Street Calls of the Week
Horizon Technology Finance Corporation (NASDAQ:HRZN) announced Thursday it has entered into a note purchase agreement for the issuance and sale of $40 million aggregate principal amount of 5.50% Convertible Notes due 2030. The transaction was disclosed in a press release statement and detailed in a filing with the U.S. Securities and Exchange Commission. The company, currently trading near its 52-week low of $6.77 with a market capitalization of $293.57 million, has seen its stock decline about 27% over the past year. According to InvestingPro data, the company faces some financial challenges, with short-term obligations exceeding liquid assets.
The company reported net proceeds of approximately $36.6 million before expenses from the sale. Horizon Technology Finance stated it intends to use the funds for general corporate purposes, which may include repaying existing debt. This debt management strategy comes at a crucial time, as InvestingPro analysis shows the company’s total debt stands at $425.14 million, with a concerning current ratio of 0.56.
The Convertible Notes mature on September 4, 2030, unless earlier converted or repurchased under their terms. They bear interest at a rate of 5.50% per year, payable monthly in arrears beginning September 30, 2025.
The notes are unsecured obligations of the company and rank equally with Horizon’s existing and future unsecured debt that is not subordinated. They are senior to any future subordinated indebtedness, effectively junior to secured debt to the extent of the value of collateral, and structurally junior to liabilities of the company’s subsidiaries. No sinking fund is provided for the notes.
Horizon may redeem the notes, in whole or in part, at its option at any time on or after March 4, 2025, at 100% of the principal amount plus accrued but unpaid interest.
Holders of the Convertible Notes have the right to convert their notes into shares of Horizon Technology Finance common stock on or after October 4, 2025, and before the maturity date. The conversion price will be the greater of the volume-weighted average closing sale price for the five trading days before the conversion date or the company’s most recently reported net asset value per share.
Conversion rights are subject to a limitation preventing any holder from owning more than 4.99% of the company’s outstanding shares after conversion.
The information in this article is based on a press release statement and details from the company’s filing with the Securities and Exchange Commission.
In other recent news, Horizon Technology Finance Corporation reported its second-quarter 2025 earnings, meeting analysts’ expectations with an earnings per share (EPS) of $0.28. The company also exceeded revenue forecasts, reporting $24.52 million compared to the expected $22.27 million, marking a 10.1% surprise. Despite this positive revenue outcome, the stock experienced a decline in post-market trading, which may be attributed to broader market conditions or uncertainties surrounding merger plans. These developments come amidst Horizon Technology Finance’s ongoing plans for a merger, which are seen as a significant factor in shaping investor sentiment. The company’s financial performance and strategic moves remain a focal point for analysts and investors alike.
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