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Business Development Companies
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New Mountain Will Seek Shareholder Approval for Reduced Asset CoverageNMFC) (the "Company", “NMFC”, "we", "us" or "our") today announced that its board of directors (the “Board”) has recommended that shareholders approve a proposal to reduce the Company’s required minimum asset coverage ratio applicable to business development companies under the Investment Company Act of 1940, as amended (the “1940 Act”), from 200% to 150%. The Company expects to hold a Special Meeting in June 2018 for its shareholders to vote on this proposal." data-reactid="12">New Mountain Finance Corporation (NMFC) announced (on 4/18/18) that its board of directors has recommended that shareholders approve a proposal to reduce the Company’s required minimum asset coverage ratio applicable to business development companies under the Investment Company Act of 1940, as amended (the “1940 Act”), from 200% to 150%. The Company expects to hold a Special Meeting in June 2018 for its shareholders to vote on this proposal. In addition, the Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the application of the modified asset coverage requirements to be effective one year after such Board approval and as a result, the Company’s asset coverage requirements for senior securities will be changed from 200% to 150%, effective April 12, 2019. However, if the stockholder proposal is passed at the Special Meeting, the Company would be subject to the modified asset coverage requirements the day after the Special Meeting. “We believe the modified asset coverage requirement will give us another powerful tool to enable us to earn our dividend in the safest possible manner,” said Robert Hamwee, Chief Executive Officer of NMFC. “We will continue to stay focused on defensive growth companies, but with the passing of this proposal, we would expand our ability to invest in a wider range of positions in the capital structure of those companies.” John Kline, President and Chief Operating Officer of NMFC added, “If this proposal passes, we expect our investment mix to shift somewhat towards more senior assets. Coupled with the current fee waiver mechanics that we have had in place regarding management fees paid on these senior assets, we expect that the overall management fee percentage would be lower, on average.” NMFC data on debt:
As time has passed - the interest expense to TII ratio has significantly increased (that's a bad thing). As time has passed - the average annual cost of debt has risen (another bad thing). At least the current annualized cost of debt is under 5% (a good thing). |
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