MSC Income Fund Makes Adjustments in Anticipation of Listing Common Stock on an Exchange
By Staff
MSC Income Fund Inc., a non-traded business development company formerly known as HMS Income Fund, announced its next steps as it continues to work toward the planned listing of its common stock on the New York Stock Exchange.
First, the fund announced that its board of directors has approved a new dividend reinvestment plan, or DRIP. The new DRIP will allow registered stockholders to automatically reinvest their cash dividends into additional shares of the company’s common stock. The new DRIP, which will become effective upon the listing of the fund’s shares on a national securities exchange, is an “opt-out” plan, meaning that registered stockholders will automatically have their dividends reinvested unless they elect to receive them in cash. Stockholders who wish to opt out of the new DRIP must notify MSC in writing at least 10 days before the payment date for the dividend.
Additionally, the fund announced that, pursuant to approval from its board of directors, it has effectuated a 2-for-1 reverse stock split. As a result, every two shares of its issued and outstanding common stock were converted into one share, without any change in the par value per share or the number of authorized shares of common stock.
The fund did not state an expected public offering price per share, but did state that the NAV per share for its common stock was $15.38, as of Sept. 30, 2024, and adjusted for the reverse stock split on a retrospective basis. The fund stated that shares of closed-end investment companies may trade at a discount to their NAV.
According to the fund, it expects shares to be approved for listing on the New York Stock Exchange under the symbol of MSIF, subject to a notice of issuance.
The fund also reported that its board of directors has authorized an open market share repurchase program of a yet-to-be-determined amount in the aggregate of shares of its common stock. Pursuant to the program, the fund said that it may, from time to time, purchase shares of its common stock in the open market, subject to market conditions and other factors, for a 12-month period following the consummation of the offering.
Finally, the fund reported that, in contemplation of its public offering, it has decided to shift its future investment strategy to be solely focused on its private loan investment strategy. As a result, the size of its lower middle-market investment portfolio is expected to decrease over time as it makes new investments consistent with its new strategy and its existing lower middle-market investments are repaid or sold off. The fund does, however, plan to continue executing follow-on investments in its existing lower middle-market portfolio companies going forward in accordance with its existing SEC order for co-investment exemptive relief.
MSC stated that its principal investment objective is to maximize its investment portfolio’s total return, primarily by generating current income from its debt investments and, to a lesser extent, by generating current income and capital appreciation from its equity and equity-related investments.
It will seek to achieve this investment objective primarily through its private loan strategy of providing debt capital to private companies owned by or in the process of being acquired by a private equity fund and, secondarily, by providing customized long-term debt and equity capital solutions to lower middle-market companies.
As previously reported by The DI Wire, MSC first took steps toward becoming a publicly listed company in July of this year, and, in November, stockholders were asked to vote on a variety of proposals in preparation for the potential public listing.
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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