XAI Octagon greenshoe lifts 6.5% five-year preferreds to $29.9 million

By Marisa Wong

Los Angeles, April 8 – The underwriters of XAI Octagon Floating Rate & Alternative Income Term Trust’s recent offering of 6.5% series 2026 term preferred shares exercised their over-allotment option in full and purchased an additional 156,000 preferreds, according to an 8-K filing with the Securities and Exchange Commission.

XAI Octagon priced the original 1.04 million shares at par of $25 on March 23. The greenshoe was exercised on April 5 and settled on April 7.

Ladenburg Thalmann & Co. Inc., B. Riley Securities Inc., National Securities Corp., and Incapital LLC acted as bookrunners.

The preferreds are non-callable for two years and then are provisionally callable at par plus accumulated but unpaid dividends, according to a previous 424B2 filing with the SEC.

Dividends are payable every Jan. 31, April 30, July 31 and Oct. 31, beginning July 31, 2021.

If the trust fails to maintain an asset coverage ratio of at least 200%, it will redeem a portion of the outstanding preferreds in an amount at least equal to the amount necessary to meet the required ratio and the maximum number that the trust can redeem out of cash.

The proceeds will be used for investments and general working capital purposes or to pay down debt under the company’s credit facility.

The trust has applied to list the preferreds on the New York Stock Exchange under the symbol “XFLTPrA.”

The closed-end management investment company is based in Chicago.

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