XAI Octagon Floating Rate & Alternative Income Trust Announces Registered Direct Placement of Common Shares
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The announcement by XAI Octagon Floating Rate & Alternative Income Trust regarding a registered direct placement of Common Shares represents a strategic move to raise capital. The pricing of these shares at $7.0485 per Common Share indicates a direct transaction with institutional investors, which often suggests a discount to the current market price to incentivize bulk purchase. This capital infusion is likely aimed at enhancing the Trust's investment capabilities or paying down existing debt, which could potentially improve financial flexibility and credit metrics.
Investors should consider the dilutive effect of such an offering on current shareholders, as the increase in outstanding shares could lead to earnings per share dilution. However, if the proceeds are deployed effectively, the long-term benefits could outweigh the initial dilution. It is also important to monitor the Trust's subsequent financial performance to assess the impact of this capital raise on its total return objective.
The timing and size of the capital raise by XAI Octagon Floating Rate & Alternative Income Trust may reflect broader market conditions and investor appetite for income-generating investments. Given the Trust's focus on income generation across multiple stages of the credit cycle, the move aligns with the current economic environment where investors might be seeking stable income amidst market volatility.
Understanding the sector-specific demand for such investment products is crucial. If the market perceives the Trust's portfolio as well-positioned to capitalize on prevailing credit conditions, the offering could be met with positive investor sentiment. Conversely, if the market is bearish on credit investments due to macroeconomic concerns such as rising interest rates or credit defaults, the Trust might face challenges in achieving its total return objective.
The use of a shelf registration statement for this transaction is a common practice that allows issuers to prepare securities offerings quickly once market conditions are deemed favorable. This method provides flexibility to the Trust and ensures regulatory compliance with the SEC. Investors should note that while this mechanism streamlines the capital-raising process, it also requires thorough due diligence to understand the terms of the offering and the implications for the Trust's governance and control.
It is also pertinent to consider the legal obligations that the Trust will have towards the new institutional investors, including any rights or restrictions attached to the Common Shares issued. The legal framework surrounding registered direct placements can influence investor confidence and the Trust's ability to engage in future capital market transactions.
The Common Shares were offered directly to the purchasers without a placement agent, underwriter, broker or dealer.
The offering of Common Shares may be made only by means of a prospectus.
Investors should consider the investment objective and policies, risk considerations, charges and expenses of the Trust carefully before investing. The preliminary prospectus supplement, dated February 1, 2024, and accompanying prospectus, dated January 24, 2022, each of which has been filed with the SEC, contain a description of these matters and other important information about the Trust and should be read carefully before investing.
Copies of the preliminary prospectus supplement and accompanying prospectus may be obtained from: XA Investments, Attn: Investor Relations, 321 N. Clark, Suite 2430,
Investors may also obtain these documents free of charge from the SEC’s website at www.sec.gov.
The information in the preliminary prospectus supplement, the accompanying prospectus and this press release is not complete and may be changed. This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.
The Trust intends to use the net proceeds from the offering to invest in accordance with its investment objective and policies, to pay down outstanding borrowings under its credit facility and/or for general working capital purposes.
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1 Effective February 1, 2024, the name of the Trust was changed from “XAI Octagon Floating Rate & Alternative Income Term Trust” to “XAI Octagon Floating Rate & Alternative Income Trust.”
About XA Investments
XA Investments LLC (“XAI”) serves as the Trust’s investment adviser. XAI is a
About XMS Capital Partners
XMS Capital Partners, LLC, established in 2006, is a global, independent, financial services firm providing M&A, corporate advisory and asset management services to clients. It has offices in
About Octagon Credit Investors
Octagon Credit Investors, LLC (“Octagon”) serves as the Trust’s investment sub-adviser. Octagon is a 29 year-old,
XAI does not provide tax advice; please consult a professional tax advisor regarding your specific tax situation. Income may be subject to state and local taxes, as well as the federal alternative minimum tax.
Investors should consider the investment objectives and policies, risk considerations, charges and expenses of the Trust carefully before investing. For more information on the Trust, please visit the Trust’s webpage at www.xainvestments.com.
This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.
This press release contains certain statements that may include “forward-looking statements.” Forward-looking statements can be identified by the words “may,” “will,” “intend,” “expect,” “estimate,” “continue,” “plan,” “anticipate,” and similar terms and the negatives of such terms. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Many factors that could materially affect the Trust’s actual results are the performance of the portfolio of securities held by the Trust, the conditions in the
Although the Trust believes that the expectations expressed in such forward-looking statements are reasonable, actual results could differ materially from those expressed or implied in such forward-looking statements. The Trust’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and are subject to inherent risks and uncertainties. You are cautioned not to place undue reliance on these forward-looking statements, which are made as of the date of this press release. Except for the Trust’s ongoing obligations under the federal securities laws, the Trust does not intend, and the Trust undertakes no obligation, to update any forward-looking statement.
NOT FDIC INSURED |
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NO BANK GUARANTEE |
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MAY LOSE VALUE |
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Kimberly Flynn, Managing Director
XA Investments LLC
Phone: 1-888-903-3358
Email: info@xainvestments.com
www.xainvestments.com
Source: XA Investments
FAQ
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