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): October 17, 2024
HORIZON TECHNOLOGY FINANCE CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware | | 814-00802 | | 27-2114934 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
312 Farmington Avenue
Farmington, CT 06032
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (860) 676-8654
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) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | 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 | | Ticker Symbol(s) | | Name of each exchange on which registered |
| Common Stock, par value $0.001 per share | | HRZN | | The Nasdaq Stock Market LLC |
| 4.875% Notes due 2026 | | HTFB | | The New York Stock Exchange |
| 6.25% Notes due 2027 | | HTFC | | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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. ☐
Section 1 | Registrant's Business and Operations |
Item 1.01 | Entry into a Material Definitive Agreement |
Convertible Notes
On October 17, 2024, Horizon Technology Finance Corporation (the “Company”) entered into a note purchase agreement (the “Note Purchase Agreement”), by and among the Company and each purchaser named therein (the “Purchasers”), in connection with the issuance and sale of $20,000,000 aggregate principal amount of the Company’s 7.125% Convertible Notes due 2031 (the “Convertible Notes”), in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. The Company received net proceeds (before expenses) from the sale of the Convertible Notes of approximately $18.6 million. The Company intends to use the net proceeds from this offering to make investments in accordance with its investment objective and investment strategy and for general corporate purposes.
The Convertible Notes mature on October 17, 2031 (the “Maturity Date”), unless earlier converted or repurchased in accordance with their terms. The Convertible Notes bear interest at a rate of 7.125% per annum, subject to additional interest upon certain events, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning on December 31, 2024. If an investment grade rating is not maintained with respect to the Convertible Notes or the rating of the Convertible Notes is downgraded below investment grade, additional interest of 1.00% per annum will accrue on the Convertible Notes until such time as the Convertible Notes have received an investment grade rating of “BBB-” (or its equivalent) or better. The Company will also be required to pay additional interest of 2.00% per annum (x) on any overdue payment of interest and (y) during the continuance of an Event of Default (as defined in the Note Purchase Agreement). In addition, on the occurrence of a Change in Control Repurchase Event (as defined in the Note Purchase Agreement) or Delisting Event (as defined in the Note Purchase Agreement), the Company will generally be required to make an offer to purchase the outstanding Convertible Notes at a price equal to 100% of the principal amount of such Convertible Notes plus accrued and unpaid interest to the repurchase date.
The Convertible Notes will be direct unsecured obligations of the Company and will rank (i) equal in right of payment to the Company’s existing and future unsecured indebtedness that is not subordinated in right of payment to the Convertible Notes; (ii) senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; (iii) effectively junior in right of payment to the Company’s existing and future secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and (iv) structurally junior to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries. No sinking fund is provided for the Convertible Notes.
At any time on or after April 17, 2025, at the Company’s sole option, the Company may redeem, from time to time, the Convertible Notes in whole or in part, out of funds legally available for such redemption, at 100% of the principal amount prepaid plus accrued but unpaid interest to but excluding the date of prepayment.
Each holder of a Convertible Note shall have the right, at such holder’s option, to convert all or a portion of any such Convertible Note, at any time on or after April 17, 2025 and prior to the close of business on the business day immediately preceding the Maturity Date, into such number of shares of common stock (“Shares”) of the Company equal to the principal balance of the Convertible Note being converted on the conversion date plus the accrued but unpaid interest on the Convertible Note as of the conversion date, divided by the Conversion Price (defined below). The “Conversion Price” is the greater of (i) volume-weighted average closing sale price for the five trading days immediately prior to the relevant conversion date and (ii) the Company’s most recently reported net asset value per Share as of the business day immediately prior to the date of the notice of such exercise.
No holder of Convertible Notes may exercise its conversion right if upon conversion the holder would receive Shares that would cause funds and accounts managed by the investment adviser to such funds and accounts and any person controlled by the parent company of such investment adviser to beneficially own in the aggregate more than 4.9% of the Shares outstanding at such time.
The foregoing description of the Convertible Notes is a summary of the material terms of the Convertible Notes, does not purport to be complete summary and is qualified in its entirety by reference to the full text of the Note Purchase Agreement filed herewith as Exhibit 10.1 and incorporated by reference herein.
Section 2 | Financial Information |
Item 1.01 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The disclosure required by this Item 2.03 is contained in Item 1.01 of this Current Report on Form 8-K and is incorporated herein by reference.
Section 3 | Securities and Trading Markets |
Item 1.01 | Unregistered Sales of Equity Securities |
The disclosure required by this Item 3.02 is contained in Item 1.01 of this Current Report on Form 8-K and is incorporated herein by reference.
Section 9 | Financial Statements and Exhibits |
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits.
* | Certain portions of this exhibit have been omitted in accordance with Item 601(b)(10)(vi) of Regulation S-K. The registrant agrees to furnish supplementally an unredacted copy of this exhibit to the Securities and Exchange Commission upon its request. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Date: October 17, 2024 | HORIZON TECHNOLOGY FINANCE CORPORATION | |
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| | By: | /s/ Robert D. Pomeroy, Jr. | |
| | | Robert D. Pomeroy, Jr. | |
| | | Chief Executive Officer | |
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