OFS Announces 20% Trim of 2026 Debt via $25M Partial Redemption

Rhea-AI Filing Summary

OFS Capital Corporation (NASDAQ: OFS) has announced a partial redemption of its 4.75% Notes due 2026. According to the Form 8-K filed on July 11, 2025, the company has issued formal notice to redeem $25 million principal amount out of the $125 million outstanding in this debt tranche. The redemption will be executed on August 11, 2025 under the terms of the 2018 Indenture and the Fifth Supplemental Indenture dated February 10, 2021.

The redemption price will be the greater of (i) 100% of the principal of the Notes called or (ii) the make-whole amount—the present value of remaining scheduled principal and interest payments discounted at the applicable Treasury rate plus 50 basis points. Holders will also receive accrued and unpaid interest up to the redemption date.

Once completed, the transaction will retire 20% of the series’ outstanding balance. While the filing does not disclose funding sources or projected interest savings, the reduction in fixed-rate debt could modestly lower ongoing interest expense and improve leverage ratios, provided the company funds the redemption from available liquidity rather than new borrowing.

The notice of redemption is included as Exhibit 99.1 to the filing. No other material events, financial results, or operational updates were reported.

Positive

• Debt reduction: Retirement of $25 million lowers the 2026 note balance by 20%, signalling proactive liability management.
• Potential interest-expense savings: Eliminating part of a 4.75% fixed-rate obligation could modestly improve net investment income.

Negative

• Make-whole premium: The redemption price may exceed par, leading to a one-time cash outlay not quantified in the filing.
• Liquidity usage: The company must allocate cash or alternative funding to execute the redemption, which could constrain capital deployment elsewhere.

Insights

Debt Capital Markets Analyst

TL;DR – OFS trims 20% of its 4.75% 2026 notes, signalling balance-sheet cleanup; impact modest but directionally positive.

The $25 million partial call reduces the 2026 note balance to $100 million and marginally lowers fixed coupon obligations. With the make-whole provision, OFS may incur a small premium, but the step nevertheless demonstrates active liability management two years before maturity. Given the company’s BDC structure, curbing leverage can preserve regulatory asset-coverage headroom. The event is moderately positive for credit quality, though not transformational for earnings.

Portfolio Manager

TL;DR – Liability management move; limited equity impact, slight positive for bondholders.

From an equity perspective, the redemption’s scale ($25 m) is small relative to OFS’s total capital base, leaving NAV and dividend capacity largely unchanged. Bondholders benefit from the make-whole clause ensuring full present-value recovery. Unless funded with additional debt, the action should lower gross leverage. Overall, I view the news as low-impact but constructive for the credit profile.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 11, 2025

OFS Capital Corporation

(Exact name of Registrant as specified in its charter)

Delaware			814-00813			46-1339639
(State or other jurisdiction of incorporation)			(Commission File Number)			(I.R.S. Employer Identification No.)

 

222 W. Adams Street, Suite 1850 Chicago, Illinois			60606
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (847) 734-2000

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

OFS

The Nasdaq Global Select Market

4.95% Notes due 2028

OFSSH

The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 8.01.    Other Events.

Partial Redemption of 4.75% Notes due 2026

On July 11, 2025, OFS Capital Corporation (the “Company”) caused notices to be issued to the holders of its 4.75% Notes due 2026 (CUSIP No. 67103B AA8) (the “Notes”) regarding the Company’s exercise of its option to redeem a portion of the issued and outstanding Notes, pursuant to Section 1101 of the Indenture dated as of April 16, 2018, between the Company and U.S. Bank Trust Company, National Association (formerly known as U.S. Bank National Association), as trustee, and Section 1.01(h) of the Fifth Supplemental Indenture dated as of February 10, 2021. The Company will redeem on August 11, 2025 (the “Redemption Date”) $25,000,000 in aggregate principal amount of the $125,000,000 outstanding Notes. The Notes will be redeemed at the greater of (a) 100% of the principal amount of the Notes to be redeemed, or (b) the sum of the present value of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the Redemption Date) on the Notes to be redeemed, discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points. A copy of the notice of redemption is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01.    Financial Statements and Exhibits.

(d)    Exhibits. 

Exhibit No.						Description
99.1						Notice of Redemption of 4.75% Notes due 2026

* * * * *

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			OFS CAPITAL CORPORATION
Date: July 11, 2025			By:			/s/ Bilal Rashid
						Chief Executive Officer

FAQ

What did OFS Capital announce in its July 11 2025 8-K filing?

OFS notified holders of a $25 million partial redemption of its 4.75% Notes due 2026, effective August 11 2025.

How much of the 4.75% 2026 notes will remain after the redemption?

After redeeming $25 million, $100 million of the 2026 notes will remain outstanding.

What price will OFS Capital pay to redeem the notes?

Holders will receive the greater of 100% of principal or a make-whole amount calculated at the Treasury rate plus 50 bps, plus accrued interest.

When is the redemption date for the notes?

The redemption is scheduled for August 11, 2025.

Does the filing disclose how OFS will finance the redemption?

No, the Form 8-K does not specify the funding source for the $25 million redemption.