NXG Cushing Midstream Energy Fund (NYSE:SRV), a Delaware-incorporated energy investment fund, disclosed on Thursday that it has entered into several agreements related to a new rights offering. The offering was launched on Wednesday, October 23, 2024, following an announcement made via a prospectus supplement and an accompanying prospectus.
The fund entered into a dealer manager agreement with its own management firm, NXG Investment Management, and UBS Securities LLC. This agreement relates to the issuance of transferable rights to existing shareholders, allowing them to subscribe for up to 1,004,176 new common shares. Shareholders as of the record date, which was the close of business on October 23, 2024, are eligible to participate in the offering.
Each shareholder will receive one right for each common share they own. These rights will enable holders to purchase one new common share for every three rights they possess. Additionally, shareholders who fully exercise their rights may subscribe for additional shares, subject to certain conditions and availability.
The fund also entered into agreements with Equiniti Trust Company, LLC, and EQ Fund Solutions, LLC, to serve as the subscription and information agents, respectively, for the rights offering.
The rights offering is part of the fund's shelf registration statement previously filed with the Securities and Exchange Commission. The offering's legal aspects are covered by an opinion from Skadden, Arps, Slate, Meagher & Flom LLP, which is also filed with the SEC.
InvestingPro Insights
NXG Cushing Midstream Energy Fund's (NYSE:SRV) recent rights offering announcement comes at a time when the fund is showing strong performance in the market. According to InvestingPro data, SRV has demonstrated impressive price returns, with a year-to-date total return of 46.38% and a one-year total return of 32.09%. This positive momentum could make the rights offering particularly attractive to existing shareholders looking to increase their stake.
One of the key attractions for investors is SRV's significant dividend yield, which currently stands at 12.15%. This aligns with an InvestingPro Tip highlighting that SRV "pays a significant dividend to shareholders." Furthermore, the fund has maintained dividend payments for 18 consecutive years, showcasing its commitment to providing consistent income to investors.
However, potential investors should also consider that SRV "suffers from weak gross profit margins," according to another InvestingPro Tip. This factor may impact the fund's long-term profitability and should be weighed against its attractive dividend yield.
For those interested in a more comprehensive analysis, InvestingPro offers additional tips and insights that could be valuable in evaluating the investment opportunity presented by SRV's rights offering.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.