Fifth Street Finance to sell shares, proceeds to be invested in debt

By Toni Weeks

San Diego, Dec. 5 - Fifth Street Finance Corp. has arranged to sell shares of its common stock, according to a 497 filing with the Securities and Exchange Commission.

The externally managed closed-end non-diversified management investment company seeks to maximize total return by generating current income from debt investments and capital appreciation from equity investments. Investments are principally in the form of first-lien, second-lien and subordinated debt investments, which may also include an equity component. The company invests in securities that are rated below investment grade.

The company will offer 14 million shares with an additional 2.1 million shares to cover over-allotments via a syndicate of underwriters led by Morgan Stanley & Co. LLC, Barclays, Goldman Sachs & Co., UBS Securities LLC and Wells Fargo Securities, LLC.

Proceeds will be used to repay debt under the company's Wells Fargo and ING facilities. Funds will be reborrowed to make investments in small and mid-sized companies.

Leonard M. Tannenbaum, Bernard D. Berman and Ivelin M. Dimitrov comprise the portfolio management team. Fifth Street Management LLC will serve as the investment manager.

The sales load will be 3.56%. Including management fees of 5.3% and other expenses, total annual expenses are expected to be 8.64%.

Fifth Street is a White Plains, N.Y.-based specialty finance company that lends to and invests in small and mid-sized companies, primarily in connection with investments by private equity sponsors.

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