Sixth Street Specialty Lending, Inc. Announces Public Offering of Common Stock

Rhea-AI Summary

Sixth Street Specialty Lending, Inc. (TSLX) announces a public offering of 4,000,000 shares of common stock with an option for underwriters to purchase an additional 600,000 shares. The net proceeds will be used to pay down debt and make new investments. Joint book running managers include Morgan Stanley, Wells Fargo Securities, and others.

Insights

Financial Analyst

From a financial perspective, the public offering of shares by Sixth Street Specialty Lending, Inc. represents a strategic move to bolster the company's capital structure. With the intention to pay down outstanding debt, this action is indicative of a proactive approach to leverage management. It's crucial to assess the offering's price relative to the current market value of TSLX shares, as this will impact the level of dilution existing shareholders experience. The decision to offer an additional purchase option to underwriters typically suggests confidence in the demand for the stock and can potentially stabilize the share price post-offering.

Investors should be cognizant of the potential for short-term fluctuations in share price due to the increased supply of shares. In the long-term, the effective use of the net proceeds towards making new investments could foster growth, provided that these investments align with the company's strategic objectives and yield favorable returns. The involvement of prominent financial institutions as joint book running managers may aid in the successful execution of the offering.

Market Research Analyst

Analyzing the sector in which TSLX operates, the move to raise capital through a public offering is not uncommon among specialty lending firms. These firms often require substantial capital to fund new investments and maintain liquidity. The investor sentiment towards such offerings can be influenced by the current economic climate, interest rate trends and the performance of credit markets. It's essential to evaluate how TSLX's offering aligns with market conditions and investor appetite for financial sector stocks.

Furthermore, the company's investment objectives and strategies, as detailed in the prospectus, will be scrutinized by investors. The quality of the new investments and the company's ability to manage its credit portfolio effectively will be key determinants of its future performance and, by extension, the performance of the stock. The credibility and track record of the underwriting institutions may also reassure potential investors about the due diligence conducted on the offering.

Debt Capital Markets Analyst

From a debt capital markets viewpoint, the use of proceeds to pay down existing debt under the revolving credit facility indicates a strategic liability management approach. This could improve TSLX's credit profile and potentially lead to more favorable borrowing terms in the future. It's important to analyze the terms of the revolving credit facility and the expected impact on the company's interest expense and financial flexibility.

Investors should also consider the implications of re-borrowing under the credit facility for new investments. While this could indicate a robust pipeline of investment opportunities, it also suggests a continuing reliance on leverage, which carries inherent risks. The balance between leveraging for growth and maintaining a manageable debt level will be critical for the company's financial health. The terms and covenants associated with the credit facility, as well as the company's historical debt management practices, will provide insights into the potential risks and benefits of this strategy.

NEW YORK--(BUSINESS WIRE)-- Sixth Street Specialty Lending, Inc. (NYSE:TSLX) (“TSLX” or the “Company”) announced today that it has launched a public offering of 4,000,000 shares of its common stock. TSLX also plans to grant the underwriters for the offering an option to purchase up to an additional 600,000 shares of its common stock. The offering will be made pursuant to a registration statement, which has been filed with the Securities and Exchange Commission (the “SEC”) and became effective automatically upon filing. The completion of the proposed offering depends upon several factors, including market and other conditions.

TSLX expects to use the net proceeds of the offering to pay down outstanding debt under its revolving credit facility. However, through re-borrowing under the revolving credit facility, the Company intends to make new investments in accordance with its investment objectives and strategies outlined in the preliminary prospectus supplement and the accompanying prospectus described below in greater detail.

Morgan Stanley, Wells Fargo Securities, BofA Securities, RBC Capital Markets, Keefe, Bruyette & Woods, A Stifel Company, Raymond James, Citigroup, Goldman Sachs & Co. LLC and J.P. Morgan are acting as joint book running managers for this offering.

Investors are advised to carefully consider the investment objectives, risks, charges and expenses of the Company before investing. The preliminary prospectus supplement dated February 29, 2024, and the accompanying prospectus dated December 22, 2023, which have been filed with the SEC, contain this and other information about the Company and should be read carefully before investing.

The information in the preliminary prospectus supplement, the accompanying prospectus and this press release is not complete and may be changed. The preliminary prospectus supplement, the accompanying prospectus and this press release are not offers to sell any securities of TSLX and are not soliciting an offer to buy such securities in any state or jurisdiction where such offer and sale is not permitted.

An effective shelf registration statement relating to these securities is on file with the SEC. The offering may be made only by means of a preliminary prospectus supplement and an accompanying prospectus, copies of which may be obtained from Morgan Stanley & Co. LLC, 180 Varick Street, 2nd Floor, New York, New York 10014, Attn: Prospectus Department.

About Sixth Street Specialty Lending, Inc.

Sixth Street Specialty Lending, Inc. is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities. The Company has elected to be regulated as a business development company, or a BDC, under the Investment Company Act of 1940 and the rules and regulations promulgated thereunder. The Company is externally managed by Sixth Street Specialty Lending Advisers, LLC, an affiliate of Sixth Street and an SEC registered investment adviser. The Company leverages the deep investment, sector, and operating resources of Sixth Street, a global investment firm with over $75 billion in assets under management as of December 31, 2023.

Forward-Looking Statements

Statements included herein may constitute “forward-looking statements,” which relate to future events or the Company’s future performance or financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about the Company, its current and prospective portfolio investments, its industry, its beliefs and opinions, and its assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Company’s control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation, the risks, uncertainties and other factors identified in the Company’s filings with the SEC. Investors should not place undue reliance on these forward-looking statements, which apply only as of the date on which the Company makes them. The Company does not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240229113049/en/

Investors:

Cami VanHorn, 469-621-2033

Sixth Street Specialty Lending, Inc.

IRTSLX@sixthstreet.com

Media:

Patrick Clifford, 617-793-2004

Sixth Street

PClifford@sixthstreet.com

Source: Sixth Street Specialty Lending, Inc.

FAQ

How many shares of common stock is TSLX offering in the public offering?

TSLX is offering 4,000,000 shares of its common stock.

Which underwriters are involved in the offering?

The underwriters for the offering include Morgan Stanley, Wells Fargo Securities, BofA Securities, and others.

What will TSLX use the net proceeds of the offering for?

TSLX intends to use the net proceeds to pay down outstanding debt under its revolving credit facility and make new investments.

When was the registration statement filed with the SEC?

The registration statement was filed with the SEC and became effective automatically upon filing.

What are the dates of the preliminary prospectus supplement and the accompanying prospectus?

The preliminary prospectus supplement is dated February 29, 2024, and the accompanying prospectus is dated December 22, 2023.