Item 1.01. Entry into a Material Definitive Agreement.
Underwriting Agreement
On September 24, 2019, PennantPark Investment Corporation (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) by and among the Company, PennantPark Investment Advisers, LLC, PennantPark Investment Administration, LLC, and Keefe, Bruyette & Woods, Inc. and Morgan Stanley & Co. LLC, as representatives of the several underwriters named on Schedule A to the Underwriting Agreement, in connection with the issuance and sale of $75,000,000 aggregate principal amount of the Company’s 5.50% Notes due 2024 (the “Offering”).
The Offering was made pursuant to the Company’s effective shelf registration statement onForm N-2(Registration No. 333-230014) previously filed with the Securities and Exchange Commission (the “Registration Statement”), as supplemented by a preliminary prospectus supplement dated September 24, 2019 (the “Preliminary Prospectus Supplement”) and a final prospectus supplement dated September 24, 2019 (the “Final Prospectus Supplement”).
The foregoing description of the Underwriting Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Underwriting Agreement filed with this report as Exhibit 1.1 and which is incorporated herein by reference.
Third Supplemental Indenture
On September 27, 2019, the Company and American Stock Transfer & Trust Company, LLC (the “Trustee”), entered into a Third Supplemental Indenture (the “Third Supplemental Indenture”) to the Indenture, dated January 22, 2013, between the Company and the Trustee (the “Base Indenture”; and together with the Third Supplemental Indenture, the “Indenture”). The Third Supplemental Indenture relates to the Offering.
The Company’s 5.50% notes due 2024 (the “Notes”) will mature on October 15, 2024 and may be redeemed in whole or in part at the Company’s option on or after October 15, 2021 at a redemption price of 100% of the outstanding principal amount of the Notes plus accrued and unpaid interest. The Notes bear interest at a rate of 5.50% per year payable quarterly on January 15, April 15, July 15 and October 15 of each year, commencing January 15, 2020. The Notes will be the Company’s direct unsecured obligations and will rankpari passu in right of payment with the Company’s future unsecured unsubordinated indebtedness, senior to any of the Company’s future indebtedness that expressly states it is subordinated in right of payment to the Notes, effectively subordinated in right of payment to all of the Company’s existing and future secured indebtedness (including indebtedness that is initially unsecured, but to which the Company subsequently grant security) to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries, financing vehicles, or similar facilities.
The Indenture contains certain covenants, including covenants requiring the Company to comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the Investment Company Act of 1940, as amended, to provide financial information to the holders of the Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended, and to use its best efforts to effect, within 30 days of issuance and delivery of the Notes, the listing of the Notes on the Nasdaq Global Stock Exchange and to maintain such listing. These covenants are subject to important limitations and exceptions that are described in the Indenture.
The Notes were offered and sold in an offering registered under the Securities Act of 1933, as amended, pursuant to the Registration Statement, the Preliminary Prospectus Supplement, and the Final Prospectus Supplement. The transaction closed on September 27, 2019. The net proceeds to the Company were approximately $72.3 million, after deducting the underwriting discounts and commissions of approximately $2.3 million payable by the Company and estimated offering expenses of approximately $500,000 payable by the Company. The Company intends to use the net proceeds to reduce outstanding obligations under its credit facilities and/or Small Business Association debentures, to invest in new or existing portfolio companies, or for other general corporate or strategic purposes.
The foregoing descriptions of the Third Supplemental Indenture and the Notes do not purport to be complete and are qualified in their entirety by reference to the full text of the Third Supplemental Indenture and the Notes, respectively, each filed as exhibits hereto and incorporated by reference herein.
