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Re: Solar Senior Capital (SUNS) Commences Offering - its complexThe actual public offering price is $16.40 (what SUNS would normally be getting). But management is kicking in dollars so that SUNS gets $16.76 - which was the Q2-16 ending NAV. And - "Upon completion of this offering, for the quarterly periods ended September 30, 2016 to June 30, 2017 (the "Waiver Period"), Solar Capital Partners has agreed to voluntarily waive a portion or all of the incentive fees, and to the extent necessary a portion or all of the base management fees, that Solar Capital Partners would otherwise be entitled to receive in order for Solar Senior Capital to earn net investment income sufficient to maintain Solar Senior Capital's current level of distributions." Why was this subsidizing done? So the NAV would not take a big hit. Prior to this offering SUNS was under performing GBDC and PFLT (the other two low PWAY BDCs) when it comes to NAV. If this not had been a subsidized offering - the NAV under performance would have become even worse. A second reason this subsidizing was done - Investors remember how FSFR was (putting it overly politely) 'messed with' by a secondary offering in 2014. Why would Solar Capital do the subsidizing? The offering increases AUM - asset under management. Thus over time - it increases the base management fee it generates from SUNS. Why subsidize the offering PLUS potentially waive future fees? Because the message of "never buy an uncovered dividend' is growing in acceptance. |
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Msg # | Subject | Author | Recs | Date Posted |
2476 | Re: Solar Senior Capital (SUNS) Commences Offering - its complex | rlp2451 | 1 | 9/8/2016 11:32:02 AM |