Fund may increase the number of shares of common stock subject to subscription by up to 100% of the shares available pursuant to the Primary Subscription. The Rights are non-transferrable and, therefore, may not be purchased or sold. The shares of common stock issued pursuant to the rights offering will be listed on the New York Stock Exchange (“NYSE”) under the ticker: RSF.

The subscription price per share of common stock will be determined based upon a formula equal to 90% of the reported net asset value or 95% of the market price per share of common stock, whichever is higher on the Expiration Date (as defined below). Market price per share of common stock will be determined based on the average of the last reported sales price of a share of common stock on the NYSE for the five trading days preceding (and not including) the Expiration Date. The subscription period will expire on April 22, 2024, unless extended by the Board (the “Expiration Date”).

The rights offering will be made pursuant to the Fund’s currently effective shelf registration statement on file with the Securities and Exchange Commission (“SEC”) and only by means of a prospectus supplement and accompanying prospectus. A final prospectus supplement and accompanying prospectus will be filed with the SEC but has not been filed as of the date of this release. The Company expects to mail subscription certificates evidencing the subscription rights and a copy of the prospectus supplement and accompanying prospectus for the rights offering shortly following the Record Date. The securities described in this release may not be sold nor may offers to purchase be accepted prior to the time the prospectus supplement and accompanying prospectus are filed with the SEC.

This press release shall not constitute an offer to sell or constitute a solicitation of an offer to buy.

RiverNorth Capital and Income Fund, Inc.

The investment objective of the Fund is to seek a high level of current income. Fund had approximately $56.9 million of net assets and 3.4 million shares of common stock outstanding as of February 29, 2024.

The Fund is a closed-end fund and does not continuously issue stock for sale as open-end mutual funds do. The Fund now trades in the secondary market. Investors wishing to buy or sell stock need to place orders through an intermediary or broker. The share price of a closed-end fund is based on the market value.

Risk is inherent in all investing. Investing in any investment company security involves risk, including the risk that you may receive little or no return on your investment or even that you may lose part or all of your investment. Therefore, before investing in the shares of common stock, you should consider the risks as well as the other information in the prospectus, annual report, and semi-annual report.

Past performance is no guarantee of future results.

See the Prospectus for a more detailed description of Fund risks.

The profitability of specialty finance and other financial companies is largely dependent upon the availability and cost of capital funds and may fluctuate significantly in response to changes in interest rates, as well as changes in general economic conditions. If the borrower of Alternative Credit (as defined below) in which the Fund invests is unable to make its payments on a loan, the Fund may be greatly limited in its ability to recover any outstanding principal and interest under such loan, as (among other reasons) the Fund may not have direct recourse against the borrower or may otherwise be limited in its ability to directly enforce its rights under the loan, whether through the borrower or the platform through which such loan was originated, the loan may be unsecured or under collateralized, and/or it may be impracticable to commence a legal proceeding against the defaulting borrower. Substantially all of the Alternative Credit in which the Fund invests will not be guaranteed or insured by a third party. In addition, the Alternative Credit Instruments in which the Fund may invest will not be backed by any governmental authority. Prospective borrowers supply a variety of information regarding the purpose of the loan, income, occupation, and employment status (as applicable) to the lending platforms. As a general matter, platforms do not verify the majority of this information, which may be incomplete, inaccurate, false, or misleading. Prospective borrowers may misrepresent any of the information they provide to the platforms, including their intentions for the use of the loan proceeds. Alternative Credit Instruments are generally not rated by the nationally recognized statistical rating organizations (“NRSROs”). Such unrated instruments, however, are considered to be comparable in quality to securities falling into any of the ratings categories used by such NRSROs to classify "junk" bonds (i.e., below investment grade securities). Accordingly, the Fund’s unrated Alternative Credit Instrument investments constitute highly risky and speculative investments similar to investments in “junk” bonds, notwithstanding that the Fund is not permitted to invest in loans that are of subprime quality at the time of investment. Although the Fund is not permitted to invest in loans that are of subprime quality at the time of investment, an investment in the Fund’s Shares should be considered speculative and involving a high degree of risk, including the risk of loss of investment. There can be no assurance that payments due on underlying loans, including Alternative Credit, will be made.

Diversification does not ensure a profit or a guarantee against loss.

The Fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The Fund’s prospectus and most recent periodic reports contain this and other important information about the investment company and may be obtained by visiting rivernorth.com/literature or by calling 844.569.4750. Read the Prospectus carefully before investing.

RiverNorth Capital Management, LLC

RiverNorth is an investment management firm founded in 2000 that specializes in opportunistic strategies in niche markets where the potential to exploit inefficiencies is greatest. RiverNorth is the manager to multiple registered and private funds.

Not FDIC Insured | May Lose Value | No Bank Guarantee
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RiverNorth® is a registered trademark of RiverNorth Capital Management, LLC.
©2000-2024 RiverNorth Capital Management, LLC. All rights reserved.
RVN001706

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RiverNorth CEF Investor Relations

800-646-0148, Option 1

CEF@rivernorth.com

Source: RiverNorth Capital and Income Fund, Inc.

FAQ

What is the ticker symbol for RiverNorth Capital and Income Fund, Inc.?

The ticker symbol for RiverNorth Capital and Income Fund, Inc. is RSF.

When is the subscription period for the rights offering set to expire?

The subscription period for the rights offering will expire on April 22, 2024, unless extended by the Board.

What is the main purpose of the rights offering by RiverNorth Capital and Income Fund, Inc.?

The main purpose of the rights offering is to allow stockholders to purchase additional shares of common stock at a determined subscription price.

What is the investment objective of the Fund?

The investment objective of the Fund is to seek a high level of current income.

How are the subscription price per share of common stock determined in the rights offering?

The subscription price per share of common stock is determined based on a formula equal to 90% of the reported net asset value or 95% of the market price per share of common stock, whichever is higher on the Expiration Date.