Fifth Street Senior Floating Rate to invest in loans via stock proceeds

By Toni Weeks

San Luis Obispo, Calif., Aug. 13 – Fifth Street Senior Floating Rate Corp. plans to offer shares of its common stock in a public offering, according to a 497 filing with the Securities and Exchange Commission.

The externally managed, closed-end, non-diversified management investment company aims to maximize total return by generating current income from debt investments while seeking to preserve capital. The company invests primarily in floating-rate senior secured loans, including first-lien, unitranche and second-lien debt instruments, made to private middle-market companies whose debt is rated below investment grade.

The company also invests in senior unsecured loans issued by private middle-market companies and, to a lesser extent, subordinated loans issued by private middle-market companies and senior and subordinated loans issued by public companies. Under normal conditions, at least 80% of assets are invested in floating-rate senior loans.

The investment committee consists of Leonard M. Tannenbaum, Bernard D. Berman and Ivelin M. Dimitrov.

The company is planning to offer 22.8 million shares with an over-allotment option for an additional 3.42 million shares via Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc., UBS Securities LLC, Goldman Sachs & Co., Barclays, Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC. The last reported sale price of the fund’s common stock (Nasdaq: FSFR) was $13.42 on Aug. 12.

The sales load will be 6%. Including management fees of 1.26%, total annual expenses are expected to be 3.69%.

White Plains, N.Y.-based Fifth Street Management LLC acts as the investment adviser.

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