Fund Urges Shareholder Vote Ahead of August Deadline to Unlock Share Value

2026-08-02 companies

New York, Saturday, 1 August 2026.
XFLT is urging shareholders to approve King Street as its new manager before August 6, 2026, unlocking a plan to buy back 12.5% of shares and reduce market discounts.

Shareholder Vote Deadline Approaches

XAI Floating Rate & Alternative Income Trust (NYSE: XFLT) has issued an urgent call for shareholders to vote in favor of a new sub-advisory agreement with King Street Capital Management ahead of a critical meeting on August 6, 2026 [1][8]. The Board of Directors emphasizes that this agreement is essential for unlocking shareholder value and implementing a comprehensive liquidity program designed to address the fund’s trading discount [1]. Rockford Tower Asset Management, L.L.C., a wholly owned subsidiary of King Street Capital Management, officially assumed the role of interim sub-adviser on July 30, 2026, replacing the terminated firm Octagon Credit Investors [2][8].

To approve the long-term King Street Sub-Advisory Agreement, the Fund requires an affirmative vote of 67% of shares present at the reconvened Special Meeting of Shareholders [3][8]. It is crucial for investors to note that under the Investment Company Act of 1940, abstentions currently count as votes against the proposal, creating a high threshold for approval [3][8]. Proxy advisory firms Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co. LLC have both recommended that shareholders vote “FOR” the agreement on the WHITE proxy card [2][4].

Liquidity Plan and Tender Offers

Central to the Board’s strategy is a proposed liquidity plan that includes an initial tender offer for up to 12.5% of common shares at 98% of net asset value (NAV) within 45 days of approval [2][7]. This initial offer is designed to provide immediate liquidity to shareholders and help narrow the market discount at which the Fund’s shares trade [7]. The Board asserts that confirming King Street as the permanent sub-adviser will enhance performance and distributions without necessitating any increase in management fees, which remain at 1.70% of average daily managed assets [5][6].

The selection of King Street Capital Management followed a rigorous 12-month diligence process involving 12 Board meetings and the evaluation of multiple candidates [4][7]. King Street, founded in 1995, manages approximately $30 billion in assets and operates a $12 billion collateralized loan obligations (CLO) platform [2][6]. The Fund’s leadership believes that King Street’s strong CLO platform and 30-year track record will benefit shareholders by allowing dynamic management within the existing mandate [4][5].

Contingent Offers and Value Creation

In addition to the initial tender offer, the liquidity plan includes two contingent tender offers for up to an additional 12.5% of shares total if specific performance conditions are not met [3][7]. These contingent offers would trigger unless the Fund’s market discount narrows below 15% for three consecutive trading days or if the Fund achieves a total value creation target of approximately $2.95 per share over a 12-month period [3][7]. The total potential repurchase capacity under the plan could reach 25 percent of common shares, providing significant liquidity support if performance hurdles are not cleared [3][7].

The value creation target is calculated based on maintaining the current $0.225 monthly distribution plus a $0.25 per share NAV increase [3]. This structure aligns the sub-adviser’s incentives with shareholder interests, ensuring that additional liquidity is provided primarily if the Fund fails to meet its discount or performance objectives [7][8]. The Board remains confident that the approval of the King Street Sub-Advisory Agreement is the best path forward for the Fund to achieve these goals [8].

Management Transition and Background

Following the transition, primary day-to-day portfolio management responsibilities will be assigned to Young Choi, a 20-year veteran and partner at King Street, and Terry Ing, also a Partner and Portfolio Manager [6][8]. Young Choi is currently serving as the Portfolio Manager of XFLT, leveraging King Street’s global investment professionals based in the U.S., London, Singapore, and Dubai [2][6]. The Fund’s name changed from “XAI Octagon Floating Rate & Alternative Income Trust” to “XAI Floating Rate & Alternative Income Trust” following the resignation of Octagon Credit Investors [6][8].

Shareholders are urged to vote using the WHITE proxy card via internet, phone, or mail to avoid prolonged uncertainty regarding the Fund’s management structure [5][8]. XA Investments LLC, the Fund’s investment adviser, clarified that a vote against the proposal will not reinstate Octagon but would impede the implementation of the liquidity plan [5][7]. The reconvened Special Meeting is scheduled for August 6, 2026, marking the final step in formalizing the new sub-advisory relationship [1][8].

Sources

XFLT King Street Capital Management