PFLT PennantPark Floating Rate Capital Ltd

Item 1.01. Entry into a Material Definitive Agreement.

Underwriting Agreement

On October 6, 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 an additional $85 million aggregate principal amount of the Company’s 4.25% notes due 2026 (the “Add-On Notes,” and the issuance and sale of the Add-On Notes, the “Offering”).

Indenture

The Add-On Notes constitute a further issuance of the $100 million aggregate principal amount of the 4.25% notes due 2026 issued by the Company on March 23, 2021 (the “Existing Notes”) under the Base Indenture, dated March 23, 2021 (the “Base Indenture”), between the Company and American Stock Transfer & Trust Company, LLC (the “Trustee”), as supplemented by the First Supplemental Indenture, dated March 23, 2021, between the Company and the Trustee (the “First Supplemental Indenture,” and together with the Base Indenture, the “Indenture”).

The Add-On Notes will be treated as a single series with the Existing Notes under the Indenture and will have the same terms as the Existing Notes, other than the issue date and the offering price. The Add-On Notes will have the same CUSIP number and will be fungible and rank equally with the Existing Notes. Upon issuance of the Add-On Notes, the outstanding aggregate principal amount of the Company’s 4.25% notes due 2026 will be $185 million.

The Add-On Notes will mature on April 1, 2026 and may be redeemed in whole or in part at the Company’s option. The Add-On Notes bear interest at a rate of 4.25% per year payable semi-annually on April 1 and October 1 of each year, commencing April 1, 2022. The Add-On Notes will be the Company’s direct unsecured obligations and will rank pari passu in right of payment with the Company’s current and future unsecured unsubordinated indebtedness, senior to any of the Company’s future indebtedness that expressly states it is subordinated in right of payment to the Add-On Notes, effectively subordinated in right of payment to all of the Company’s 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 Company’s 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 Add-On Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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 Company’s effective shelf registration statement on Form N-2 (Registration No. 333-235532) previously filed with the Securities and Exchange Commission, as supplemented by a preliminary prospectus supplement, dated October 6, 2021, and a final prospectus supplement, dated October 6, 2021. The transaction closed on October 12, 2021. The net proceeds to the Company were approximately $84.4 million, based on the public offering price of 101.45% of the aggregate principal amount of the Add-On Notes, plus accrued and unpaid interest from October 1, 2021 up to, but not including, the date of delivery of the Add-On Notes, after deducting the underwriting discounts and commissions of $1.7 million payable by the Company and estimated offering expenses of approximately $0.2 million payable by the Company. The Company intends to use the net proceeds from the Offering to invest in new or existing portfolio companies or for other general corporate or strategic purposes, including repaying amounts outstanding under its existing indebtedness.

The foregoing descriptions of the Underwriting Agreement, the Base Indenture, the First Supplemental Indenture and the Add-On Notes do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, each of which is filed as an exhibit to this Current Report on Form 8-K and incorporated herein by reference.