Trinity Capital Inc. Prices Offering of $100.0 Million of 7.875% Notes due 2029

Rhea-AI Summary

Trinity Capital Inc. announces a public offering of $100.0 million in 7.875% notes due 2029 to pay down existing debt and redeem 7.00% notes due 2025. The offering is managed by Keefe, Bruyette & Woods, Morgan Stanley, RBC Capital Markets, and Compass Point.

Positive

• Trinity Capital Inc. is addressing its debt obligations by issuing $100.0 million in 7.875% notes due 2029.
• The company plans to use the net proceeds to pay down existing debt under its KeyBank Credit Facility and potentially redeem a portion of its 7.00% Notes due 2025.
• The offering is managed by Keefe, Bruyette & Woods, Morgan Stanley, RBC Capital Markets, and Compass Point.
• Investors are advised to review the investment objectives, risks, and expenses outlined in the prospectus supplement and accompanying prospectus filed with the SEC.

Negative

• None.

Financial Analyst

The issuance of $100 million in 7.875% notes by Trinity Capital Inc. reflects a strategic move to restructure the company's debt profile. The interest rate offered is notably higher than the average corporate bond yield, suggesting that Trinity may be compensating for higher perceived risk or seeking to attract investors with a more appealing return. The option to redeem these notes starting from 2026 indicates flexibility in debt management, which could be a positive signal to investors about the company's financial planning.

From a financial standpoint, the decision to pay down existing debt under the KeyBank Credit Facility could potentially lead to a reduction in interest expenses, depending on the interest rates of the existing debt. This action could improve Trinity's net interest margins and, consequently, its profitability. However, investors should be aware that such debt restructuring could also lead to temporary increases in leverage ratios until the proceeds are effectively used to reduce outstanding debt levels.

Market Research Analyst

Trinity's decision to list the new notes on the Nasdaq Global Select Market is indicative of their aim to enhance liquidity and provide easy access for investors. The 30-day overallotment option granted to underwriters is a common practice known as a 'greenshoe' option, which provides stability and liquidity to the notes' market post-issuance. This could help in maintaining the notes' price close to the offering price, thereby potentially reducing volatility shortly after the listing.

It is also important to consider the competitive landscape and the current economic environment. The choice of joint book-running managers—Keefe, Bruyette & Woods, Morgan Stanley and RBC Capital Markets—brings credibility to the offering, as these institutions are well-regarded in the financial industry. Their involvement may reassure investors of the offering's legitimacy and could aid in achieving a successful capital raise.

Debt Capital Markets Expert

Trinity Capital Inc.'s underwritten public offering of notes is a clear indication of tapping into the debt capital markets to optimize its capital structure. The offered yield of 7.875% is relatively high, which could be reflective of the current interest rate environment or specific credit risk associated with Trinity. For investors, the yield represents the compensation for the credit risk they are taking on and it is essential to compare this with the yields of similar instruments in the market to assess its attractiveness.

The use of proceeds to pay down existing debt is a prudent measure, especially if the new debt has a lower cost or more favorable terms. However, investors should scrutinize Trinity's overall debt maturity profile and how this new offering fits within it. The redemption feature provides the company with an exit strategy for the notes, which will have implications for the company's interest expense and cash flow management in the mid to long term.

PHOENIX, March 25, 2024 /PRNewswire/ -- Trinity Capital Inc. ("Trinity") (NASDAQ: TRIN), an internally managed business development company, today announced that it has priced an underwritten public offering of $100.0 million in aggregate principal amount of 7.875% notes due 2029 (the "Notes"). The Notes will mature on March 30, 2029, and may be redeemed in whole or in part at any time or from time to time at the Company's option on or after March 30, 2026.  In connection with the offering, Trinity has granted the underwriters a 30-day option to purchase additional Notes in an amount up to $15.0 million to cover overallotments, if any. The Notes are being issued at 100% of the principal amount per Note.

The offering is subject to customary closing conditions and is expected to close on March 28, 2024. Trinity intends to list the Notes on the Nasdaq Global Select Market within 30 days of the issue date of the Notes under the symbol "TRINZ."

Trinity intends to use the net proceeds from this offering to pay down a portion of its existing indebtedness outstanding under its KeyBank Credit Facility and, depending on the remaining amount of net proceeds after such use, to redeem a portion of its outstanding 7.00% Notes due 2025.

Keefe, Bruyette & Woods, A Stifel Company, Morgan Stanley and RBC Capital Markets are acting as the joint book-running managers for this offering. Compass Point is acting as lead manager for this offering.

Investors are advised to carefully consider the investment objectives, risks and charges and expenses of Trinity before investing. The preliminary prospectus supplement dated March 25, 2024 and the accompanying prospectus dated February 7, 2024, each of which has been filed with the Securities and Exchange Commission ("SEC"), contain a description of these matters and other important information about Trinity and should be read carefully before investing.

The issuer has filed a shelf registration statement (including a base prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the base prospectus in that registration statement, the preliminary prospectus supplement and the documents incorporated by reference therein, which the issuer has filed with the SEC, for more complete information about the issuer and this offering. You may obtain these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the preliminary prospectus supplement if you request it from Keefe, Bruyette & Woods, Inc., 787 7th Avenue, 4th Floor, New York, NY 10019, Attn: Equity Syndicate, by telephone at 1-800-966-1559; Morgan Stanley & Co. LLC, 1585 Broadway, New York, NY 10036, toll free at 1-866-718-1649; or RBC Capital Markets, LLC, Brookfield Place, 200 Vesey Street, 8th Floor, New York, New York, 10281 by telephone at 1-866-375-6829.

The information in this preliminary prospectus supplement, the accompanying prospectus and this press release is not complete and may be changed. The preliminary prospectus supplement, the accompanying prospectus and this press release do not constitute an offer to sell or the solicitation of offers to buy, nor will there be any sale of the Notes referred to in this press release, in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction.

About Trinity Capital Inc.

Trinity (NASDAQ: TRIN), an internally managed specialty lending company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended, is a leading provider of debt, including loans and equipment financing, to growth stage companies, including venture-backed companies and companies with institutional equity investors. Trinity's investment objective is to generate current income and, to a lesser extent, capital appreciation through investments consisting primarily of term loans and equipment financings and, to a lesser extent, working capital loans, equity and equity-related investments. Trinity believes it is one of only a select group of specialty lenders that has the depth of knowledge, experience, and track record in lending to growth stage companies.

Forward-Looking Statements

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute 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 SEC. Trinity undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

 

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SOURCE Trinity Capital Inc.

What is Trinity Capital Inc. offering in the public offering?

Trinity Capital Inc. is offering $100.0 million in 7.875% notes due 2029 in the public offering.

How will Trinity utilize the net proceeds from the offering?

Trinity intends to use the net proceeds to pay down existing debt under its KeyBank Credit Facility and potentially redeem a portion of its 7.00% Notes due 2025.

Who are the joint book-running managers for the offering?

Keefe, Bruyette & Woods, Morgan Stanley, RBC Capital Markets, and Compass Point are acting as the joint book-running managers for the offering.

Where can investors find important information about Trinity's offering?

Investors can find important information in the preliminary prospectus supplement dated March 25, 2024, and the accompanying prospectus dated February 7, 2024, filed with the SEC.