8-K: Runway Growth Finance Corp. Secures $107 Million in Senior Notes

Runway Growth Finance Corp. has entered into a Master Note Purchase Agreement to issue $107 million in 7.51% Series 2025A Senior Notes due April 7, 2028, in a private placement to institutional investors.

Summary

• Runway Growth Finance Corp. has entered into a Master Note Purchase Agreement on April 7, 2025.
• The agreement governs the issuance of 7.51% Series 2025A Senior Notes due April 7, 2028, with an aggregate principal amount of $107.0 million.
• The notes are being privately placed with institutional investors.
• The company intends to use the net proceeds to repay outstanding indebtedness, make investments, and for general corporate purposes.
• Interest on the Series 2025A Notes will be due semiannually on April 7 and October 7, beginning on October 7, 2025.
• The company may prepay all or part of the notes on or after October 7, 2027, at 100% of the principal amount plus accrued interest, subject to certain conditions.
• The notes rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the company.
• The Series 2025A Notes were offered in reliance on Section 4(a)(2) of the Securities Act of 1933.

Sentiment

Score: 7

Explanation: The announcement is fairly standard for a BDC, indicating a routine capital raise. The terms of the notes appear reasonable, and the intended use of proceeds is typical. The sentiment is moderately positive as it provides the company with additional financial flexibility.

Positives

• The issuance provides Runway Growth Finance Corp. with additional capital.
• The proceeds will be used to repay existing debt, fund investments, and support general corporate activities.
• The notes have a fixed interest rate, providing predictability for the company's interest expense.
• The company has the option to prepay the notes, offering flexibility in managing its debt.

Negatives

• The company is obligated to offer to repay the Series 2025A Notes at par if certain change in control events occur.
• The Note Purchase Agreement contains customary terms and conditions for senior notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of the Company's status as a business development company within the meaning of the Investment Company Act of 1940, as amended, and a regulated investment company under the Internal Revenue Code of 1986, as amended, minimum shareholders equity, minimum asset coverage ratio and maximum secured debt ratio.

Risks

• The company's obligations under the Note Purchase Agreement are general unsecured obligations.
• The notes are subject to customary events of default, which could trigger acceleration of the debt.
• Changes in control could trigger a mandatory repayment of the notes.
• If at any time a Below Investment Grade Event occurs, then the Notes shall bear interest at the Adjusted Interest Rate provided that, such Adjusted Interest Rate shall not apply to the Notes held by holders who accepted an offer of prepayment pursuant to Section 8.9 with respect to such Notes and such Below Investment Grade Event

Future Outlook

The company intends to use the net proceeds from the offering of the Series 2025A Notes to repay outstanding indebtedness, make investments in accordance with the Company's investment objective and investment strategy and for other general corporate purposes of the Company.

Industry Context

This announcement reflects a common financing strategy for business development companies (BDCs) to raise capital for investment and operational needs. BDCs often utilize debt offerings to leverage their investment portfolios and generate returns for shareholders.

Comparison to Industry Standards

• Comparable BDCs, such as Ares Capital Corporation (ARCC) and Main Street Capital Corporation (MAIN), frequently issue senior notes to diversify their funding sources.
• The interest rate of 7.51% is within the typical range for senior notes issued by BDCs, depending on market conditions and the company's credit profile.
• The maturity date of April 7, 2028, is a standard term for senior notes in the BDC sector.
• The private placement structure is also a common method for BDCs to access capital from institutional investors.

Stakeholder Impact

• Shareholders: The capital raise could potentially enhance the company's investment capacity and improve returns.
• Employees: The additional funding may support the company's growth and stability.
• Customers: The investments made with the proceeds could benefit portfolio companies.
• Creditors: The repayment of outstanding indebtedness will improve the company's financial position.

Next Steps

• The company will complete the private placement of the Series 2025A Notes.
• Runway Growth Finance Corp. will use the proceeds to repay debt, make investments, and for general corporate purposes.
• The company will make semiannual interest payments on the notes starting October 7, 2025.

Key Dates

Keywords

senior notes, private placement, debt financing, institutional investors, Runway Growth Finance Corp., notes