SARATOGA INVESTMENT CORP. 8-K

What Happened
Saratoga Investment Corp. announced a private placement of $25,000,000 aggregate principal of 7.25% notes due April 10, 2029 (the "Notes") pursuant to a Notes Purchase Agreement that closed on April 10, 2026. Interest on the Notes is 7.25% per year, payable quarterly beginning May 31, 2026. The Notes were sold at 98.00% of principal; net proceeds were approximately $24,275,000 after about $225,000 of offering expenses. The Company may, by mutual agreement with the purchaser, issue additional Notes in subsequent private offerings up to $50,000,000 in the aggregate through July 10, 2026.

Key Details

• Issue: $25,000,000 principal 7.25% Notes due April 10, 2029 (company may extend maturity to Oct 10, 2029).
• Closing date: April 10, 2026; interest payable quarterly (Feb 28, May 31, Aug 31, Nov 30).
• Proceeds: ~ $24,275,000 net (purchase price 98.00%; offering expenses approx. $225,000).
• Security & ranking: unsecured obligations of the Company; pari passu with other unsubordinated unsecured debt, effectively subordinated to secured debt and structurally subordinated to subsidiary obligations (including existing SPV financing facilities and SBA-guaranteed debentures).
• Restrictions & holder protections: covenants limit declaring cash dividends or repurchasing stock unless certain asset-coverage tests are met (as modified by applicable Investment Company Act provisions and SEC relief); holders can require early repayment (a “put”) upon certain management changes or breaches of specified regulatory provisions.
• Registration status: Notes not registered under the Securities Act; sold in a Section 4(a)(2) private placement to an institutional investor.

Why It Matters
This transaction raises immediate liquidity for Saratoga Investment Corp. (roughly $24.3M net) without diluting equity. The Notes increase the company’s unsecured debt load and carry a relatively high coupon (7.25%), which increases interest costs. Because the Notes are unsecured and structurally subordinated to subsidiary liabilities, holders are behind secured creditors and some subsidiary creditors in a liquidation. Dividend and share‑buyback flexibility is also limited by covenants tied to asset-coverage tests, which could affect future cash distributions to shareholders.