Capital Southwest Corporation (NASDAQ: CSWC) (“Capital Southwest”
or the “Company”) is pleased to announce that it has priced an
underwritten public offering of an additional $65 million in
aggregate principal amount of 4.50% notes due 2026 (the “Notes”).
The Notes will be issued at a price of 102.11% of the aggregate
principal amount of the Notes, resulting in a yield-to-maturity of
approximately 4.0%.
Purchasers will be required to pay accrued and
unpaid interest on the Notes from December 29, 2020 up to, but not
including, the date of delivery of the Notes. On July 31, 2021,
Capital Southwest will pay this pre-issuance accrued interest on
the Notes to the holders of the Notes as of the applicable record
date, along with interest accrued on the Notes offered hereby from
the date of delivery to such interest payment date.
The Notes will constitute a further issuance of,
have the same terms as, rank equally in right of payment with, and
be fungible and form a single series with the $75 million in
aggregate principal amount of the 4.50% notes due 2026 that the
Company initially issued on December 29, 2020. Upon the issuance of
the Notes, the outstanding aggregate principal amount of the
Company’s 4.50% notes due 2026 will be $140 million.
The Notes will bear interest at a rate of 4.50%
per year, payable semi-annually, will mature on January 31, 2026
and may be redeemed in whole or in part at Capital Southwest’s
option at any time prior to October 31, 2025, at par plus a
“make-whole” premium, and thereafter at par. The offering is
subject to customary closing conditions and is expected to close on
February 25, 2021.
Capital Southwest intends to use the net
proceeds from this offering to repay the outstanding indebtedness
under its credit facility. However, through re-borrowings under its
credit facility, Capital Southwest intends to make investments in
lower middle market and upper middle market portfolio companies in
accordance with its investment objective and strategies, and for
other general corporate purposes, including payment of operating
expenses. As of February 19, 2021, Capital Southwest had $173.0
million of indebtedness outstanding under its credit facility. The
credit facility matures on December 21, 2023, and borrowings under
the credit facility currently bear interest on a per annum basis
equal to LIBOR plus 2.50%.
Raymond James & Associates, Inc. is acting
as sole underwriter for this offering.
Investors should carefully consider,
among other things, Capital Southwest’s investment objective and
strategies and the risks related to Capital Southwest and the
offering before investing. The pricing term sheet dated February
22, 2021, the preliminary prospectus supplement dated February 22,
2021, and the accompanying prospectus dated August 15, 2019, each
of which has been filed with the Securities and Exchange Commission
(the “SEC”), contain this and other information about Capital
Southwest and should be read carefully before
investing.
A shelf registration statement relating
to these securities is on file with and has been declared effective
by 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, when available, for free by visiting the
SEC’s website at www.sec.gov or from Raymond James &
Associates, Inc., 880 Carillon Parkway, St. Petersburg, Florida
33716, by email: prospectus@raymondjames.com or by calling:
1-800-248-8863.
The information in the pricing term sheet, the
preliminary prospectus supplement, the accompanying prospectus and
this press release is not complete and may be changed. The pricing
term sheet, the preliminary prospectus supplement, the accompanying
prospectus and this press release do not constitute offers to sell
or the solicitation of offers 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.
ABOUT CAPITAL SOUTHWEST
Capital Southwest Corporation is a Dallas,
Texas-based, internally managed Business Development Company, with
approximately $313 million in net assets as of December 31, 2020.
Capital Southwest is a middle-market lending firm focused on
supporting the acquisition and growth of middle market businesses
and makes investments ranging from $5 to $20 million in securities
across the capital structure, including first lien, unitranche,
second lien, subordinated debt, and non-control equity
co-investments. As a public company with a permanent capital base,
Capital Southwest has the flexibility to be creative in its
financing solutions and to invest to support the growth of its
portfolio companies over long periods of time.
FORWARD-LOOKING STATEMENTS
This press release may contain certain
forward-looking statements within the meaning of the federal
securities laws, including statements with regard to Capital
Southwest’s notes offering, the expected net proceeds from the
offering and the anticipated use of the net proceeds of the
offering. These statements are often, but not always, made through
the use of word or phrases such as “will,” “may,” “could,”
“expect,” and similar expressions and variations or negatives of
these words. These statements are based on management’s current
expectations, assumptions, and beliefs. They are not guarantees of
future results and are subject to numerous risks, uncertainties,
and assumptions that could cause actual results to differ
materially from those expressed in any forward-looking statement.
These risks include risks identified in Capital Southwest’s filings
with the SEC and risks related to, among other things: changes in
the markets in which Capital Southwest invests; changes in the
financial, capital, and lending markets; regulatory changes; tax
treatment and general economic and business conditions;
uncertainties associated with the impact from the COVID-19
pandemic, including its impact on the global and U.S. capital
markets and the global and U.S. economy, the length and duration of
the COVID-19 outbreak in the United States as well as worldwide and
the magnitude of the economic impact of that outbreak; and the
effect of the COVID-19 pandemic on our business prospects and the
operational and financial performance of our portfolio companies,
including our ability and their ability to achieve our respective
objectives, and the effects of the disruptions caused by the
COVID-19 pandemic on our ability to continue to effectively manage
our business. Readers should not place undue reliance on any
forward-looking statements and are encouraged to review Capital
Southwest’s registration statement and other SEC filings for a more
complete discussion of the risks and other factors that could
affect any forward-looking statements. Except as required by the
federal securities laws, Capital Southwest does not undertake any
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,
changing circumstances or any other reason after the date of this
press release.
CONTACT:
Michael S. Sarner, Chief Financial Officer
msarner@capitalsouthwest.com 214-884-3829
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