XAI Octagon Floating Rate & Alternative Income Term Trust (XFLT)
Company Profile
| Document And Entity Information | Jun. 04, 2024 |
| Document Information [Line Items] | |
| Entity Registrant Name | XAI Octagon Floating Rate & Alternative Income Trust |
| Document Type | 424B2 |
| Amendment Flag | false |
| Entity Central Index Key | 0001703079 |
| N-2 - USD ($) | 12 Months Ended | |||
| Jun. 04, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | ||
| Cover [Abstract] | ||||
| Entity Central Index Key | 0001703079 | |||
| Amendment Flag | false | |||
| Document Type | 424B2 | |||
| Entity Registrant Name | XAI Octagon Floating Rate & Alternative Income Trust | |||
| Fee Table [Abstract] | ||||
| Shareholder Transaction Expenses [Table Text Block] | Shareholder Transaction Expenses Sales load paid by Common Shareholders (as a percentage of offering price) 1.00 % (1) Offering expenses borne by the Trust (as a percentage of offering price) 0.11 % (2) Dividend Reinvestment Plan fees None (3) | |||
| Sales Load [Percent] | [1] | 1% | ||
| Other Transaction Expenses [Abstract] | ||||
| Other Transaction Expenses [Percent] | [2] | 0.11% | ||
| Annual Expenses [Table Text Block] | As a Percentage Annual Expenses Management fees (4) 2.85 % Leverage expense Interest payment on borrowed funds (5) 3.21 % Preferred Share dividends (6) 0.89 % Other expenses Investor Support and Secondary Market Support Services Fee (7) 0.33 % Other (8)(9) 0.55 % Total annual expenses 7.83 % | |||
| Management Fees [Percent] | [3] | 2.85% | ||
| Interest Expenses on Borrowings [Percent] | [4] | 3.21% | ||
| Dividend Expenses on Preferred Shares [Percent] | [5] | 0.89% | ||
| Distribution/Servicing Fees [Percent] | [6] | 0% | ||
| Other Annual Expenses [Abstract] | ||||
| Other Annual Expenses [Percent] | [7],[8] | 0.55% | ||
| Total Annual Expenses [Percent] | 7.83% | |||
| Waivers and Reimbursements of Fees [Percent] | [9] | 0.33% | ||
| Expense Example [Table Text Block] | 1 Year 3 Years 5 Years 10 Years $ 87 $ 234 $ 372 $ 684 | |||
| Expense Example, Year 01 | $ 87 | |||
| Expense Example, Years 1 to 3 | 234 | |||
| Expense Example, Years 1 to 5 | 372 | |||
| Expense Example, Years 1 to 10 | $ 684 | |||
| Purpose of Fee Table , Note [Text Block] | The following table contains information about the costs and expenses that Common Shareholders will bear directly or indirectly. The table is based on the capital structure of the Trust as of September 30, 2023 (except as noted below) after giving effect to the anticipated net proceeds of the Common Shares offered pursuant to this Prospectus Supplement and the accompanying Prospectus and assuming the Trust incurs the estimated offering expenses. If the Trust issues fewer than all of the Common Shares available for sale pursuant to the Distribution Agreement and the net proceeds to the Trust are less, all other things being equal, the total annual expenses shown would increase. The purpose of the table and the example below is to help you understand the fees and expenses that you, as a holder of Common Shares, would bear directly or indirectly. | |||
| Other Expenses, Note [Text Block] | Example The following example illustrates the expenses that you would pay on a $1,000 investment in Common Shares, assuming (1) total annual expenses of 7.83% of net assets attributable to Common Shares, (2) the sales load of $10 and estimated offering expenses of $1.10, and (3) a 5% annual return. The example assumes that the estimated Total Annual Expenses set forth in the Annual Expenses table are accurate and that all dividends and distributions are reinvested at NAV per Common Share. Actual expenses may be greater or less than those assumed. Moreover, the Trust’s actual rate of return may be greater or less than the hypothetical 5% return shown in the example. 1 Year 3 Years 5 Years 10 Years $ 87 $ 234 $ 372 $ 684 The Example should not be considered a representation of future expenses or returns. Actual expenses may be higher or lower than those assumed. Moreover, the Trust’s actual rate of return may be higher or lower than the hypothetical 5% return shown in the example. | |||
| Acquired Fund Fees and Expenses, Note [Text Block] | SUMMARY OF TRUST EXPENSES The following table contains information about the costs and expenses that Common Shareholders will bear directly or indirectly. The table is based on the capital structure of the Trust as of September 30, 2023 (except as noted below) after giving effect to the anticipated net proceeds of the Common Shares offered pursuant to this Prospectus Supplement and the accompanying Prospectus and assuming the Trust incurs the estimated offering expenses. If the Trust issues fewer than all of the Common Shares available for sale pursuant to the Distribution Agreement and the net proceeds to the Trust are less, all other things being equal, the total annual expenses shown would increase. The purpose of the table and the example below is to help you understand the fees and expenses that you, as a holder of Common Shares, would bear directly or indirectly. Shareholder Transaction Expenses Sales load paid by Common Shareholders (as a percentage of offering price) 1.00 % (1) Offering expenses borne by the Trust (as a percentage of offering price) 0.11 % (2) Dividend Reinvestment Plan fees None (3) As a Percentage Annual Expenses Management fees (4) 2.85 % Leverage expense Interest payment on borrowed funds (5) 3.21 % Preferred Share dividends (6) 0.89 % Other expenses Investor Support and Secondary Market Support Services Fee (7) 0.33 % Other (8)(9) 0.55 % Total annual expenses 7.83 % | |||
| Financial Highlights [Abstract] | ||||
| Senior Securities, Note [Text Block] | SENIOR SECURITIES The information contained under the heading “Notes to Financial Statements —10. Senior Securities” in the Trust’s Annual Report is incorporated herein by reference. | |||
| General Description of Registrant [Abstract] | ||||
| Investment Objectives and Practices [Text Block] | Investment Objective. | |||
| Risk Factors [Table Text Block] | RISKS An investment in the Trust is subject to investment risk, including the possible loss of your entire investment. Investors should consider the specific risk factors and special considerations associated with investing in the Trust. See “Risks” beginning on page 2 of the accompanying Prospectus, and “Risks” in the Trust’s most recent Annual Report on Form N -CSR | |||
| Share Price [Table Text Block] | MARKET AND NET ASSET VALUE INFORMATION The Trust’s currently outstanding Common Shares are, and the Common Shares offered pursuant to this Prospectus Supplement and the accompanying Prospectus will be, subject to notice of issuance, listed on the NYSE. The Common Shares commenced trading on the NYSE on September 27, 2017. The Common Shares have traded both at a premium and at a discount to the Trust’s NAV per Common Share. Although the Common Shares recently have traded at a premium to NAV, there can be no assurance that this will continue after the offering nor that the Common Shares will not trade at a discount in the future. Shares of closed -end Market Price Corresponding Corresponding Fiscal Quarter Ended High Low High Low High Low December 31, 2023 $ 7.24 $ 6.48 $ 6.89 $ 6.55 5.08 % -1.07 % March 31, 2024 $ 7.73 $ 7.01 $ 6.92 $ 6.90 11.71 % 1.59 % As of May 31, 2024, 59,891,284 Common Shares were outstanding. The last reported sales price, NAV per Common Share and percentage premium to NAV per Common Share on May 31, 2024 was $7.09, $6.95 and 2.01%, respectively. The Trust cannot predict whether its Common Shares will trade in the future at a premium to or discount from NAV, or the level of any premium or discount. Shares of closed -end | |||
| Lowest Price or Bid | $ 7.01 | $ 6.48 | ||
| Highest Price or Bid | 7.73 | 7.24 | ||
| Lowest Price or Bid, NAV | 6.9 | 6.55 | ||
| Highest Price or Bid, NAV | $ 6.92 | $ 6.89 | ||
| Highest Price or Bid, Premium (Discount) to NAV [Percent] | 11.71% | 5.08% | ||
| Lowest Price or Bid, Premium (Discount) to NAV [Percent] | 1.59% | 1.07% | ||
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] | ||||
| Capital Stock [Table Text Block] | DESCRIPTION OF CAPITAL STRUCTURE | |||
| Long Term Debt, Title [Text Block] | CAPITALIZATION In accordance with the terms of the Distribution Agreement, the Trust may offer and sell up to 15,000,000 Common Shares, from time to time, through the Distributor (or the Sub -Placement The following table sets forth the Trust’s capitalization at September 30, 2023: (i) (ii) -the-market (iii) Actual As Adjusted As Further Indebtedness: Aggregate Principal Amount of Borrowings $ 150,350,000 $ 194,050,000 $ 194,050,000 Preferred Shares: 6.50% Series 2026 Preferred Shares, par value $0.01 per share; 1,596,000 shares issued and outstanding $ 39,900,000 $ 39,900,000 $ 39,000,000 6.00% Series 2029 Convertible Preferred Shares, par value $0.01 per share; 800,000 shares issued and outstanding (actual); 0 shares issued and outstanding (as adjusted and as further adjusted) $ 20,000,000 — — 6.95% 2029 Convertible Preferred Shares, par value $0.01 per share; 0 shares issued and outstanding (actual); 1,200,000 shares issued and outstanding (as adjusted and as further adjusted) — $ 30,000,000 $ 30,000,000 Common Shareholder’s Equity: Common Shares, par value $0.01 per share; 44,743,181 shares issued and outstanding (actual), 59,891,284 shares issued and outstanding (as adjusted), 74,891,284 shares issued and outstanding (as further adjusted) Paid-in capital $ 350,935,380 $ 436,956,161 $ 542,127,661 Total distributable earnings (52,654,972 ) (52,654,972 ) (52,654,972 ) Net Assets $ 298,280,408 $ 384,301,189 $ 489,472,689 | |||
| Other Securities [Table Text Block] | DESCRIPTION OF PREFERRED SHARES The Trust’s Governing Documents provide that the Board of Trustees may authorize and issue Preferred Shares with rights as determined by the Board of Trustees, by action of the Board of Trustees without prior approval of the holders of the Common Shares. Under the 1940 Act, the Trust may not issue Preferred Shares unless, immediately after such issuance, it has an “asset coverage” of at least 200% of the liquidation value of the outstanding Preferred Shares (i.e., such liquidation value may not exceed 50% of the value of the Trust’s total assets). For these purposes, “asset coverage” means the ratio of (i) total assets less all liabilities and indebtedness not represented by “senior securities” to (ii) the amount of “senior securities representing indebtedness” plus the “involuntary liquidation preference” of the Preferred Shares. “Senior security” generally means any bond, note, or similar security evidencing indebtedness and any class of shares having priority over any other class as to distribution of assets or payment of dividends. “Senior security representing indebtedness” means any “senior security” other than equity shares. The “involuntary liquidation preference” of the Preferred Shares is the amount that holders of Preferred Shares would be entitled to receive in the event of an involuntary liquidation of the Trust in preference to the Common Shares. While Preferred Shares are outstanding, two of the Trust’s Trustees will be elected by the holders of Preferred Shares, voting separately as a class. The remaining Trustees of the Trust will be elected by Common Shareholders and Preferred Shares voting together as a single class. In the unlikely event the Trust failed to pay dividends on Preferred Shares for two years, Preferred Shares would be entitled to elect a majority of the Trustees of the Trust. For any series of Preferred Shares issued by the Trust, our Board of Trustees will determine and the Prospectus Supplement relating to such issuance, which will accompany this Prospectus, will describe: • • • • • • • • • • All Preferred Shares that the Trust may issue will be identical and of equal rank except as to the particular terms thereof that may be fixed by the Board of Trustees, and all shares of each series of Preferred Shares will be identical and of equal rank except as to the dates from which cumulative dividends thereon will be cumulative. Preferred Share investors should read the applicable accompanying prospectus supplement, as well as the statement of preferences that contains the terms of the applicable series of preferred stock. DESCRIPTION OF SUBSCRIPTION RIGHTS The Trust may issue subscription rights to holders of (i) Common Shares to purchase Common Shares and/or Preferred Shares or (ii) Preferred Shares to purchase Preferred Shares. Subscription rights may be issued independently or together with any other offered security and may or may not be transferable by the person purchasing or receiving the subscription rights. In connection with a subscription rights offering to holders of Common Shares and/or Preferred Shares, the Trust would distribute certificates evidencing the subscription rights and a Prospectus Supplement to our common or preferred shareholders as of the record date that we set for determining the shareholders eligible to receive subscription rights in such subscription rights offering. For complete terms of the subscription rights, please refer to the actual terms of such subscription rights which will be set forth in the subscription rights agreement relating to such subscription rights and described in the Prospectus Supplement. The Trust generally may not issue and sell Common Shares at a public offering price (less underwriting commissions and discounts) less than the net asset value of the Trust’s Common Shares (calculated within 48 hours of the pricing of such offering). However, pursuant to Section 23(b) of the 1940 Act, the Trust may issue and sell Common Shares at a public offering price less than the net asset value of the Trust’s Common Shares in connection with the issuance of subscription rights to holders of Common Shares to purchase additional Common Shares. See “Description of Capital Structure.” The applicable Prospectus Supplement, which would accompany this Prospectus, would describe the following terms of subscription rights in respect of which this Prospectus is being delivered: • • • • • • • • • -subscription -subscription • • • Exercise of Subscription Rights Each subscription right would entitle the holder of the subscription right to purchase for cash such number of shares at such exercise price as in each case is set forth in, or be determinable as set forth in the Prospectus Supplement relating to the subscription rights offered thereby. Subscription rights would be exercisable at any time up to the close of business on the expiration date for such subscription rights set forth in the Prospectus Supplement. After the close of business on the expiration date, all unexercised subscription rights would become void. Upon expiration of the rights offering and the receipt of payment and the subscription rights certificate properly completed and duly executed at the corporate trust office of the subscription rights agent or any other office indicated in the Prospectus Supplement, the Trust would issue, as soon as practicable, the shares purchased as a result of such exercise. To the extent permissible under applicable law, the Trust may determine to offer any unsubscribed offered securities directly to persons other than shareholders, to or through agents, underwriters or dealers or through a combination of such methods, as set forth in the applicable Prospectus Supplement. Transferable Rights Offering Subscription rights issued by the Trust may be transferrable. The distribution to shareholders of transferable rights, which may themselves have intrinsic value, also will afford non -participating -for-3 1 3 | |||
| Warrants or Rights, Called Title | SUBSCRIPTION RIGHTS | |||
| Outstanding Securities [Table Text Block] | Title of Class Amount Amount Amount Common Shares of Beneficial Interest Unlimited None 26,674,283 6.50% Series 2026 Term Preferred Shares (Liquidation Preference $25.00) Unlimited None 1,596,000 | |||
| Outstanding Security, Held [Shares] | ||||
| Outstanding Security, Not Held [Shares] | 1,596,000 | |||
| Convertible Common Stock [Member] | ||||
| Capital Stock, Long-Term Debt, and Other Securities [Abstract] | ||||
| Outstanding Security, Held [Shares] | ||||
| Outstanding Security, Not Held [Shares] | 26,674,283 | |||
| [1]Represents the estimated commission with respect to the Common Shares being sold under this Prospectus Supplement and the accompanying Prospectus. There is no guarantee that there will be any sales of Common Shares under this Prospectus Supplement and the accompanying Prospectus. Actual sales of Common Shares under this Prospectus Supplement and the accompanying Prospectus, if any, may be less than as set forth under “Capitalization” below. In addition, the price per Common Share of any such sale may be greater or less than the price set forth under “Capitalization” below, depending on market price of the Common Shares at the time of any such sale.[2]Assumes the sale of 15,000,000 Common Shares at a sales price per Common Share of $7.09, which represents the last reported sales price of the Common Shares on the NYSE on May 31, 2024. There is no guarantee that there will be any sales of Common Shares under this Prospectus Supplement and the accompanying Prospectus. Actual sales, if any, of the Common Shares under this Prospectus Supplement and the accompanying Prospectus may be at a price greater or less than $7.09 per Common Share, depending on the market price of the Common Shares at the time of any such sale.[3]The Trust pays the Adviser an annual management fee, payable monthly in arrears, in an amount equal to 1.70% of the Trust’s average daily Managed Assets. Common Shareholders bear the portion of the investment advisory fee attributable to the assets purchased with the proceeds of leverage, which means that Common Shareholders effectively bear the entire management fee. The contractual management fee rate of 1.70% of the Trust’s Managed Assets represents an effective management fee rate of 2.85% of net assets attributable to Common Shares, assuming Financial Leverage of 38.85% of the Trust’s Managed Assets (the Trust’s outstanding Financial Leverage as of May 31, 2024). The Adviser pays to the Sub-Adviser a sub-advisory fee out of the management fee received by the Adviser. (6) | ||||