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Fidus Investment Corporation (NASDAQ:FDUS), a business development company with a market capitalization of $715.6 million and an attractive dividend yield of 10.9%, has entered into a definitive agreement with U.S. Bank Trust Company, National Association as trustee, to issue $100 million of 6.750% notes due March 19, 2030. The announcement was made today and marks the company’s latest financial maneuver aimed at optimizing its capital structure. According to InvestingPro data, the company maintains strong financial health with liquid assets exceeding short-term obligations.
The newly issued notes will carry an interest rate of 6.750% per annum, with semi-annual payments slated for March 19 and September 19 each year, starting September 19, 2025. These notes are unsecured and will rank equally with Fidus’s existing and future unsecured, unsubordinated debt. The notes are senior to any potential future preferred stock issuances and to any future subordinated debt but are subordinate to any existing or future secured debt. With a current total debt of $474.89 million and a healthy current ratio of 2.19, InvestingPro analysis indicates the company maintains strong liquidity to service its debt obligations.
Proceeds from the note offering are intended to repay part of the outstanding borrowings under Fidus’s senior secured revolving credit facility with ING Capital LLC. However, the company retains the flexibility to reborrow under the credit facility for investments in line with its strategic objectives or for general corporate purposes.
Fidus has the option to redeem the notes before the maturity date, with the price dependent on certain conditions, including prevailing Treasury rates. Furthermore, if a Change of Control Repurchase Event occurs, note holders will have the right to require Fidus to repurchase their notes at 100% of the principal amount, plus accrued interest.
The company has outlined several covenants in the indenture, including adherence to specific sections of the Investment Company Act of 1940, and has committed to providing financial information to note holders and the trustee if it ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934.
The offering was made through a registered public offering under the Securities Act of 1933, as detailed in Fidus’s registration statement and related prospectus supplements filed with the SEC earlier this month.
This transaction, which closed today, is part of Fidus Investment Corporation’s broader strategy to manage its debt portfolio effectively. The company has demonstrated solid financial performance with revenue growth of 12.33% and trades at a P/E ratio of 8.82. The information in this article is based on a press release statement. For comprehensive analysis and additional insights, including more than 30 key financial metrics and exclusive ProTips, visit InvestingPro.
In other recent news, Fidus Investment Corporation reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $0.54, slightly above the forecasted $0.5364. The company also reported revenue of $37.46 million, exceeding the anticipated $36.92 million. Fidus announced a $100 million public offering of 6.75% notes due in 2030, with plans to use the proceeds to repay part of its outstanding borrowings. Additionally, Keefe, Bruyette & Woods maintained its Market Perform rating on Fidus, with a price target of $21.00, noting the company’s growth potential despite a minor increase in non-accruals.
The company disclosed the sale of two investments in early 2025, expected to yield approximately $11 million in realized gains. Fidus’s leverage ratio remains low at 0.7x, providing significant capacity for future expansion. The firm’s strategy of monetizing equity investments continues to be effective, contributing to its stable portfolio growth. The company’s portfolio fair value remained stable at $1.1 billion, with a focus on first lien investments. Fidus announced a dividend of $0.54 per share for the first quarter of 2025, reflecting its commitment to returning value to shareholders.
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