Item 1.01. Entry into a Material Definitive Agreement.
Underwriting Agreement
On March 18, 2021,
PennantPark Floating Rate Capital Ltd. (the Company) entered into an underwriting agreement (the Underwriting Agreement) by and among the Company, PennantPark Investment Advisers, LLC, and Goldman Sachs & Co. LLC,
Keefe, Bruyette & Woods, Inc. and Truist Securities, Inc., as representatives of the several underwriters named on Schedule A to the Underwriting Agreement, in connection with the issuance and sale of $100,000,000 aggregate principal amount
of the Companys 4.25% Notes due 2026 (the Offering).
The Offering was made pursuant to the Companys effective shelf registration
statement on Form N-2 (Registration No. 333-235532) previously filed with the Securities and Exchange Commission (the Registration Statement), as
supplemented by a preliminary prospectus supplement dated March 18, 2021 (the Preliminary Prospectus Supplement) and a final prospectus supplement dated March 18, 2021 (the Final Prospectus Supplement).
The foregoing description of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the
Underwriting Agreement filed with this report as Exhibit 1.1 and which is incorporated herein by reference.
Indenture
On March 23, 2021, the Company and American Stock Transfer & Trust Company, LLC (the Trustee), entered into the Indenture (the
Base Indenture), and a First Supplemental Indenture to the Indenture (the First Supplemental Indenture and, together with the Base Indenture, the Indenture). The First Supplemental Indenture relates to the
Offering.
The Companys 4.25% notes due 2026 (the Notes) will mature on April 1, 2026 and may be redeemed in whole or in part at
the Companys option. The Notes bear interest at a rate of 4.25% per year payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2021. The Notes will be the Companys direct unsecured obligations
and will rank pari passu in right of payment with the Companys current and future unsecured unsubordinated indebtedness, senior to any of the Companys future indebtedness that expressly states it is subordinated in right of
payment to the Notes, effectively subordinated in right of payment to all of the Companys existing and future secured indebtedness (including indebtedness that is initially unsecured, but to which the Company subsequently grant security) to
the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other obligations of any of the Companys subsidiaries, financing vehicles, or similar facilities.
The Indenture contains certain covenants, including covenants requiring the Company to comply with the asset coverage requirements of Section 18(a)(1)(A)
as modified by Section 61(a)(1) and (2) of the Investment Company Act of 1940, as amended, and to provide financial information to the holders of the Notes and the Trustee if the Company is no longer subject to the reporting requirements
under the Securities Exchange Act of 1934, as amended. These covenants are subject to important limitations and exceptions that are described in the Indenture.
The Notes were offered and sold in an offering registered under the Securities Act of 1933, as amended, pursuant to the Registration Statement, the
Preliminary Prospectus Supplement, and the Final Prospectus Supplement. The transaction closed on March 23, 2021. The net proceeds to the Company were approximately $96.8 million, based on the public offering price per Note of 99.441% of
the aggregate principal amount thereof, after deducting the underwriting discounts and commissions of $2.0 million payable by the Company and estimated offering expenses of approximately $600,000 payable by the Company. The Company intends to
use the net proceeds to reduce outstanding obligations under its credit facility, to invest in new or existing portfolio companies or for other general corporate or strategic purposes.
The foregoing descriptions of the Base Indenture, the First Supplemental Indenture and the Notes do not purport to be complete and are qualified in their
entirety by reference to the full text of the Base Indenture, First Supplemental Indenture and the Notes, respectively, each filed as exhibits hereto and incorporated by reference herein.