8-K: NXG Cushing Midstream Energy Fund Launches Rights Offering

NXG Cushing Midstream Energy Fund has commenced a transferable rights offering to subscribe for up to 1,555,870 common shares, allowing existing shareholders to purchase one new share for every three rights held.

Summary

• NXG Cushing Midstream Energy Fund (the "Fund") commenced a transferable rights offering (the "Offer") on November 17, 2025.
• The Offer allows holders of record as of November 17, 2025, to subscribe for up to 1,555,870 common shares of beneficial interest.
• Shareholders will receive one right for each outstanding common share owned.
• Holders can purchase one new common share for every three rights held (1-for-3).
• Record Date Shareholders who fully exercise their rights can subscribe for additional common shares through an over-subscription privilege, subject to limitations and allotment.
• Shareholders owning fewer than three common shares on the Record Date can subscribe for one full common share.
• The estimated subscription price is $40.24 per share. The final subscription price will be 95% of the average of the last reported sale price of a common share on the NYSE on the expiration date and the four preceding trading days, or 92.5% of the net asset value (NAV) per common share at the close of trading on the expiration date, whichever is lower.
• UBS Securities LLC is acting as the dealer manager for the Offer.
• Equiniti Trust Company, LLC is the subscription agent, and EQ Fund Solutions, LLC is the information agent.

Sentiment

Score: 6

Explanation: The rights offering provides an opportunity for the Fund to raise capital and for existing shareholders to maintain their stake or increase it at a potential discount. However, it also introduces potential dilution for non-participating shareholders and involves associated fees. The overall sentiment is neutral to slightly positive, as it's a standard capital-raising mechanism for closed-end funds, but the discount and fees can be a slight negative.

Positives

• Provides existing shareholders with the opportunity to maintain their proportional ownership and potentially acquire additional shares at a discount through the over-subscription privilege.
• The capital raise will provide the Fund with additional funds for investment, potentially increasing assets under management and investment capacity.
• The rights are transferable, offering flexibility to shareholders.

Negatives

• Non-exercising shareholders will experience dilution of their ownership percentage.
• The offering involves a sales load on the subscription price.
• Potential for downward pressure on the share price during the offering period due to the issuance of new shares and the discount pricing mechanism.

Risks

• The Dealer Manager's obligations are subject to various conditions, including no material adverse change in the Fund's condition, business, management, properties, net worth, or results of operations.
• Market conditions, such as suspension or material limitation in trading on the NYSE, a general moratorium on commercial banking activities, or material adverse changes in financial markets, could lead to termination of the Dealer Manager Agreement.
• Acts of terrorism, outbreak of hostilities, national emergency, or other calamities could also lead to termination of the Dealer Manager Agreement.
• Enforceability of obligations may be limited by U.S. bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other laws affecting creditors' rights, and general principles of equity.
• Enforcement of rights to indemnity and contribution may be limited by federal or state securities laws or principles of public policy.
• The Fund is not liable for any settlement of a legal proceeding effected without its written consent, which could create a conflict if the indemnified party settles without consent.
• The Fund and Investment Manager disclaim responsibility for statements in the Registration Statement or Offering Materials made in reliance on information furnished by the Dealer Manager.

Future Outlook

The Fund intends to direct the investment of the proceeds from the Offer in a manner that complies with the requirements of Subchapter M of the Code and the Investment Company Act, and to continue to qualify as a regulated investment company.

Management Comments

• The Fund intends to direct the investment of the proceeds of the Offer described in the Registration Statement and the Prospectus in such a manner as to comply, with the requirements of Subchapter M of the Code, and intends to continue to qualify as a regulated investment company under Subchapter M of the Code.
• The Fund has complied, and will direct the investment of the proceeds of the Offer described in the Registration Statement and the Prospectus in such a manner as to continue to comply, with the asset coverage requirements of the Investment Company Act.

Industry Context

Rights offerings are a common method for closed-end funds to raise capital, often at a discount to market price or NAV, to increase assets under management and potentially improve liquidity. This allows existing shareholders to participate and avoid dilution. The structure with a dealer manager, subscription agent, and information agent is standard for such offerings.

Corporate Governance

Related Party Transactions

• Cushing Asset Management, LP, d/b/a NXG Investment Management (the "Investment Manager"), is a party to the Dealer Manager Agreement and the Investment Advisory Agreement with the Fund. The Investment Manager is a related party to the Fund.

Stakeholder Impact

• Shareholders: Existing shareholders have the opportunity to subscribe for additional shares at a discount, potentially increasing their investment or maintaining their proportional ownership. Non-participating shareholders will experience dilution.
• Fund: The Fund will raise additional capital, which can be used for new investments, potentially increasing assets under management and investment capacity.
• Dealer Manager (UBS Securities LLC): Will earn fees (3.50% of aggregate subscription price) for its services in managing the offering.
• Selling Group Members and Soliciting Dealers: Will earn reallowed fees (2.00% and 0.50% respectively) for their efforts in soliciting exercises of rights.

Next Steps

• The subscription period for the rights offering will continue until the Expiration Date, currently December 11, 2025.
• The Fund will issue shares upon the exercise of rights and payment of the subscription price.
• The Fund will apply the net proceeds from the Offer in accordance with its stated use of proceeds and regulatory requirements.

Key Dates

Recommendation

The rights offering is a capital-raising event for the Fund, allowing it to potentially expand its asset base. For existing shareholders, it presents an opportunity to subscribe for additional shares at a discount, which can be beneficial if they wish to maintain or increase their stake. However, non-participating shareholders will face dilution. The offering itself doesn't fundamentally change the investment thesis of the fund, but rather provides a mechanism for growth. Investors should evaluate their individual portfolio strategy, the Fund's underlying performance, and the attractiveness of the subscription price relative to the market price and NAV before deciding to exercise their rights or sell them. Given the nature of a closed-end fund rights offering, a "hold" recommendation is appropriate for those already invested, with a caveat to assess participation based on personal financial goals and market conditions.

Keywords

Rights Offering, Common Shares, Closed-End Fund, Capital Raise, Subscription Rights, Over-Subscription Privilege, NXG Cushing Midstream Energy Fund, SRV, NYSE, Investment Company, Dealer Manager Agreement, SEC Filing, Form 8-K, Equity Offering, Dilution