| | | | Sincerely yours, | |
| | | | ![]() | |
| | | | Joseph B. Alala, III Chairman and Chief Executive Officer | |
| | | | By Order of the Board of Directors, | |
| | | | [INSERT SIGNATURE] | |
| | | | Kevin A. Koonts Corporate Secretary | |
Name of Beneficial Owner | | | Number of Shares Beneficially Owned(1) | | | Percentage of Class(2) | | ||||||
Interested Directors | | | | | | | | | | | | | |
Joseph B. Alala, III(3) | | | | | 554,077 | | | | | | 3.4% | | |
M. Hunt Broyhill(4) | | | | | 401,766 | | | | | | 2.5% | | |
Independent Directors | | | | | | | | | | | | | |
R. Charles Moyer | | | | | 7,838 | | | | | | * | | |
H. Paul Chapman | | | | | 10,000 | | | | | | * | | |
Larry W. Carroll(5) | | | | | 140,660 | | | | | | * | | |
Executive Officers | | | | | | | | | | | | | |
Stephen A. Arnall | | | | | 26,885 | | | | | | * | | |
Kevin A. Koonts | | | | | 986 | | | | | | * | | |
Executive Officers and Directors as a Group | | | | | 1,142,212 | | | | | | 7.0% | | |
Name of Director | | | Dollar Range of Equity Securities in Capitala Finance(1)(2) | |
Interested Directors | | | | |
Joseph B. Alala, III | | | Over $100,000 | |
M. Hunt Broyhill | | | Over $100,000 | |
Independent Directors | | | | |
R. Charles Moyer | | | $ | |
Larry W. Carroll | | | Over $100,000 | |
H. Paul Chapman | | | $50,001 – $100,000 | |
Name, Address and Age(1) | | | Position(s) Held with Company | | | Terms of Office and Length of Time Served | | | Principal Occupation(s) During Past 5 Years | | | Other Directorships Held by Director or Nominee for Director During Past 5 Years | |
Independent Director | | | | | | | | | | | | | |
R. Charles Moyer, 74 | | | Director | | | Class I Director since 2013; Term expires 2020. | | | Professor of Finance at the University of Louisville; Dean Emeritus of the Babcock Graduate School of Management, Wake Forest University. | | | Director of Summit Biosciences Inc.; Board member of the Kentucky Center for the Arts Foundation; Director of the Enterprise Angels Community Fund I; Former Director of Kentucky Seed Capital Fund; and Former Director of King Pharmaceuticals Inc. | |
Name, Address and Age(1) | | | Position(s) Held with Company | | | Terms of Office and Length of Time Served | | | Principal Occupation(s) During Past 5 Years | | | Other Directorships Held by Director or Nominee for Director During Past 5 Years | |
Interested Director | | | | | | | | | | | | | |
M. Hunt Broyhill, | | | Director | | | Class II Director since 2013; Term expires | | | Partner of the predecessor to Capitala Investment Advisors; Chief Executive Officer of Broyhill Asset Management, LLC, a private wealth management firm; President and Chairman of the board of directors of BMC Fund, Inc., a registered closed-end management investment company; President and director of Broyhill Investments, Inc., a private investment company; and also holds several senior positions within the Broyhill family offices. | | | Chairman of the board of directors of BMC Fund, Inc. and director of Broyhill Investments, Inc. | |
| Independent Director | | | | | | | | | | | | | |
| Larry W. Carroll, | | | Director | | | Class II Director since 2013; Term expires | | | President of Carroll Financial Associates, Inc., a financial planning and investment management firm. | | | Former Director of Park Sterling Corporation and its wholly owned subsidiary, Park Sterling Bank; Director of Carroll Financial Associates, Inc.; Former Director of the Board of Trustees of the Cultural and Heritage Foundation; Board of Trustees of Austin Peay State University | |
Name, Address and Age(1) | | | Position(s) Held with Company | | | Terms of Office and Length of Time Served | | | Principal Occupation(s) During Past 5 Years | | | Other Directorships Held by Director or Nominee for Director During Past 5 Years | |
Interested Director | | | | | | | | | | | | | |
Joseph B. Alala, III, | | | Chief Executive Officer, President, and Chairman of the | | | Class III Director since 2013; Term expires | | | Chief Executive Officer, President, and Chairman of the | | | |
| Independent Director | | | | | | | | | | | | | |
| H. Paul Chapman, | | | Director | | | Class III Director since 2013; Term expires | | | Partner at KPMG LLP, an accounting firm (1974 – 2013); Professor in the Belk College of Business at University of North Carolina at Charlotte (2013 – Present). | | | |
Name, Address, and Age(1) | | | Position(s) Held with Company | | | Principal Occupation(s) During Past 5 Years | |
Stephen A. Arnall, | | | Chief Financial Officer and Chief Operating Officer | | | Chief Financial Officer and Chief Operating Officer of Capitala Finance since May | |
| | Chief Accounting Officer, Treasurer, Chief Compliance Officer and Secretary | | | Chief Compliance Officer and Secretary of | |
Name | | | Fees Earned or Paid in Cash(1) | | | All Other Compensation(2) | | | Total | | |||||||||
Interested Directors | | | | | | | | | | | | | | | | | | | |
Joseph B. Alala, III | | | | | — | | | | | | — | | | | | | — | | |
M. Hunt Broyhill | | | | | — | | | | | | — | | | | | | — | | |
Independent Directors | | | | | | | | | | | | | | | | | | | |
R. Charles Moyer | | | | $ | 125,000 | | | | | | — | | | | | $ | 125,000 | | |
Larry W. Carroll | | | | $ | 125,000 | | | | | | — | | | | | $ | 125,000 | | |
H. Paul Chapman | | | | $ | 130,000 | | | | | | — | | | | | $ | 130,000 | | |
| | Fiscal Year Ended December 31, 2017 | | Fiscal Year Ended December 31, 2016 | | | Fiscal Year Ended December 31, 2019 | | Fiscal Year Ended December 31, 2018 | | ||||||||||||||||
Audit Fees | | | $ | 711.8 | | | | $ | 596.1 | | | | | $ | 808.5 | | | | $ | 726.5 | | | ||||
Audit-Related Fees | | | | — | | | | | — | | | | | | — | | | | | — | | | ||||
Tax Fees | | | | 67.0 | | | | | 33.5 | | | | | | 51.5 | | | | | 50.0 | | | ||||
All Other Fees | | | | — | | | | | — | | | | | | — | | | | | — | | | ||||
Total Fees: | | | $ | 778.8 | | | | $ | 629.5 | | | | | $ | 860.0 | | | | $ | 776.5 | | | ||||
|
Fiscal Year Ended | | NAV Per Share(1) | | | Sales Price | | | Premium or (Discount) of High Sales Price to NAV(2) | | Premium or (Discount) of Low Sales Price to NAV(2) | | Declared Distributions Per Share(3) | | | NAV Per Share(1) | | �� | Sales Price | | | Premium or (Discount) of High Sales Price to NAV(2) | | Premium or (Discount) of Low Sales Price to NAV(2) | | Declared Distributions Per Share(3) | | ||||||||||||||||||||||||||||||||||||||||||||||||
| High | | Low | | | High | | Low | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
First Quarter (February 22, 2018) | | | $ | * | | | | $ | * | | | | $ | * | | | | | * % | | | | | * % | | | | $ | 0.25 | | | |||||||||||||||||||||||||||||||||||||||||||
December 31, 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
December 31, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
First Quarter (through February 21, 2020) | | | | * | | | | $ | 9.20 | | | | $ | 8.57 | | | | | *% | | | | | *% | | | | $ | 0.25 | | | |||||||||||||||||||||||||||||||||||||||||||
December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
Fourth Quarter | | | $ | * | | | | $ | 10.00 | | | | $ | 7.12 | | | | | * % | | | | | * % | | | | $ | 0.25 | | | | | $ | [ ] | | | | $ | 9.12 | | | | $ | 8.07 | | | | | [ ]% | | | | | [ ]% | | | | $ | 0.25 | | | ||||||||||||
Third Quarter | | | $ | 14.21 | | | | $ | 13.57 | | | | $ | 8.67 | | | | | (4.7)% | | | | | (63.9)% | | | | $ | 0.39 | | | | | $ | 9.40 | | | | $ | 9.99 | | | | $ | 7.34 | | | | | 6.3% | | | | | (21.9)% | | | | $ | 0.25 | | | ||||||||||||
Second Quarter | | | $ | 14.97 | | | | $ | 14.43 | | | | $ | 12.85 | | | | | (3.7)% | | | | | (16.5)% | | | | $ | 0.39 | | | | | $ | 9.55 | | | | $ | 9.69 | | | | $ | 7.97 | | | | | 1.5% | | | | | (16.5)% | | | | $ | 0.25 | | | ||||||||||||
First Quarter | | | $ | 15.71 | | | | $ | 14.65 | | | | $ | 13.00 | | | | | (7.2)% | | | | | (20.8)% | | | | $ | 0.39 | | | | | $ | 11.61 | | | | $ | 8.74 | | | | $ | 6.83 | | | | | (24.7)% | | | | | (41.2)% | | | | $ | 0.25 | | | ||||||||||||
December 31, 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||
Fourth Quarter | | | $ | 15.79 | | | | $ | 13.95 | | | | $ | 11.51 | | | | | (11.7)% | | | | | (27.1)% | | | | $ | 0.39 | | | |||||||||||||||||||||||||||||||||||||||||||
Third Quarter | | | $ | 15.68 | | | | $ | 15.80 | | | | $ | 12.75 | | | | | 0.77% | | | | | (18.69)% | | | | $ | 0.47 | | | |||||||||||||||||||||||||||||||||||||||||||
Second Quarter | | | $ | 16.28 | | | | $ | 14.20 | | | | $ | 11.72 | | | | | (12.78)% | | | | | (28.01)% | | | | $ | 0.47 | | | |||||||||||||||||||||||||||||||||||||||||||
First Quarter | | | $ | 16.29 | | | | $ | 13.18 | | | | $ | 9.54 | | | | | (19.09)% | | | | | (41.44)% | | | | $ | 0.47 | | |
Fiscal Year Ended | | | NAV Per Share(1) | | | Sales Price | | | Premium or (Discount) of High Sales Price to NAV(2) | | | Premium or (Discount) of Low Sales Price to NAV(2) | | | Declared Distributions Per Share(3) | | |||||||||||||||||||||
| High | | | Low | | ||||||||||||||||||||||||||||||||
December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fourth Quarter | | | | $ | 11.88 | | | | | $ | 8.73 | | | | | $ | 6.75 | | | | | | (26.5)% | | | | | | (43.2)% | | | | | $ | 0.25 | | |
Third Quarter | | | | $ | 12.71 | | | | | $ | 9.05 | | | | | $ | 8.29 | | | | | | (28.8)% | | | | | | (34.8)% | | | | | $ | 0.25 | | |
Second Quarter | | | | $ | 13.71 | | | | | $ | 8.60 | | | | | $ | 7.66 | | | | | | (37.3)% | | | | | | (44.1)% | | | | | $ | 0.25 | | |
First Quarter | | | | $ | 13.66 | | | | | $ | 8.15 | | | | | $ | 6.88 | | | | | | (40.3)% | | | | | | (49.6)% | | | | | $ | 0.25 | | |
| | Prior to Sale Below NAV | | | Example 1 5% Offering at 5% Discount | | Example 2 10% Offering at 10% Discount | | Example 3 20% Offering at 20% Discount | | Example 4 25% Offering at 100% Discount | | | | | | | | Example 1 5% Offering at 5% Discount | | Example 2 10% Offering at 10% Discount | | Example 3 20% Offering at 20% Discount | | Example 4 25% Offering at 100% Discount | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Following Sale | | % Change | | Following Sale | | % Change | | Following Sale | | % Change | | Following Sale | | % Change | | | Prior to Sale Below NAV | | Following Sale | | % Change | | Following Sale | | % Change | | Following Sale | | % Change | | Following Sale | | % Change | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offering Price | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Price per Share to the Public | | | | — | | | | $ | 10.00 | | | | | — | | | | $ | 9.47 | | | | | — | | | | $ | 8.42 | | | | | — | | | | $ | 0.01 | | | | | — | | | | | | — | | | | $ | 10.00 | | | | | — | | | | $ | 9.47 | | | | | — | | | | $ | 8.42 | | | | | — | | | | $ | 0.01 | | | | | — | | | ||||||||||||||||||
Net Proceeds per Share to Issuer | | | | — | | | | $ | 9.50 | | | | | — | | | | $ | 9.00 | | | | | — | | | | $ | 8.00 | | | | | — | | | | $ | 0.01 | | | | | — | | | | | | — | | | | $ | 9.50 | | | | | — | | | | $ | 9.00 | | | | | — | | | | $ | 8.00 | | | | | — | | | | $ | 0.01 | | | | | — | | | ||||||||||||||||||
Decrease to NAV | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Total Shares Outstanding | | | | 1,000,000 | | | | | 1,050,000 | | | | | 5.00% | | | | | 1,100,000 | | | | | 10.00% | | | | | 1,200,000 | | | | | 20.00% | | | | | 1,250,000 | | | | | 25.00% | | | | | | 1,000,000 | | | | | 1,050,000 | | | | | 5.00% | | | | | 1,100,000 | | | | | 10.00% | | | | | 1,200,000 | | | | | 20.00% | | | | | 1,250,000 | | | | | 25.00% | | | ||||||||||||||||||
NAV per Share | | | $ | 10.00 | | | | $ | 9.98 | | | | | (0.20)% | | | | $ | 9.91 | | | | | (0.90)% | | | | $ | 9.67 | | | | | (3.30)% | | | | $ | 8.00 | | | | | (20.00)% | | | | | $ | 10.00 | | | | $ | 9.98 | | | | | (0.20)% | | | | $ | 9.91 | | | | | (0.90)% | | | | $ | 9.67 | | | | | (3.30)% | | | | $ | 8.00 | | | | | (20.00)% | | | ||||||||||||||||||
Dilution to Stockholder | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Shares Held by Stockholder A | | | | 10,000 | | | | | 10,000 | | | | | — | | | | | 10,000 | | | | | — | | | | | 10,000 | | | | | — | | | | | 10,000 | | | | | — | | | | | | 10,000 | | | | | 10,000 | | | | | — | | | | | 10,000 | | | | | — | | | | | 10,000 | | | | | — | | | | | 10,000 | | | | | — | | | ||||||||||||||||||
Percentage Held by Stockholder A | | | | 1.00% | | | | | 0.95% | | | | | (4.76)% | | | | | 0.91% | | | | | (9.09)% | | | | | 0.83% | | | | | (16.67)% | | | | | 0.80% | | | | | (20.00)% | | | | | | 1.00% | | | | | 0.95% | | | | | (4.76)% | | | | | 0.91% | | | | | (9.09)% | | | | | 0.83% | | | | | (16.67)% | | | | | 0.80% | | | | | (20.00)% | | | ||||||||||||||||||
Total Asset Values | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Total NAV Held by Stockholder A | | | $ | 100,000 | | | | $ | 99,800 | | | | | (0.20)% | | | | $ | 99,100 | | | | | (0.90)% | | | | $ | 96,700 | | | | | (3.30)% | | | | $ | 80,020 | | | | | (19.98)% | | | | | $ | 100,000 | | | | $ | 99,800 | | | | | (0.20)% | | | | $ | 99,100 | | | | | (0.90)% | | | | $ | 96,700 | | | | | (3.30)% | | | | $ | 80,020 | | | | | (19.98)% | | | ||||||||||||||||||
Total Investment by Stockholder A(1) | | | $ | 100,000 | | | | $ | 100,000 | | | | | — | | | | $ | 100,000 | | | | | — | | | | $ | 100,000 | | | | | — | | | | $ | 100,000 | | | | | — | | | | | $ | 100,000 | | | | $ | 100,000 | | | | | — | | | | $ | 100,000 | | | | | — | | | | $ | 100,000 | | | | | — | | | | $ | 100,000 | | | | | — | | | ||||||||||||||||||
Total Dilution to Stockholder A(2) | | | | — | | | | $ | (200) | | | | | — | | | | $ | (900) | | | | | — | | | | $ | (3,300) | | | | | — | | | | $ | (19,980) | | | | | — | | | | | | — | | | | $ | (200) | | | | | — | | | | $ | (900) | | | | | — | | | | $ | (3,300) | | | | | — | | | | $ | (19,980) | | | | | — | | | ||||||||||||||||||
Per Share Amounts | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
NAV per Share held by Stockholder A | | | | — | | | | $ | 9.98 | | | | | — | | | | $ | 9.91 | | | | | — | | | | $ | 9.67 | | | | | — | | | | $ | 8.00 | | | | | — | | | | | | — | | | | $ | 9.98 | | | | | — | | | | $ | 9.91 | | | | | — | | | | $ | 9.67 | | | | | — | | | | $ | 8.00 | | | | | — | | | ||||||||||||||||||
Investment per Share held by Stockholder A(3) | | | $ | 10.00 | | | | $ | 10.00 | | | | | — | | | | $ | 10.00 | | | | | — | | | | $ | 10.00 | | | | | — | | | | $ | 10.00 | | | | | — | | | | | $ | 10.00 | | | | $ | 10.00 | | | | | — | | | | $ | 10.00 | | | | | — | | | | $ | 10.00 | | | | | — | | | | $ | 10.00 | | | | | — | | | ||||||||||||||||||
Dilution per Share held by Stockholder A(4) | | | | — | | | | $ | (0.02) | | | | | — | | | | $ | (0.09) | | | | | — | | | | $ | (0.33) | | | | | — | | | | $ | (2.00) | | | | | — | | | | | | — | | | | $ | (0.02) | | | | | — | | | | $ | (0.09) | | | | | — | | | | $ | (0.33) | | | | | — | | | | $ | (2.00) | | | | | — | | | ||||||||||||||||||
Percentage Dilution to Stockholder A(5) | | | | — | | | | | — | | | | | (0.20)% | | | | | — | | | | | (0.90)% | | | | | — | | | | | (3.30)% | | | | | — | | | | | (19.98)% | | | | | | — | | | | | — | | | | | (0.20)% | | | | | — | | | | | (0.90)% | | | | | — | | | | | (3.30)% | | | | | — | | | | | (19.98)% | | |
| | | | By Order of the Board of Directors [INSERT SIGNATURE] Kevin A. Koonts Corporate Secretary | |