PennantPark Floating Rate Capital Ltd. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
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Item 1.01. Entry into Material Definitive Agreements.
On February 20, 2025, (the “Closing Date”), PennantPark Floating Rate Capital Ltd. (the “Company”) completed a $474.6 million term debt securitization transaction (the “CLO Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company. The secured notes and subordinated notes issued in the CLO Transaction and the secured loan borrowed in the CLO Transaction were issued and incurred by the Company’s consolidated subsidiary, PennantPark CLO 11, LLC, a Delaware limited liability company (the “Issuer”), and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the Issuer.
The CLO Transaction was executed by (A) the issuance of the following classes of notes pursuant to an indenture dated as of the Closing Date (the “Indenture”), by and among the Issuers and Western Alliance Trust Company, National Association: (i) $220.5 million of AAA(sf) Class A-1 Notes, which bear interest at the three-month secured overnight financing rate published by the Federal Reserve Bank of New York (“SOFR”) plus 1.49%, (ii) $19 million of AAA(sf) Class A-2 Notes, which bear interest at three-month SOFR plus 1.60%, (iii) $28.5 million of AA(sf) Class B Notes, which bear interest at three-month SOFR plus 1.75%, (iv) $38 million of A(sf) Class C Notes, which bear interest at three-month SOFR plus 2.20%, (v) $28.5 million of BBB-(sf) Class D Notes, which bear interest at three-month SOFR plus 3.60%, (together, the “Secured Notes”), and (vi) $85.1 million of subordinated notes (“Subordinated Notes”) and (B) the borrowing by the Issuers of $10.0 million under AAA(sf) Class A-1L-A floating rate loans and $45.0 million under AAA(sf) Class A-1L-B floating rate loans (together, the “Class A-1 Loans,” and collectively with the Secured Notes and Subordinated Notes, the “Debt”), which bear interest at three-month SOFR plus 1.49%, under a credit agreement (the “Credit Agreement”), dated as of the Closing Date, by and among the Issuer, as borrower, various financial institutions, as lenders, and Western Alliance Trust Company, National Association, as collateral agent and as loan agent. The Class A-1 Loans and the Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the Issuer. The Debt is scheduled to mature on April 20, 2037.
As part of the CLO Transaction, the Company entered into a master loan sale agreement with the Issuer and the Company, dated as of the Closing Date, which provided for the sale and contribution of approximately $423.6 million par amount of middle market loans, and closing date participation interests in middle market loans, from the Company to the Issuer on the Closing Date and for future sales and contributions, as applicable, from the Company to the Issuer on an ongoing basis. Such loans and closing date participation interests constituted the initial portfolio of assets securing the Class A-1 Loans and the Secured Notes. The Company made customary representations, warranties, and covenants to the Issuer under the applicable agreement.
The Company will continue to retain the Class D Notes and the Subordinated Notes. Through no later than April 20, 2029, a portion of the proceeds received by the Issuer from the loans securing the Class A-1 Loans and the Secured Notes may be used by the Issuer to purchase additional middle market loans under the direction of PennantPark Investment Advisers, LLC (“PennantPark”), the Company’s investment adviser, in its capacity as collateral manager for the Issuer and in accordance with the requirements of the Issuer’s indenture and collateral management agreement with PennantPark and the Company’s investing strategy and ability to originate eligible middle market loans.
The Class A-1 Loans and the Secured Notes are the secured obligations of the Issuer, and the Indenture and the Credit Agreement include customary covenants and events of default. The Secured Notes and the Subordinated Notes have not been registered under the Securities Act of 1933, as amended, or any state securities (e.g., “blue sky”) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration. PennantPark will serve as collateral manager for the Issuer under a collateral management agreement dated as of the Closing Date. PennantPark is entitled to receive fees for providing these services. PennantPark has irrevocably waived its right to receive such fees for so long as it serves as collateral manager for the Issuer.
The above descriptions of the documentation related to the CLO Transaction and other arrangements entered into on or prior to the Closing Date contained in this Current Report on Form 8-K do not purport to be complete and are qualified in their entirety by reference to the underlying agreements attached hereto as Exhibits 99.1, 99.2, 99.3, 99.4 and 99.5.
Item 2.03. Creation of Direct Financial Obligation
The information set forth under Item 1.01 above is incorporated by reference into this Item 2.03.
Forward-Looking Statements
This report on Form 8-K may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act |
of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports the Company files under the Exchange Act. All statements other than statements of historical facts included in this report on Form 8-K are forward-looking statements and are not guarantees of future performance or results, and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.
The Company may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from its historical experience and present expectations.
Item 9.01. Financial Statements and Exhibits
(a) Financial statements: None (b) Pro forma financial information: None (c) Shell company transactions: None (d) Exhibits:
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SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. |
Dated: February 24, 2025
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PENNANTPARK FLOATING RATE CAPITAL LTD.
By: /s/ Richard T. Allorto, Jr. Richard T. Allorto, Jr. Chief Financial Officer & Treasurer
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