XFLT Tender Offer: 7.3M Shares Tendered for 1.9M at 98% of NAV

What the offer is, in the filing’s words

XFLT is a listed closed-end fund, not a non-traded vehicle: its shares have traded on the NYSE since September 27, 2017, so a holder can sell at the market price any day. A tender is a second, separate way out, at a price tied to NAV, and the fund can only buy a fixed number of shares through it. The terms, from the Schedule TO-I filed September 18, 2026 and its Offer to Purchase:

The fund can still walk away. The conditions in the Offer to Purchase let it decline to buy if the purchase would delist the shares, impair its status as a regulated investment company, breach its asset coverage rules, or force a sale of portfolio assets that is not orderly, among others. The release of October 20, 2026 says the offer was oversubscribed and proration is expected, which means the fund is going ahead.

The result so far, and what is not known yet

On October 20, 2026 the fund filed Amendment No. 1 attaching a press release. Its figures: a count by the depositary of “approximately 7,331,021 Common Shares” validly tendered and not withdrawn, at the NAV anticipated at 5:00 p.m. Eastern on October 20, 2026, and a warning that “the below-indicated results are based on preliminary information, are subject to adjustment and should not be regarded as final.” It did not state a proration factor.

Nearly half the fund’s shares were offered for sale at 98% of NAV, and the fund can buy only 12.5% of its shares. Two things can move the final factor: late deliveries or withdrawals that change the depositary’s count, and any tender the depositary rejects as not in proper form. We have not seen the final number. The page will be updated when the final Schedule TO-I/A is on EDGAR.

Worked example: tender 1,000 shares, about 259 are bought

The rule is a single fraction applied to every holder. At the preliminary 25.97% (our arithmetic, fractions disregarded, price at 98% of the $21.49 NAV on the fund page):

Two details from the documents. First, the fraction does not depend on how much you tender, only on what everyone else tenders, so asking for more than you want to sell cannot be counted on to raise the share you get filled; it raises the number sold, in proportion. Second, the shares not bought are returned to the account in book-entry form, and the filing says a tender “will not affect the record ownership” of shares for dividend entitlement until they are accepted.

Put against the market, the 1,000-share holder who tenders everything ends up with 259 shares sold at about $21.06 and 741 still held. If those 741 were then sold at the October 20 close of $17.04, the 1,000 shares would have brought $18,081 against $17,040 sold entirely on the NYSE, 6.1% more (our arithmetic; it ignores commissions, taxes and any move in the price, and the 741 shares may well trade at another price). That is an arithmetic comparison, not a forecast.

98% of NAV versus a 20.71% discount

The tender price is a fixed fraction of NAV. What it is worth to a holder depends on how far the NYSE price sits below NAV on the pricing date. Both reference points come from the fund itself:

If the $21.49 on the fund page is the NAV at the October 20 pricing date, as the dates suggest, the fund’s cost of buying 1,903,861 shares would be about $40.1 million (our arithmetic), against the $42.8 million it estimated at the September NAV. The final release states the actual price.

The 2% below NAV is also the only cost the offer has for a seller: the fund charges no separate fee, and says the 98% price “may help defray certain costs of the tender.” On $21.49 it is $0.43 a share (our arithmetic). Selling in the market instead costs the whole discount.

The fund’s own table of quarterly highs and lows, Section 9 of the Offer to Purchase, shows how the gap opened. Premium or (discount) to NAV on the dates of the quarter’s high and low closing prices (share prices before the 1-for-5 reverse split of March 20, 2026 are not comparable with later ones, so only the percentages are shown):

Between the quarter ended March 31, 2024 and the quarter ended March 31, 2026 the shares went from a premium of 11.71% on the day of the quarter’s high price to a discount of 30.49% on the day of its low price. This is the problem the tender and the Bulldog agreement are meant to address; the Offer to Purchase calls the liquidity plan part of “the Trust’s ongoing effort to manage its discount.” It does not promise any result: “There can be no assurances as to the effect that liquidity plan contemplated by the Standstill Agreement will have on the market for the Common Shares or the discount” at which they trade.

Why a listed fund is running a tender: the Bulldog standstill

The Offer to Purchase says the fund “entered into the Standstill Agreement with Bulldog” and agreed “to conduct a tender offer on terms consistent with the terms of the Offer.” The agreement and its August 6 amendment are exhibits (d)(i) and (d)(ii) to the Schedule TO-I. What they say:

The contingent tenders can be skipped. According to the amended Appendix A, the first is not required if the shares trade at a discount of less than 15% on 15 of 20 consecutive trading days in the last three months of the one-year measurement period, or if the average NAV over the last 20 trading days exceeds the NAV at the start of the period by at least $0.25 a share, adjusted for distributions above or below $0.225 a month. The Offer to Purchase describes the discount test differently, as less than 15% “at the close of trading for three consecutive trading days” in the period. The two documents do not match; the agreement controls the parties’ obligation, and the difference would matter only if the discount hovers near 15%. At 20.71% on October 20, 2026 the discount was more than 15%. The measurement period starts on the fifth business day after the initial tender is completed.

Bulldog Investors, LLP is a company; the agreement and filings name individuals who signed for each side, whom we do not name here.

One date to read carefully. The Offer to Purchase says that if the fund “fails to complete a tender offer on or before October 5, 2026, the Standstill Agreement will terminate.” This offer expired on October 19. The original agreement’s wording is that the agreement is void if the fund fails to “commence” the initial tender within 60 days after shareholder approval, and 60 days after August 6, 2026 is October 5 (our arithmetic). The tender commenced on September 18, inside that window. The “complete” in the Offer to Purchase looks like a drafting slip, but we flag it because the documents differ.

Why the sub-adviser changed: the July 30 and August 6 votes

The standstill was tied to a vote. Its recitals say the liquidity plan becomes effective “following approval of a new investment sub-advisory agreement” with Rockford Tower Asset Management, L.L.C. at a special meeting of shareholders on July 30, 2026. The sequence from the filings:

What the first 8-K says about the new arrangement: the sub-adviser is a newly formed, wholly owned subsidiary of King Street Capital Management, L.P., which reported $30.0 billion under management at December 31, 2025. The adviser, XA Investments, LLC, keeps its 1.70% fee on managed assets; the sub-adviser receives 52% of that fee (so the adviser keeps 48%, our arithmetic) and may be reimbursed certain expenses capped at 0.07% a year of average net assets. Octagon’s side, in its own proxy filing, was that the change would increase fees to the adviser and replace “a Proven Investment Team”; the fund’s board recommended the change. We state both positions as the parties filed them; the shareholders’ vote is the fact.

For readers comparing listed credit funds, our page on Oxford Square Capital shows how another listed CLO equity vehicle’s dividend, NII and NAV compare.

What paying for the tender does to the fund

A tender is financed by cash, asset sales or borrowing. The Offer to Purchase lists the sources in that order and warns that a sale of assets can lower NAV, and with it the price the tendering holder receives, because the price is set at NAV on the pricing date.

Because the fee is charged on managed assets including leverage, the fund says common shareholders “effectively bear the entire management fee.” For holders who stay, the offer lists higher expenses per share, less flexibility and, if borrowings are not repaid, more leverage on a smaller base. On the other side of the ledger, each share bought at 98% of NAV leaves the remaining shares with a small gain: 2% of NAV on 1,903,861 shares is about $818,000, or about $0.06 a remaining share (our arithmetic, before costs).

Tax and paperwork: the procedural facts

The Offer to Purchase, Section 13, is the source for each point. It is a general summary, assumes the shares are capital assets, and says “consult your tax adviser.”

• Taxable event. A tender of all or part of a holder’s shares for cash is a taxable transaction for U.S. federal income tax purposes. Treatment is decided under Section 302 of the Internal Revenue Code.
• Exchange or dividend. If the sale meets a Section 302(b) test (complete redemption, “substantially disproportionate,” or “not essentially equivalent to a dividend”) it is a sale: gain or loss is the cash received less the holder’s adjusted basis, long-term if held more than one year. If not, the whole payment can be treated as a dividend to the extent of earnings and profits, with no basis offset. The filing says proration may affect which test is met, since fewer shares are sold than tendered.
• Constructive ownership. Section 318 attributes to you shares owned by certain relatives and entities, which can matter for the test.
• Wash sales. A loss on shares sold in the tender is ordinarily disallowed to the extent shares are acquired within 30 days before or after the purchase date. Our page on the wash sale rule for fund tenders works through the dates for three other funds.
• Withholding. Backup withholding of 24% applies unless a Form W-9 is supplied. A non-U.S. holder may see 30% withholding on the payment, treated as a dividend, unless a Form W-8BEN, W-8BEN-E or W-8ECI is supplied.
• Medicare tax. The 3.8% net investment income tax can apply to gain or dividends on the sale, for holders above the thresholds.
• Brokerage holders. A holder whose shares sit in a brokerage account tenders through that firm, which can set an earlier deadline and charge a fee. For this offer the deadline has passed.

What a reader can do with this

• If you tendered: the preliminary fill was about 26%. The final release will say the factor and price; payment is due about five business days after expiry (October 26, 2026, our arithmetic). The shares not bought stay in your account. Keep the final Schedule TO-I/A and your broker’s confirmation for the tax return.
• If you did not tender: the shares trade on the NYSE as before. The fund page shows the current price and NAV; the figures in this page are dated October 20, 2026.
• What would change the picture: the final proration factor; the first post-tender NAV and price; the discount staying above or falling below 15% through the one-year measurement period, which decides whether the 7.5% tender is owed; and the next distribution declaration. The fund page showed a current distribution rate of 15.85% on October 20, which matches a payout of $0.225 a month on the $17.04 price (our arithmetic); $0.225 is also the monthly baseline used in the standstill.
• What to read: the final Schedule TO-I/A when it is filed, the fund’s next Form N-CSR, and any 8-K on the sub-adviser. All are on EDGAR under CIK 1703079.

Other tender offers worked the same way on our site: the tender offer census explains the SEC rules and lists the funds, and the BDC tender results for the third quarter of 2026 shows who prorated and who paid.

FAQ

Figures are from the Schedule TO-I (accession 0001213900-26-101507, September 18, 2026) with its Offer to Purchase, press release and Standstill Agreement exhibits; Schedule TO-I/A No. 1 (0001213900-26-111087, October 20, 2026); Forms 8-K 0001213900-26-083432 and 0001213900-26-087333; the Octagon proxy materials (DFAN14A 0001213900-26-079315); the 40-APP (0001213900-26-100918); and the fund page at xainvestments.com/xflt, read on October 21, 2026. The final results were not on EDGAR at that time. Fill rates and dollar examples are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.