OFS Shareholders Green-Light Potential Dilutive Sub-NAV Issuance

Rhea-AI Filing Summary

OFS Capital Corporation (OFS) filed an 8-K (Item 5.07) detailing results of its 30 Jul 2025 adjourned Special Meeting. Shareholders approved a single proposal authorizing the Board, for the next 12 months, to issue common stock at prices below current net asset value (NAV), provided the cumulative shares sold do not exceed 25 % of outstanding shares immediately before each sale.

The motion passed with 6,757,050 votes FOR, 1,329,304 AGAINST and 262,132 ABSTAIN, meaning 83.6 % support; excluding 3,025,425 affiliated votes, unaffiliated holders cast 3,731,625 FOR. No other items were presented.

The authorization increases capital-raising flexibility, allowing the BDC to fund new investments or reduce leverage even when the market prices the stock below NAV. However, any issuance under this authority would be immediately dilutive to existing shareholders and could pressure per-share NAV and earnings. Investors should monitor forthcoming equity offerings, pricing, and use-of-proceeds disclosures.

Positive

• Enhanced capital flexibility: Board can raise equity even when shares trade at a discount, supporting portfolio growth or leverage reduction.
• Strong shareholder support: 83.6 % of votes, including a majority of unaffiliated shares, endorsed the proposal, signalling investor confidence in management.

Negative

• Immediate dilution risk: Issuing shares below NAV decreases per-share NAV and EPS on day of sale.
• Sizeable potential issuance: Up to 25 % of outstanding shares can be sold within 12 months, which could pressure share price.

Insights

Financial Analyst

TL;DR: Approval gives OFS cheap equity firepower but carries clear dilution risk; impact depends on execution.

The vote materially expands OFS’s capital toolbox, enabling it to seize credit opportunities without relying solely on debt at a time when BDC leverage rules are tight. If management times issuances alongside accretive asset purchases or debt pay-downs, longer-term earnings could improve. Yet every share sold below NAV erodes per-share value on day one. Market reaction will hinge on how aggressively and at what discount the Board issues stock. Overall, balanced risk/reward supports a neutral impact rating.

Corporate Governance Expert

TL;DR: Shareholders OK potential 25 % sub-NAV issuance, signalling trust, but governance optics of dilution are negative.

Granting blanket authority to sell stock below NAV is common among BDCs yet controversial. While unaffiliated holders still backed the measure, the Board now controls a powerful lever that can dilute minority investors up to one-quarter in a single year. Best-practice governance calls for clear disclosure of pricing rationale and use of proceeds before each sale; otherwise, investor relations could suffer. The approval is impactful and leans negative for governance quality.

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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 30, 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

7.50% Notes due 2028

OFSSO

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 5.07.    Submission of Matters to a Vote of Security Holders.

On July 30, 2025, OFS Capital Corporation, a Delaware corporation (the “Company”), held an adjourned Special Meeting of Stockholders (the “Special Meeting”). Stockholders considered one proposal as described in the Company’s proxy statement filed on April 30, 2025. The final results of the voting on the matter submitted to stockholders at the Special Meeting are set forth below.

Proposal – Sales of Common Stock Below NAV. The stockholders approved the proposal to authorize the Company, with approval of its Board of Directors, to sell or otherwise issue shares of its common stock (during the next 12 months) at a price below the Company’s then current net asset value per share in one or more offerings, subject to certain limitations set forth in the proxy statement for the Special Meeting (including that the cumulative number of shares sold pursuant to such authority does not exceed 25% of the Company’s then outstanding common stock immediately prior to each such sale) by the vote shown below.

The vote on the proposal, including affiliated and non-affiliated shares, was as follows:

For			Against			Abstain
6,757,050			1,329,304			262,132

The vote on the proposal, adjusted for 3,025,425 affiliated shares, was as follows:

For			Against			Abstain
3,731,625			1,329,304			262,132

* * * * *

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 30, 2025			By:			/s/ Bilal Rashid
						Chief Executive Officer

FAQ

What did OFS Capital shareholders approve on 30 July 2025?

They authorized the Board to sell common stock below current NAV for 12 months, up to 25 % of outstanding shares.

How many votes supported the sub-NAV issuance proposal for OFS?

6,757,050 votes were cast FOR versus 1,329,304 AGAINST and 262,132 ABSTAIN.

Why might OFS issue shares below NAV?

To quickly raise capital for new investments or debt reduction when market price is lower than NAV.

How much dilution could OFS shareholders face?

The authority allows issuance of up to 25 % of current shares, creating material dilution if fully used.

Is the authorization permanent?

No. The authority lasts 12 months from the Special Meeting date unless renewed by future shareholder votes.