Item 1.01. Entry into a Material Definitive Agreement.
Notes Offering
On June 22,
2021, Portman Ridge Finance Corporation (the Company) priced an offering of $28,000,000 in aggregate principal amount of its 4.875% Notes due 2026 (the New Notes) in a private placement exempt from registration under the
Section 4(a)(2) of the Securities Act of 1933, as amended (the Securities Act). The private offering closed on June 23, 2021. The New Notes have not been registered under the Securities Act or any state securities laws and may
not be reoffered or resold in the United States absent registration or an applicable exemption from such registration requirements. The net proceeds to the Company were approximately $27.4 million, after deducting estimated offering expenses.
The Company intends to use the net proceeds of the offering to redeem in full its 6.125% Notes due September 2022, make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes.
The New Notes were issued under the Companys indenture with U.S. Bank National Association (the Trustee) dated
October 10, 2012 and supplemental indenture dated as of April 30, 2021 (collectively, the Indenture). The New Notes were issued as Additional Notes under the Indenture and have identical terms to Companys
$80.0 million of aggregate principal amount of 4.875% Notes due 2026 that were issued on April 30, 2021 (the Existing Notes and, together with the New Notes, the Notes), other than the issue date. The New Notes will
be treated as a single class of notes with the Existing Notes for all purposes under the Indenture. The Notes will mature on April 30, 2026 and may be redeemed in whole or in part at the Companys option at any time or from time to time at
the redemption prices set forth in the Indenture. The Notes bear interest at a rate of 4.875% per year payable semi-annually on March 16 and September 16 of each year, commencing on September 16, 2021. The Notes are general
unsecured obligations of the Company that rank senior in right of payment to all of the Companys existing and future indebtedness that is expressly subordinated in right of payment to the Notes, rank pari passu with all existing and
future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Companys secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets
securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Companys subsidiaries, financing vehicles or similar facilities.
The Indenture contains certain covenants, including covenants requiring the Company to comply with the asset coverage requirements of
Sections 18(a)(1)(A) and 18(a)(1)(B) as modified by Section 61(a)(2) of the Investment Company Act of 1940, as amended, whether or not it is subject to those requirements, and to provide financial information to the holders of the Notes
and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. Additionally, the Company has agreed to use its commercially reasonable efforts to maintain a rating of the
Notes from a rating agency, as defined in the Indenture, as long as the Notes are outstanding. These covenants are subject to important limitations and exceptions that are described in the Indenture.
In addition, on the occurrence of a change of control repurchase event, as defined in the Indenture, the Company will generally be
required to make an offer to purchase the outstanding Notes at a price equal to 100% of the principal amount of such Notes plus accrued and unpaid interest to the repurchase date.
The foregoing description of the Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of
the Indenture, filed as an exhibit hereto and incorporated by reference herein.
Registration Rights Agreement
In connection with the offering, the Company entered into a Registration Rights Agreement, dated as of June 23, 2021 (the
Registration Rights Agreement), with the purchasers of the New Notes. Pursuant to the Registration Rights Agreement, the Company is obligated to file with the Securities and Exchange Commission (the Commission) a registration
statement relating to an offer to exchange the New Notes for new notes issued by the Company that are registered under the Securities Act and otherwise have terms substantially identical to those of the New Notes, and to use its commercially
reasonable efforts to cause such registration statement to be declared effective. If the Company is not able to effect the exchange offer, the Company will be obligated to file a shelf registration statement covering the resale of the Notes and use
its commercially reasonable efforts to cause such registration statement to be declared effective. If the Company fails to satisfy its registration obligations by certain dates specified in the Registration Rights Agreement, it will be required to
pay additional interest to the holders of the Notes.
The foregoing description of the Registration Rights Agreement does not purport to
be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, filed as an exhibit hereto and incorporated by reference herein.