Horizon Technology Finance Corporation (NASDAQ: HRZN) has announced the closing of a new $100 million senior secured credit facility led by a large U.S. based insurance company. This credit facility, which may be increased to $200 million with mutual agreement, will provide Horizon with additional capital resources to leverage existing investments and deploy capital for new opportunities.
The new credit facility has a one-year funding period and a three-year investment period, during which Horizon's wholly-owned subsidiary, Horizon Funding II, LLC (HFII), may make additional borrowings and loans. It has a maximum advance rate of 67.5% based on the number of distinct obligors whose loans serve as collateral and bears interest at a rate per annum determined by the yield for the United States Treasury constant maturity 3-year and 5-year, interpolated to a 4.88-year weighted average life plus 3.15%, or 5.00%.
Horizon intends to use this facility to grow its venture debt portfolio prudently and generate further shareholder value. Daniel R. Trolio, Executive Vice President and Chief Financial Officer of Horizon, highlighted the company's belief that this additional facility will bolster its ability to offer venture debt solutions to high-quality companies.
Horizon Technology Finance Corporation, externally managed by Horizon Technology Finance Management LLC, an affiliate of Monroe Capital, is a leading specialty finance company that provides capital in the form of secured loans to venture capital-backed companies in various industries. The company's investment objective is to maximize its investment portfolio's return by generating current income from debt investments and capital appreciation from the warrants it receives when making such debt investments. Monroe Capital, the company's affiliate, is an $18 billion asset management firm specializing in private credit markets across various strategies.
This new credit facility represents a significant enhancement of Horizon's capital resources and capacity, and it will be interesting to see how the company utilizes these resources to grow its portfolio and create value for its shareholders. As a result of these announcements, the company's shares have moved 0.9% on the market, and are now trading at a price of $11.82. For more information, read the company's full 8-K submission here.
