Gladstone Capital Corporation Prices Upsized Public Offering of 5.875% Convertible Notes due 2030

Rhea-AI Summary

Gladstone Capital Corporation (NASDAQ:GLAD) has priced an upsized public offering of $130.0 million in 5.875% convertible notes due 2030. The notes will be issued at 98.5% of principal value, with an additional $19.5 million overallotment option granted to the underwriter.

The notes will pay interest semi-annually, with an initial conversion rate of 38.4394 shares per $1,000 principal amount (equivalent to $26.02 per share, a 10% premium). The company expects net proceeds of approximately $123.7 million, which will be used to repay revolving credit facility debt and potentially redeem outstanding 5.125% Notes due 2026 and 7.75% Notes due 2028.

Positive

• Upsized offering from $110M to $130M indicates strong investor demand
• Additional $19.5M overallotment option provides flexibility for extra capital
• Conversion premium of 10% protects against immediate dilution
• Opportunity to refinance higher-cost debt (7.75% Notes) with lower 5.875% Notes

Negative

• Potential dilution if notes are converted to common stock
• Additional debt burden with $130M principal amount
• Issue price of 98.5% represents a slight discount to par value

MCLEAN, VA / ACCESS Newswire / September 9, 2025 / Gladstone Capital Corporation (NASDAQ:GLAD) (the "Company") today announced that it priced a registered public offering of $130.0 million aggregate principal amount of 5.875% convertible notes due 2030 (the "Notes") at an issue price of 98.5% of the principal amount thereof on September 9, 2025. In addition, the Company granted the underwriter of the Notes a 30-day option to purchase up to an additional $19.5 million in aggregate principal amount of the Notes to cover overallotments, if any. The size of the offering was increased from the previously announced $110.0 million aggregate principal amount of Notes. The closing of the transaction is subject to customary closing conditions and the Notes are expected to be delivered on or about September 12, 2025.

The Notes will be unsecured obligations of the Company and will pay interest semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2026. The Notes will mature on October 1, 2030, unless earlier converted, redeemed or repurchased.

Noteholders may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding the maturity date. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election. The conversion rate will initially be 38.4394 shares of the Company's common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $26.02 per share of the Company's common stock). The initial conversion price of the Notes represents a premium of approximately 10.0% over the last reported sale price of the Company's common stock on the Nasdaq Global Select Market on September 9, 2025. The conversion rate will be subject to adjustment in certain events. In addition, following certain corporate events that occur prior to the maturity date or if the Company delivers a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event or notice of redemption, as the case may be.

The Company may not redeem the Notes prior to October 6, 2028. The Company may redeem for cash all or any portion of the Notes (subject to certain limitations), at the Company's option, on a redemption date on or after October 6, 2028 and on or before the 45th scheduled trading day immediately prior to the maturity date if the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If the Company undergoes a fundamental change, then, subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Company estimates that the net proceeds from the offering will be approximately $123.7 million (or approximately $142.3 million if the underwriter fully exercises its overallotment option), after deducting underwriting discounts and commissions and estimated expenses payable by the Company. The Company intends to use the net proceeds from the offering to repay a portion of the outstanding indebtedness under its revolving credit facility and for other general corporate purposes. The Company intends to reborrow under its revolving credit facility to redeem all or a portion of its outstanding 5.125% Notes due 2026 and 7.75% Notes due 2028.

Oppenheimer & Co. Inc. is acting as sole book-running manager for the offering.

Investors are advised to carefully consider the investment objectives, risks, charges and expenses of the Company before investing. The preliminary prospectus supplement, dated September 8, 2025, and the accompanying prospectus, dated January 17, 2024, which have been filed with the U.S. Securities and Exchange Commission (the "SEC"), and the final prospectus supplement, which will be filed with the SEC, contain this and other information about the Company and should be read carefully before investing.

The offering is being conducted pursuant to the Company's effective shelf registration statement that was initially filed with the SEC on December 7, 2023 and declared effective on January 17, 2024 (File No. 333-275934).

Copies of the preliminary prospectus supplement or the final prospectus supplement relating to the offering and the accompanying prospectus may be obtained from: Oppenheimer & Co. Inc., Attention: Syndicate Prospectus Department, 85 Broad Street, 26th Floor, New York, NY 10004, by telephone at (212) 667-8055 or by email at EquityProspectus@opco.com.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

About Gladstone Capital Corporation: Gladstone Capital Corporation is a publicly traded business development company that invests in debt and equity securities consisting primarily of secured first and second lien term loans to lower middle market businesses in the United States.

Forward-Looking Statements

This press release contains statements as to the Company's intentions and expectations of the outcome of future events that are forward-looking statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These statements relate to the completion of the offering of Notes and the anticipated use of the net proceeds by the Company for the repayment of a portion of the outstanding indebtedness under its revolving credit facility and for other general corporate purposes. No assurance can be given that the transaction discussed above will be completed on the terms described, or at all. Completion of the offering on the terms described, and the application of net proceeds, are subject to numerous conditions, many of which are beyond the control of the Company. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. For a description of certain risks to which the Company is or may be subject, please refer to the factors discussed under the captions "Forward-Looking Statements" and "Risk Factors" included in the Company's filings with the SEC (accessible at www.sec.gov).

CONTACT: For further information: Gladstone Capital Corporation, 703-287-5898.

SOURCE: Gladstone Capital Corporation

View the original press release on ACCESS Newswire

FAQ

What is the size and interest rate of GLAD's new convertible notes offering?

GLAD priced a $130.0 million offering of convertible notes with a 5.875% interest rate, due in 2030. The offering was upsized from the initially announced $110.0 million.

What is the conversion price for GLAD's 2030 convertible notes?

The initial conversion price is $26.02 per share, representing a 10% premium over GLAD's last reported stock price on September 9, 2025. The conversion rate is 38.4394 shares per $1,000 principal amount.

How will GLAD use the proceeds from the convertible notes offering?

GLAD will use the estimated $123.7 million net proceeds to repay part of its revolving credit facility debt and plans to reborrow to redeem its outstanding 5.125% Notes due 2026 and 7.75% Notes due 2028.

When can GLAD redeem these convertible notes?

GLAD cannot redeem the notes before October 6, 2028. After that date, they can be redeemed if GLAD's stock price is at least 130% of the conversion price for 20 out of 30 trading days.

When do GLAD's new convertible notes mature?

The convertible notes will mature on October 1, 2030, unless earlier converted, redeemed, or repurchased.