Non-traded business development company MSC Income Fund Inc. announced a flurry of activity last week as it moves toward potentially publicly listing its common stock on a national securities exchange.
For one, the BDC, formerly known as HMS Income Fund, scheduled an anticipated special meeting of stockholders for Dec. 2, 2024. At the meeting, it will consider a series of proposals it believes will position it to go public if and when market conditions make it desirable to do so and it is otherwise in the company’s best interest. Related, its board of directors unanimously approved suspending its share repurchase program in case of a listing and the opportunity for enhanced liquidity a listing would be expected to provide the BDC’s shareholders.
The board will be asking stockholders to vote on the proposals previously reported by The DI Wire, which include: amending the company charter to limit the transferability of outstanding shares in the 365 days after listing; conforming provisions of the charter to more closely resemble the charters of other BDCs whose securities are listed and publicly traded; amending its advisory and administrative services agreement to reduce the annual base management fees payable by the company to the adviser; reducing and resetting the incentive fee on capital gains payable to the adviser; and authorizing flexibility for the company to offer and sell shares at a price below net asset value per share, among other amendments.
Also last week, the BDC’s board declared a quarterly cash dividend of $0.18 per share, payable on Jan. 31, 2025, to shareholders of record as of Dec. 31, 2024.
Finally, the company announced an amendment to its senior secured revolving credit facility, which provides extensions of the revolving period to November 2028 and the final maturity date to May 2029. The interest rate for outstanding borrowings was also decreased to a secured overnight financing rate plus 2.05% (from 2.50%), or the base rate plus 1.05% (from 1.40%). In addition, the BDC continues to maintain two, one-year extension options under the amended credit facility, which could extend the revolving period and final maturity for up to two additional years, subject to certain conditions and lender approval.
Launched in 2012, the fund was previously advised by a Hines affiliate and sub-advised by an affiliate of Main Street Capital Corporation, a publicly traded BDC. In fall 2020, shareholders approved an advisory agreement to turn over sole advisement to Main Street. Now externally managed by a wholly owned subsidiary of Main Street, the BDC specializes in providing long-term debt and equity capital to lower middle-market and middle-market companies. Its portfolio investments have typically supported management buyouts, recapitalizations, growth financings, refinancings, and acquisitions of companies that operate in diverse industry sectors.
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