XAI Octagon Floating Rate & Alternative Income Term Trust Announces Direct Offering of Preferred Shares

Rhea-AI Summary

XAI Octagon Floating Rate & Alternative Income Term Trust (NYSE: XFLT) announced a registered direct offering of 400,000 shares of 6.50% Series 2026 Term Preferred Shares at $25.00 per share, generating approximately $10 million in proceeds before expenses. The Trust plans to utilize these funds to invest according to its objectives, reduce outstanding borrowings, and cover general working capital. The offering is expected to close around September 8, 2021.

Positive

• Proceeds of approximately $10 million from the offering enhance capital resources.
• Funds will be used for investment and to pay down borrowings, improving financial health.

Negative

• Dilution risk due to the issuance of new shares may affect existing shareholders.

CHICAGO--(BUSINESS WIRE)-- XAI Octagon Floating Rate & Alternative Income Term Trust (the “Trust”) (NYSE: XFLT), a diversified, closed-end management investment company with an investment objective to seek attractive total return with an emphasis on income generation across multiple stages of the credit cycle, has entered into a purchase agreement with certain institutional investors for the purchase and sale of 400,000 shares of its 6.50% Series 2026 Term Preferred Shares (the “Preferred Shares”) in a registered direct offering pursuant to the Trust’s effective shelf registration statement filed with the U.S. Securities and Exchange Commission (the “SEC”). Purchasers are purchasing Preferred Shares at the liquidation preference $25.00 per Preferred Share, resulting in proceeds (before expenses) of approximately $10 million for the Trust, plus accrued dividends from July 31, 2021 to but not including the date of delivery, which will be paid by Purchasers.

The Fund’s outstanding Preferred Shares are, and the purchased Preferred Shares will be, subject to notice of issuance, listed on the New York Stock Exchange under the symbol “XFLTPRA.”

The Trust intends to use the net proceeds from the offering to invest in accordance with its investment objective and policies, to pay down outstanding borrowings under its credit facility and/or for general working capital purposes. The offering is expected to close on or about September 8, 2021, subject to the satisfaction of customary closing conditions.

The offering of Preferred Shares may be made only by means of a prospectus. Copies of the prospectus supplement relating to the offering and accompanying base prospectus may be obtained from: XA Investments, Attn: Investor Relations, 321 N. Clark, Suite 2430, Chicago, IL 60647, or by emailing info@xainvestments.com (telephone number 888-903-3358).

Investors may also obtain these documents free of charge from the SEC’s website at www.sec.gov.

About XA Investments

XA Investments LLC (“XAI”) serves as the Trust’s investment adviser. XAI is a Chicago-based firm founded by XMS Capital Partners in April, 2016. In addition to investment advisory services, the firm also provides investment fund structuring and consulting services focused on registered closed-end funds to meet institutional client needs. XAI offers custom product build and consulting services, including development and market research, sales, marketing, fund management and administration. XAI believes that the investing public can benefit from new vehicles to access a broad range of alternative investment strategies and managers. XAI provides individual investors with access to institutional-caliber alternative managers. For more information, please visit www.xainvestments.com.

About XMS Capital Partners

XMS Capital Partners, LLC, established in 2006, is a global, independent financial services firm providing M&A, corporate advisory and asset management services to clients. It has offices in Chicago, Boston and London. For more information, please visit www.xmscapital.com.

About Octagon Credit Investors

Octagon Credit Investors, LLC (“Octagon”) serves as the Trust’s investment sub-adviser. Octagon is a 25+ year old, $28.4B below-investment grade corporate credit investment adviser focused on leveraged loan, high yield bond and structured credit (CLO debt and equity) investments. Through fundamental credit analysis and active portfolio management, Octagon's investment team identifies attractive relative value opportunities across below-investment grade asset classes, sectors and issuers. Octagon’s investment philosophy and methodology encourage and rely upon dynamic internal communication to manage portfolio risk. Over its history, the firm has applied a disciplined, repeatable and scalable approach in its effort to generate attractive risk-adjusted returns for its investors. For more information, please visit www.octagoncredit.com.

The Trust, XAI and Octagon do not provide tax advice; consult a professional tax advisor regarding your specific tax situation. Income may be subject to state and local taxes, as well as the federal alternative minimum tax.

Investors should consider the investment objectives and policies, risk considerations, charges and expenses of the Trust carefully before investing. The prospectus supplement, dated September 8, 2021, and accompanying prospectus, dated February 2, 2021, each of which has been filed with the SEC, contain a description of these matters and other important information about the Trust 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. This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.

This press release contains certain statements that may include “forward-looking statements.” Forward-looking statements can be identified by the words “may,” “will,” “intend,” “expect,” “estimate,” “continue,” “plan,” “anticipate,” and similar terms and the negatives of such terms. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Many factors that could materially affect the Trust’s actual results are the performance of the portfolio of securities held by the Trust, the conditions in the U.S. and international financial and other markets, the price at which Preferred Shares trade in the public markets and other factors discussed in the Trust’s prospectus supplement and accompanying base prospectus and to be discussed in the Trust’s periodic filings with the SEC.

Although the Trust believes that the expectations expressed in such forward-looking statements are reasonable, actual results could differ materially from those expressed or implied in such forward-looking statements. The Trust’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and are subject to inherent risks and uncertainties. You are cautioned not to place undue reliance on these forward-looking statements, which are made as of the date of this press release. Except for the Trust’s ongoing obligations under the federal securities laws, the Trust does not intend, and the Trust undertakes no obligation, to update any forward-looking statement.

NOT FDIC INSURED NO BANK GUARANTEEMAY LOSE VALUE

View source version on businesswire.com: https://www.businesswire.com/news/home/20210908006160/en/

Kimberly Flynn, Managing Director

XA Investments LLC

Phone: 1-888-903-3358

Email: info@xainvestments.com

www.xainvestments.com

Source: XA Investments LLC

FAQ

What is the purpose of XFLT's recent share offering?

The offering aims to raise approximately $10 million for investment, paying down borrowings, and general working capital.

How many shares are being offered in the XFLT offering?

XFLT is offering 400,000 shares of its 6.50% Series 2026 Term Preferred Shares.

When is the expected closing date for XFLT's preferred shares offering?

The offering is expected to close on or about September 8, 2021.

What are the risks associated with the XFLT share offering?

Investors may face dilution risk due to the issuance of new shares.

At what price are the preferred shares being offered by XFLT?

The preferred shares are being offered at a liquidation preference of $25.00 per share.