FS Credit Opportunities Corp. (NYSE:FSCO), a financial services company with a market capitalization of $1.38 billion and currently trading near its 52-week high of $7.02, has entered into a distribution agreement with ALPS Distributors, Inc., potentially offering up to $150 million of its common shares.
According to InvestingPro data, the company maintains a compelling P/E ratio of 5.21 and has demonstrated strong financial health. The agreement, effective as of January 15, 2025, will allow the company to sell shares from time to time directly on the market, as outlined in a prospectus supplement dated the same day.
The arrangement specifies that shares will not be sold below their current net asset value, excluding any commission or discount. ALPS Distributors, Inc. may collaborate with selected dealers through sub-placement agreements, one of which has already been established with UBS Securities LLC. The company has maintained a strong track record of shareholder returns, with InvestingPro analysis showing an impressive dividend yield of 11.14% and three consecutive years of dividend increases.
ALPS Distributors will receive a commission of 1.00% of the gross proceeds from the sale of FS Credit Opportunities Corp.'s common shares. Out of this commission, the sub-placement agent, UBS Securities LLC, will be compensated up to 0.80% of the gross sales proceeds from shares sold through them.
This offering is part of a shelf registration statement previously filed with the Securities and Exchange Commission. The legal opinion regarding the common shares was provided by Miles & Stockbridge P.C., which is included in the prospectus supplement.
The company's decision to engage in this at-the-market offering allows for flexibility in financing its operations by selling shares in response to market conditions and capital needs. The use of such an offering can enable the company to raise capital over time, potentially minimizing the dilution impact on existing shareholders and allowing for capital to be raised as needed.
Investors are encouraged to review the full text of the distribution agreement and sub-placement agent agreement, which are filed with the SEC and incorporated by reference in the company's recent report. This move represents FS Credit Opportunities Corp.'s strategic approach to managing its capital structure and ensuring access to funds for future growth or operational needs.
This article is based on information from the company's SEC filing.
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