Item 1.01. Entry into a Material Definitive Agreement.
Underwriting Agreement
On October 16, 2019,
Investcorp Credit Management BDC, Inc. (formerly CM Finance Inc) (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) by and between the Company and Ladenburg
Thalmann & Co. Inc., as representative of the several underwriters named on Schedule A thereto, in connection with the issuance and sale of $15,000,000 aggregate principal amount of the Company’s 6.125% Notes due 2023 (the
“Notes” and the issuance and sale of the Notes, the “Offering”).
The Notes were issued as additional
notes under the Indenture, dated as of July 2, 2018 (the “Base Indenture”), between the Company and U.S. Bank National Association (the “Trustee”), as supplemented by the First Supplemental
Indenture, dated as of July 2, 2018 (the “First Supplemental Indenture”; together with the Base Indenture, the “Indenture”), pursuant to which, on July 2, 2018 and July 12, 2018, the
Company issued $34,500,000 aggregate principal amount of the 6.125% Notes due 2023 (the “Existing Notes”). The Notes are being treated as a single series with the Existing Notes under the Indenture and have the same terms as
the Existing Notes. The Notes have the same CUSIP number and are fungible and rank equally with the Existing Notes.
The Notes bear interest at a rate of
6.125% per year payable quarterly on January 1, April 1, July 1 and October 1, beginning on January 1, 2020. The Notes will mature on July 1, 2023 and may be redeemed in whole or in part at the Company’s
option at any time on or after July 1, 2020 at a redemption price of 100% of the outstanding principal amount of the Notes plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period
accrued to, but excluding, the date fixed for redemption.
The Company intends to use a portion of the net proceeds from the Offering to repay outstanding
indebtedness under the Company’s senior secured revolving credit facility, as amended (the “Revolving Financing”). However, the Company may re-borrow under the Revolving Financing
in order to invest in middle market companies in accordance with its investment objective and strategies and for working capital and general corporate purposes. The Company intends to use any remaining net proceeds from the Offering to fund
investments in middle market companies in accordance with its investment objective and for other general corporate purposes.
The Notes are the direct
unsecured obligations of the Company and rank pari passu with all existing and future unsecured, unsubordinated indebtedness issued by the Company, including the Existing Notes, senior to any of the Company’s future
indebtedness that expressly provides it is subordinated to the Notes, effectively subordinated to all of the existing and future secured indebtedness issued by the Company (including indebtedness that is initially unsecured in respect of which
the Company subsequently grants a security interest), to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s
subsidiaries, including, without limitation, outstanding borrowings under the Company’s term secured financing facility and the Revolving Financing, respectively, which are secured by the assets held at CM Finance SPV Ltd., the Company’s
wholly-owned subsidiary.
The Indenture contains certain covenants, including covenants (i) requiring the Company’s compliance
with the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a) of the Investment Company Act of 1940, as amended (the “1940 Act”), whether or not the Company continues to be
subject to such provisions of the 1940 Act; (ii) requiring the Company’s compliance, under certain circumstances, with the requirements set forth in Section 18(a)(1)(B) as modified by Section 61(a) of the 1940 Act, whether or not
the Company continues to be subject to such provisions of the 1940 Act, prohibiting the declaration of any cash dividend or distribution upon any class of our capital stock (except to the extent necessary for us to maintain its treatment as a
“regulated investment company” under Subchapter M of the Internal Revenue Code), or purchasing any such capital stock, if the Company’s asset coverage, as defined in the 1940 Act, is below 150% at the time of the declaration of the
dividend or distribution or the purchase and after deducting the amount of such dividend, distribution, or purchase; and (iii) requiring the Company to provide financial information to the holders of the Notes and the Trustee if the Company
ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. These covenants are subject to limitations and exceptions that are described in the Indenture.
The Notes were offered and sold in an offering registered under the Securities Act of 1933, as amended, pursuant to the Registration Statement
on Form N-2 (File No. 333-223999) and the prospectus supplement dated October 16, 2019. The transaction closed on October 18, 2019. The net proceeds to
the Company were approximately $14,276,250, based on the purchase price paid by the underwriters of 96.875% of the aggregate principal amount of the Notes, plus accrued and unpaid interest from October 1, 2019 up to, but not including, the date
of delivery, after deducting the estimated offering expenses of approximately $255,000 payable by the Company.
The foregoing descriptions
of the Underwriting Agreement, the Base Indenture, the First Supplemental Indenture, and the Notes do not purport to be complete and are qualified in their entirety by reference to the full text of the Underwriting Agreement, the Base Indenture, the
First Supplemental Indenture, and the Notes, respectively, each filed, or incorporated by reference, as exhibits hereto and incorporated by reference herein.
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