STELLUS CAPITAL INVESTMENT CORPORATION PRICES OFFERING OF $75 MILLION OF 7.25% NOTES DUE 2030
Stellus Capital Investment (NYSE: SCM) has announced the pricing of $75 million aggregate principal amount of 7.25% notes due 2030. The notes, priced on March 25, 2025, will mature on April 1, 2030, with interest payable semi-annually starting October 1, 2025.
The notes can be redeemed at any time at par plus a 'make-whole' premium. Raymond James & Associates is leading the offering, with Goldman Sachs & Co. and Keefe, Bruyette & Woods as passive book-runners. The expected delivery date is April 1, 2025.
The company plans to use the net proceeds to repay part of its outstanding credit facility, which stood at $236.4 million as of March 24, 2025. SCM may re-borrow under the facility to invest in lower middle-market companies and for working capital purposes.
- Successful pricing of $75 million notes offering provides additional capital
- Potential debt restructuring by replacing credit facility debt with longer-term notes
- Flexibility to re-borrow under credit facility for new investments
- High interest rate of 7.25% on new notes increases interest expense
- Substantial existing debt of $236.4 million under credit facility
- Additional debt burden without immediate debt reduction
Insights
Stellus Capital Investment 's $75 million notes offering represents a strategic debt restructuring for the Business Development Company (BDC). With a 7.25% interest rate on notes maturing in 2030, SCM is effectively converting a portion of its $236.4 million credit facility debt into longer-term, fixed-rate financing.
This transaction affects approximately
For a BDC like Stellus whose business model revolves around providing debt capital to lower middle-market companies, efficient liability management is crucial. By issuing fixed-rate notes, the company gains certainty on its cost of funds through 2030, which can be particularly valuable for matching fixed-rate loans in its portfolio.
The debt restructuring doesn't change SCM's overall leverage position initially, but it does modify the composition between variable-rate credit facility debt and fixed-rate notes. This adjustment likely aims to optimize the company's interest expense and maturity ladder.
The successful pricing of this offering demonstrates market access and investor confidence in SCM's credit profile, even as the notes represent a significant portion of the company's market value. For BDC investors focused on dividend sustainability, such liability management directly impacts the spread between portfolio yields and funding costs.
Raymond James & Associates, Inc. is acting as the lead book-running manager for this offering and Goldman Sachs & Co. LLC and Keefe, Bruyette & Woods, Inc. are acting as passive book-runners for this offering.
The closing of the transaction is subject to customary closing conditions and the Notes are expected to be delivered on or about April 1, 2025.
The Company intends to use the net proceeds from this offering to repay a portion of the amount outstanding under its credit facility. However, the Company may re-borrow under its 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 24, 2025, the Company had
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 25, 2025 and the accompanying prospectus dated August 22, 2022, 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. 333-265695) 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,
About Stellus Capital Investment Corporation
The Company is an externally-managed, closed-end, non-diversified investment management company that has elected to be regulated as a business development company under the Investment Company Act of 1940. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation by investing primarily in private lower middle-market companies (typically those with
FORWARD-LOOKING STATEMENTS
Statements included herein may contain "forward-looking statements" which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the SEC including the final prospectus that will be filed with the SEC. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
Contacts
Stellus Capital Investment Corporation
W. Todd Huskinson, (713) 292-5414
Chief Financial Officer
thuskinson@stelluscapital.com
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SOURCE Stellus Capital Investment Corporation
FAQ
What is the interest rate and maturity date for SCM's new notes offering?
How much debt did Stellus Capital (SCM) have under its credit facility before this offering?
What is the size of SCM's notes offering and how will the proceeds be used?
Who are the book-runners for SCM's 2030 notes offering?
