XAI Octagon trust to sell $71.5 million in preferred shares

CHICAGO - XAI Octagon Floating Rate & Alternative Income Trust (NYSE:XFLT) announced Wednesday it has reached an agreement with institutional investors to sell 7,300,000 shares of its 5.92% Series A Mandatory Redeemable Preferred Shares.

The trust expects to receive approximately $71.5 million in net proceeds from the sale, with closings scheduled on or before December 18, 2025. The preferred shares, which have a liquidation preference of $10.00 per share, will mature on January 31, 2031.

The preferred shares will pay quarterly dividends at a fixed annual rate of 5.92% of the liquidation preference, equivalent to $0.5920 per share annually. The trust will be required to redeem all outstanding shares on the maturity date. According to InvestingPro, XFLT has maintained dividend payments for 9 consecutive years, with the common shares currently yielding an impressive 15.85%.

According to the press release, the trust plans to use the proceeds to refinance existing leverage and for general corporate purposes. Moelis & Company LLC served as the exclusive placement agent for the offering.

The trust maintains the option to redeem the preferred shares early, subject to a make-whole premium. The shares will not be listed on any exchange and can only be transferred under exemptions to the Securities Act of 1933 or in certain other circumstances.

XAI Investments LLC serves as the trust’s investment adviser, while Octagon Credit Investors, LLC, a 30+ year old firm managing $33.0 billion in below-investment grade corporate credit investments, acts as the sub-adviser.

The transaction remains subject to completion of legal documentation and other standard closing conditions. InvestingPro analysis shows XFLT maintains a GREAT financial health score of 3.51, suggesting strong operational stability. Subscribers can access additional exclusive insights and metrics about XFLT’s financial performance.

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