XAI Octagon Floating Rate & Alternative Income Trust filed SEC Form 8-K: Entry into a Material Definitive Agreement, Financial Statements and Exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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CURRENT REPORT
Pursuant to Section 13 or 15(d)
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Date of Report (Date of earliest event reported)
March 26, 2025 (
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| Item 1.01 | Entry into a Material Definitive Agreement. |
On March 21, 2025 (the “Closing Date”), XAI Octagon Floating Rate & Alternative Income Trust (NYSE: XFLT) (the “Trust”) entered into a Credit Agreement (the “Credit Agreement”) between the Trust, as the borrower, and BNP Paribas SA, as the bank (the “Bank”). The Credit Agreement replaces the Trust’s existing Credit Agreement, dated as of October 6, 2017 (as amended, restated, amended and restated, supplemented or otherwise modified through the Closing Date, the “Existing Credit Agreement”), by and between the Trust and Société Générale, as lender and administrative agent. The Existing Credit Agreement was terminated substantially concurrently with the Trust’s entry into the Credit Agreement and all outstanding amounts and commitments thereunder have been repaid in full and terminated.
The Credit Agreement provides for a senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of $300,000,000, scheduled to terminate on March 19, 2027, or such later date as the Trust and the Bank may agree pursuant to the Credit Agreement. Loans under the Revolving Credit Facility will bear interest at a per annum rate based on SOFR plus a margin of 1.48%. The Trust will also pay a commitment fee on unused commitments, payable quarterly, at a per annum rate equal to (x) at all times when the principal obligations are greater than 75% of the commitments, 0.00%, and (y) at all other times, 0.55%.
The obligations of the Trust under the Revolving Credit Facility are secured by substantially all of the assets of the Trust. The Credit Agreement contains affirmative and negative covenants that are customary for a senior secured credit agreement. The negative covenants include, among other things, limitations on indebtedness, liens, mergers, dividends and investments. The Credit Agreement includes usual and customary events of default for credit facilities of this nature.
On the Closing Date, the Trust borrowed $237 million under the Credit Agreement, substantially all of which was used to fully repay outstanding borrowings under the Existing Credit Agreement.
As of the Closing Date, the Trust’s financial leverage, through indebtedness under the Credit Facility and the Trust’s outstanding preferred shares of beneficial interest, represented approximately 39.73% of the Trust’s Managed Assets. The use of leverage is a speculative technique that involves special risks. There can be no assurance that the Trust’s leveraging strategy will be successful.
The description above is only a summary of the material provisions of the Credit Agreement and is qualified in its entirety by reference to the Credit Agreement, a copy of which is filed as Exhibit 10.1, to this current report on Form 8-K and by this reference incorporated herein.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits | |
| 10.1 | Credit Agreement, dated as of March 21, 2025, between XAI Octagon Floating Rate & Alternative Income Trust and BNP Paribas SA |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| XAI OCTAGON FLOATING RATE & ALTERNATIVE INCOME TRUST | ||
| Date: March 26, 2025 | By: |
/s/ Benjamin D. McCulloch |
| Name: | Benjamin D. McCulloch | |
| Title: | Secretary and Chief Legal Officer | |