Gladstone Capital prices $130 million convertible notes offering

Gladstone Capital Corporation (NASDAQ: GLAD) priced a public offering of $130 million in convertible notes due 2030, the company announced September 9. The offering was increased from the previously announced $110 million.

The 5.875% convertible notes were priced at 98.5% of principal amount. The company granted underwriters a 30-day option to purchase an additional $19.5 million in notes to cover overallotments. The notes are expected to be delivered September 12, subject to customary closing conditions.

The notes will be unsecured obligations paying interest semi-annually on April 1 and October 1, beginning April 1, 2026. They mature October 1, 2030, unless earlier converted, redeemed or repurchased.

Noteholders may convert at any time prior to maturity. The initial conversion rate is 38.4394 shares per $1,000 principal amount, equivalent to a conversion price of approximately $26.02 per share. This represents a 10% premium over the company's stock price on September 9.

The company cannot redeem the notes before October 6, 2028. After that date, redemption is permitted if the stock price reaches at least 130% of the conversion price for 20 trading days within any 30-day period.

Gladstone Capital estimates net proceeds of approximately $123.7 million, or $142.3 million if the overallotment option is fully exercised, after deducting fees and expenses. The company plans to use proceeds to repay part of its revolving credit facility and for general corporate purposes. It intends to reborrow under the credit facility to redeem all or part of its outstanding 5.125% notes due 2026 and 7.75% notes due 2028.

Oppenheimer & Co. Inc. serves as sole book-running manager for the offering, which is conducted under the company's effective shelf registration statement filed with the SEC.

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