Gladstone Capital to fund debt investments via $50 million stock sale

By Toni Weeks

San Luis Obispo, Calif., Feb. 27 – Gladstone Capital Corp. said it will sell up to $50 million of its common stock to finance its investments in private companies, according to a 497 filing with the Securities and Exchange Commission.

The closed-end, non-diversified management investment company seeks to achieve and grow current income by investing in debt securities of establishes businesses and, as a secondary objective, provide stockholders with long-term capital appreciation.

The company aims to maintain a portfolio allocation of about 95% debt investments and 5% equity investments. Investments will consist of (i) senior debt securities, including senior loans, senior term loans, lines of credit and senior notes, (ii) senior subordinated debt securities, specifically senior subordinated loans and senior subordinated notes, (iii) junior subordinated debt securities, such as subordinated loans, subordinated notes and mezzanine loans and (iv) preferred and common equity and equivalents.

David Gladstone, Terry Lee Brubaker and Robert L. Marcotte comprise the portfolio management team.

The company will sell shares through agents KeyBanc Capital Markets Inc and Cantor Fitzgerald & Co.

The last reported sale price of the company’s common stock (Nasdaq: GLAD) was $6.85 per share on Feb. 26.

Proceeds will be used to repay a portion of amounts outstanding under Gladstone’s credit facility, to fund new investment opportunities and for other general corporate purposes.

Stocholder expenses include a 2% sales load. Total annual expenses of 15.23% include management fees of 5.75%.

McLean, Va.-based Gladstone Management Corp. serves as the investment adviser.

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