PENNANTPARK FLOATING RATE CAPITAL LTD. Filed Pursuant to Rule 424(b)(2) File No. 333-268813
Prospectus Supplement
To the Prospectus dated January 9, 2023
Up to $250 million
Common Stock
PennantPark Floating Rate Capital Ltd. ("we", "our", or "us") has entered into separate amended and restated equity distribution agreements, each dated August 11, 2023, with Citizens JMP Securities, LLC, Raymond James & Associates, Inc. and Truist Securities, Inc., each, a sales agent, relating to the shares of our common stock offered by this prospectus supplement and the accompanying prospectus. The amended and restated equity distribution agreements provide that we may offer and sell shares of our common stock having an aggregate offering price of up to $250 million (which amount includes all of the shares of our common stock previously sold pursuant to the equity distribution agreements dated March 31, 2023) from time to time through the sales agents. Sales of our common stock, if any, under this prospectus supplement and the accompanying prospectus may be made in negotiated transactions or transactions that are deemed to be "at the market," as defined in Rule 415 under the Securities Act of 1933, as amended, or the Securities Act, including sales made directly on The New York Stock Exchange, or NYSE, or any similar securities exchange or sales made to or through a market maker other than on a securities exchange, at prices related to the prevailing market prices or at negotiated prices. See "Plan of Distribution." From March 31, 2023 to August 11, 2023, we sold a total of 9,002,887 shares of common stock pursuant to the "at the market" offering. The total amount of capital raised as a result of these sales of our common stock was approximately $99.3 million and net proceeds were approximately $98.8 million, after deducting the sales agents' commissions and offering expenses and inclusive of reimbursement proceeds from PennantPark Investment Advisers, LLC (the "Investment Adviser").
PennantPark Floating Rate Capital Ltd., a Maryland corporation, is a closed-end, externally managed, non-diversified investment company that has elected to be treated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act. Our investment objectives are to generate both current income and capital appreciation while seeking to preserve capital. We seek to achieve our investment objectives by investing primarily in loans bearing variable rates of interest, or Floating Rate Loans, and other investments made to U.S. middle-market private companies whose debt is rated below investment grade. Securities rated below investment grade are often referred to as "leveraged loans," "high yield" securities or "junk bonds" and are often higher risk compared to debt instruments that are rated above investment grade and have speculative characteristics. We are externally managed by the Investment Adviser. PennantPark Investment Administration, LLC provides the administrative services necessary for us to operate.
Our common stock is traded on the NYSE and The Tel Aviv Stock Exchange, or TASE, under the symbol "PFLT". The last reported closing price for our common stock on the NYSE
on August 10, 2023 was $10.82 per share. The net asset value, or NAV, of our common stock as of June 30, 2023 (the last date prior to the date of this prospectus supplement on which we published NAV) was $10.96 per share.
Under the terms of the amended and restated equity distribution agreements, each sales agent will receive a commission from us of up to 2.0% of the gross sales price of any shares of common stock sold through such sales agent under the applicable amended and restated equity distribution agreement. The sales agents are not required to sell any specific number or dollar amount of common stock but will use their commercially reasonable efforts consistent with their respective sales and trading practices to sell the shares of our common stock offered by this prospectus supplement and the accompanying prospectus. We may also sell shares of common stock to a sales agent, as principal for its own account, at a price agreed upon at the time of sale. If we sell shares to a sales agent as principal, we will enter into a separate agreement with such sales agent, setting forth the terms of such transaction, and we will describe such agreement in a separate prospectus supplement. See "Plan of Distribution" beginning on page S-13 of this prospectus supplement. The sales price per share of our common stock offered by this prospectus supplement and the accompanying prospectus, less commissions payable under the applicable amended and restated equity distribution agreement and discounts, if any, will not be less than the NAV per share of our common stock at the time of such sale. The Investment Adviser may, from time to time, in its sole discretion, pay some or all of the commissions payable under the amended and restated equity distribution agreements or make additional supplemental payments to ensure that the sales price per share of our common stock in connection with all of the offerings made hereunder will not be less than our current NAV per share. Any such payments made by the Investment Adviser will not be subject to reimbursement by us.
This prospectus supplement, the accompanying prospectus, any free writing prospectus and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus contain important information you should know before investing in our securities. Please read this prospectus supplement, the accompanying prospectus, any free writing prospectus and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus before you invest in our securities and keep them for future reference. We file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission, or the SEC. You may also obtain such information free of charge or make stockholder inquiries by contacting us in writing at 1691 Michigan Avenue, Miami Beach, Florida 33139, by calling us collect at (786) 297-9500 or by visiting our website at www.pennantpark.com. Except for the documents incorporated by reference into this prospectus supplement and the accompanying prospectus, the information on our website is not part of this prospectus supplement or the accompanying prospectus. The SEC also maintains a website at www.sec.govthat contains such information free of charge.
Investing in our common stock involves a high degree of risk, including the risk of leverage. Before buying any shares of our common stock, you should read the discussion of the material risks of investing in us described in the section titled "Risk Factors" on page S-10 of this prospectus supplement and in our most recent Annual Report on Form 10-K, our most recent Quarterly Reports on Form 10-Q and under similar headings in other documents that are filed with the SEC on or after the date hereof and incorporated by reference into this prospectus supplement and the accompanying prospectus.
Shares of closed-end investment companies, including BDCs, frequently trade at a discount to their NAV. If our shares trade at a discount to our NAV, it may increase the risk of loss for purchasers in this offering.
Neither the SEC nor any state securities commission, nor any other regulatory body, has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
JMP Securities
A CITIZENS COMPANY | Raymond James | Truist Securities |
The date of this prospectus supplement is August 11, 2023.
TABLE OF CONTENTS | |
PROSPECTUS SUPPLEMENT | |
TABLE OF CONTENTS | S-i |
ABOUT THIS PROSPECTUS SUPPLEMENT | S-1 |
PROSPECTUS SUPPLEMENT SUMMARY | S-2 |
THE OFFERING | S-5 |
UPDATE TO "AT THE MARKET" OFFERING | S-7 |
FEES AND EXPENSES | S-7 |
RISK FACTORS | S-10 |
FORWARD-LOOKING STATEMENTS | S-10 |
USE OF PROCEEDS | S-12 |
PLAN OF DISTRIBUTION | S-13 |
LEGAL MATTERS | S-15 |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | S-15 |
INDEPENDENT AUDITOR | S-15 |
INCORPORATION BY REFERENCE | S-15 |
AVAILABLE INFORMATION | S-16 |
PROSPECTUS | Page |
PROSPECTUS SUMMARY | 2 |
FEES AND EXPENSES | 7 |
FINANCIAL HIGHLIGHTS | 8 |
RISK FACTORS | 10 |
FORWARD-LOOKING STATEMENTS | 10 |
USE OF PROCEEDS | 11 |
SENIOR SECURITIES | 12 |
PRICE RANGE OF COMMON STOCK | 12 |
SALES OF COMMON STOCK BELOW NET ASSET VALUE | 12 |
DISTRIBUTIONS | 17 |
PORTFOLIO COMPANIES | 19 |
PORTFOLIO MANAGEMENT | 31 |
DETERMINATION OF NET ASSET VALUE | 34 |
DESCRIPTION OF OUR CAPITAL STOCK | 37 |
DESCRIPTION OF OUR PREFERRED STOCK | 43 |
DESCRIPTION OF OUR WARRANTS | 44 |
DESCRIPTION OF OUR SUBSCRIPTION RIGHTS | 45 |
DESCRIPTION OF OUR DEBT SECURITIES | 47 |
BROKERAGE ALLOCATIONS AND OTHER PRACTICES | 60 |
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS | 61 |
PLAN OF DISTRIBUTION | 72 |
SUB-ADMINISTRATOR, CUSTODIAN, TRANSFER AGENT AND TRUSTEE | 74 |
LEGAL MATTERS | 74 |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 74 |
INDEPENDENT AUDITORS | 74 |
INCORPORATION BY REFERENCE | 75 |
AVAILABLE INFORMATION | 76 |
S-i
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus supplement, which describes specific details regarding the terms of this offering and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying prospectus. The second part is the accompanying prospectus, which provides general information about us and the securities we may offer from time to time, some of which may not apply to this offering. To the extent the information contained in this prospectus supplement differs from the information contained in the accompanying prospectus or the information included in any document filed prior to the date of this prospectus supplement and incorporated by reference in this prospectus supplement and the accompanying prospectus, the information in this prospectus supplement shall control. Generally, when we refer to this "prospectus", we are referring to both this prospectus supplement and the accompanying prospectus combined, together with any free writing prospectus that we have authorized for use in connection with this offering or any exhibits and documents incorporated by reference. Please carefully read this prospectus supplement and the accompanying prospectus together with any free writing prospectus that we have authorized for use in connection with this offering and any exhibits and documents incorporated by reference before you make an investment decision.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT, INCLUDING ANY DOCUMENTS WE INCORPORATE BY REFERENCE HEREIN, THE ACCOMPANYING PROSPECTUS AND ANY FREE WRITING PROSPECTUS PREPARED BY OR ON BEHALF OF US THAT RELATES TO THIS OFFERING, INCLUDING THE DOCUMENTS WE INCORPORATE BY REFERENCE THEREIN. NEITHER WE NOR ANY SALES AGENT HAS AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT OR ADDITIONAL INFORMATION OR TO MAKE REPRESENTATIONS AS TO MATTERS NOT STATED IN THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS OR IN ANY FREE WRITING PROSPECTUS PREPARED BY OR ON BEHALF OF US THAT RELATES TO THIS OFFERING. WE TAKE NO RESPONSIBILITY FOR, AND CAN PROVIDE NO ASSURANCE AS TO THE RELIABILITY OF, ANY OTHER INFORMATION THAT OTHERS MAY GIVE YOU. IF ANYONE PROVIDES YOU WITH DIFFERENT OR ADDITIONAL INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT, AND THE SALES AGENTS ARE NOT, MAKING AN OFFER TO SELL SHARES OF OUR COMMON STOCK IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS SUPPLEMENT, INCLUDING THE DOCUMENTS WE INCORPORATE BY REFERENCE HEREIN, THE ACCOMPANYING PROSPECTUS AND ANY FREE WRITING PROSPECTUS, INCLUDING THE DOCUMENTS WE INCORPORATE BY REFERENCE THEREIN, ARE ACCURATE ONLY AS OF THEIR RESPECTIVE DATE, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS, ANY FREE WRITING PROSPECTUS OR ANY SALES OF SHARES OF OUR COMMON STOCK. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THOSE DATES.
S-1
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights some of the information in this prospectus supplement and the accompanying prospectus. It is not complete and may not contain all of the information that you may want to consider in making an investment decision. References to our portfolio and investments include investments we make through our consolidated subsidiaries. Some of the statements in this prospectus supplement and accompanying prospectus constitute forward-looking statements which apply to us and our consolidated subsidiaries, and relate to future events, future performance or future financial condition. The forward-looking statements involve risks and uncertainties on a consolidated basis and actual results could differ materially from those projected in the forward-looking statements for many reasons, including those factors discussed in the section titled "Risk Factors" in our most recent Annual Report on Form 10-K, our most recent Quarterly Reports on Form 10-Q and elsewhere in this prospectus supplement and the accompanying prospectus. You should read carefully the more detailed information set forth under "Risk Factors" and the other information included in this prospectus supplement and accompanying prospectus.
In this prospectus supplement and the accompanying prospectus, except where the context suggests otherwise, the terms "Company," "we," "our" or "us" refer to PennantPark Floating Rate Capital Ltd. and its wholly-owned consolidated subsidiaries; "Funding I" refers to PennantPark Floating Rate Funding I, LLC; "PSSL" refers to PennantPark Senior Secured Loan Fund I LLC, an unconsolidated joint venture; "PTSF" refers to PennantPark-TSO Senior Loan Fund, LP, an unconsolidated limited partnership; "PennantPark Investment Advisers" or "Investment Adviser" refer to PennantPark Investment Advisers, LLC; "Administrator" refers to PennantPark Investment Administration, LLC; "2023 Notes" refers to our 4.3% Series A notes due 2023; "2026 Notes" refers to our 4.25% Notes due 2026; "1940 Act" refers to the Investment Company Act of 1940, as amended; "Code" refers to the Internal Revenue Code of 1986, as amended; "RIC" refers to a regulated investment company under the Code; "BDC" refers to a business development company under the 1940 Act; "Credit Facility" refers to our multi-currency senior secured revolving credit facility, as amended from time to time, with Truist Bank and other lenders, entered into on August 12, 2021; "Securitization Issuer" refers to PennantPark CLO I, Ltd.; "Securitization Issuers" refers to the Securitization Issuer and PennantPark CLO I, LLC; "Debt Securitization" refers to the $301.4 million term debt securitization completed by the Securitization Issuers; and "2031 Asset-Backed Debt" refers to (i) the issuance of the Class A-1 Senior Secured Floating Rate Notes due 2031, the Class A-2 Senior Secured Fixed Rate Notes due 2031, the Class B-1 Senior Secured Floating Rate Notes due 2031, the Class B-2 Senior Secured Fixed Rate Notes due 2031, the Class C-1 Secured Deferrable Floating Rate Notes due 2031, the Class C-2 Notes Secured Deferrable Fixed Rate Notes due 2031, and the Class D Secured Deferrable Floating Notes due 2031 and (ii) the borrowing of the Class A-1 Senior Secured Floating Rate Notes due 2031 by the Securitization Issuers in connection with the Debt Securitization. References to our portfolio, our investments, the Credit Facility and our business include investments we make through our subsidiaries.
General Business of PennantPark Floating Rate Capital Ltd.
PennantPark Floating Rate Capital Ltd. is a BDC whose objectives are to generate both current income and capital appreciation while seeking to preserve capital by investing primarily in Floating Rate Loans and other investments made to U.S. middle-market companies.
We believe that Floating Rate Loans to U.S. middle-market companies offer attractive risk-reward to investors due to a limited amount of capital available for such companies. We use the term "middle-market" to refer to companies with annual revenues between $50 million and $1 billion. Our investments are typically rated below investment grade. Securities rated below investment grade are often referred to as "leveraged loans," "high yield" securities or "junk bonds" and are often higher risk compared to debt instruments that are rated above investment grade and have speculative characteristics. However, when compared to junk bonds and other non-investment
S-2
grade debt, senior secured Floating Rate Loans typically have more robust capital-preserving qualities, such as historically lower default rates than junk bonds, represent the senior source of capital in a borrower's capital structure and often have certain of the borrower's assets pledged as collateral. Our debt investments may generally range in maturity from three to ten years and are made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities which operate in various industries and geographical regions.
Under normal market conditions, we generally expect that at least 80% of the value of our managed assets, which means our net assets plus any borrowings for investment purposes, will be invested in Floating Rate Loans and other investments bearing a variable-rate of interest. We generally expect that first lien secured debt will represent at least 65% of our overall portfolio. We also generally expect to invest up to 35% of our overall portfolio opportunistically in other types of investments, including second lien secured debt and subordinated debt and, to a lesser extent, equity investments. We seek to create a diversified portfolio by generally targeting an investment size between $5 million and $30 million, on average, although we expect that this investment size will vary proportionately with the size of our capital base.
Our investment activity depends on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives.
Organization and Structure of PennantPark Floating Rate Capital Ltd.
PennantPark Floating Rate Capital Ltd., a Maryland corporation organized in October 2010, is a closed-end, externally managed, non-diversified investment company that has elected to be treated as a BDC under the 1940 Act. In addition, for federal income tax purposes we have elected to be treated, and intend to qualify annually, as a RIC under the Code.
We have entered into an investment advisory management agreement, or the Investment Management Agreement, with the Investment Adviser, an external adviser that manages our day-to-day operation. Under our Investment Management Agreement, we have agreed to pay our Investment Adviser an annual base management fee based on our average adjusted gross assets as well as an incentive fee based on our investment performance. We have also entered into an administration agreement with the Administrator, or the Administration Agreement. Under our Administration Agreement, we have agreed to reimburse the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer, Chief Financial Officer, Corporate Counsel and their respective staffs. Our board of directors, a majority of whom are independent of us, provides overall supervision of our activities, and the Investment Adviser supervises our day-to-day activities.
Funding I, our wholly owned subsidiary and a special purpose entity, was organized in Delaware as a limited liability company in May 2011. On August 12, 2021, Funding I, as borrower, entered into the Credit Facility, which provides the ability for Funding I to borrow up to $366 million. The Credit Facility is secured by all of the assets of Funding I. On July 31, 2023, the Credit Facility was amended to increase the Credit Facility's commitment by $20 million due to the inclusion of a new lender to the facility. The additional commitment increases the Credit Facility's total commitment amount to $386 million.
S-3
| Attention: This is an excerpt of the original content. To continue reading it, access the original document here. |
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
PennantPark Floating Rate Capital Ltd. published this content on 12 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2023 19:20:07 UTC.
