Sierra Income Corporation (“Sierra” or the “Company”), Medley
Capital Corporation (NYSE: MCC, “MCC”) (TASE: MCC), and Medley
Management Inc. (NYSE: MDLY, “MDLY” or “Medley”) joint
announcement.
Sierra, MCC and MDLY have entered into definitive agreements for
Sierra to acquire MCC and MDLY. MCC will merge with and into
Sierra, with Sierra as the surviving company. Simultaneously,
Sierra will acquire MDLY, and MDLY’s existing asset management
business will operate as a wholly-owned subsidiary of Sierra. The
Boards of Directors of Sierra, MCC and MDLY unanimously approved
the transactions based on recommendations of independently advised
special committees of independent directors at each company,
respectively.
Transaction Highlights:
- The combined company will have over $5
billion of assets under management, including $2 billion of
internally managed assets1
- Sierra is expected to be the second
largest internally managed Business Development Company (“BDC”) and
the seventh largest publicly traded BDC
- Expected to be accretive to net
investment income per share for both Sierra and MCC
- Expected to increase liquidity for
shareholders of Sierra, MCC and MDLY
The transaction is expected to add scale to the BDC platform,
increase operational efficiencies, create a stronger balance sheet
and improve portfolio diversification. In addition, growth of
MDLY’s existing asset management business would add to NII and NAV
over time.
The senior leadership and the investment management teams will
remain intact as part of this transaction. The board of Sierra
following the transaction will consist of the current independent
directors from Sierra, one interested director from Sierra and two
independent directors from MCC.
MCC shareholders will receive 0.8050 shares of Sierra Common
Stock for each share of MCC Common Stock.
MDLY Class A shareholders will receive 0.3836 shares of Sierra
Common Stock for each Medley Class A share, $3.44 per share of cash
consideration and $0.65 per share of special cash dividends.
Medley LLC Unitholders have agreed to convert their units into
MDLY Class A Common Stock, and will receive 0.3836 shares of Sierra
Common Stock for each MDLY Class A share, $3.44 per share of cash
consideration and a $0.35 per share special cash dividend. As part
of the transaction, Medley LLC Unitholders have agreed to forgo all
payments that would be due to them under the existing Tax
Receivable Agreement with Medley for the benefit of the combined
company.
At close, current Sierra shareholders will continue to own
shares of Sierra Common Stock. As a condition to closing the
transactions, Sierra’s common stock will be listed to trade on the
New York Stock Exchange and Sierra will remain a BDC. There are no
expected changes to the current dividend policies of the respective
entities prior to the closing of the transaction, except that MCC
will be promptly terminating any feature of its dividend
reinvestment plan. In addition, Sierra will be promptly suspending
any share repurchase program or offers to repurchase. It is
anticipated that Sierra will continue with its current dividend
policy after the close of the transaction.
“We are excited to bring together these three complementary
entities to create a single, large-scale BDC and credit manager,”
said Brook Taube, CEO of Medley.
The mergers are cross conditioned upon each other and are
subject to approval by Sierra, MCC and MDLY shareholders,
regulatory review, other customary closing conditions and third
party consents. The transaction is expected to close in the fourth
quarter of 2018 or early in 2019.
Transaction Advisors:
- The Special Committee of Sierra Income
Corporation’s Board of Directors is served by financial advisor
Broadhaven Capital Partners, LLC and legal counsel Sullivan &
Worcester LLP
- The Special Committee of Medley Capital
Corporation’s Board of Directors is served by financial advisor
Sandler O’Neill + Partners, L.P. and legal counsel Kramer Levin
Naftalis & Frankel LLP
- The Special Committee of Medley
Management Inc.’s Board of Directors is served by financial advisor
Barclays Capital Inc. and legal counsel Potter Anderson &
Corroon LLP
- Medley Management Inc. is served by
financial advisor Goldman Sachs & Co. LLC and legal counsel
Eversheds Sutherland (US) LLP
Joint Conference Call
Sierra, MCC and Medley will host a joint conference call at
9:00am (Eastern Time), August 10, 2018, to discuss the
transactions.
All interested parties are welcome to participate and can access
the conference call by dialing (877) 524-5743 and using the
conference ID 5547448 approximately 10 minutes prior to the call.
For interested parties, an archived replay of the joint conference
call will be available by dialing (855) 859-2056 and using the
conference ID 5547448. This conference call will be broadcast live
over the Internet and can be accessed by all interested parties
through Medley’s website, http://www.mdly.com. To listen to the
live call, please go to Medley’s website at least 15 minutes prior
to the start of the call to register and download any necessary
audio software.
An archived replay will also be available through a webcast link
located on the page of the Investor Relations section of Medley's
website.
A joint slide presentation containing supplemental information
from Sierra, MCC and Medley will be referenced on the conference
call and is available on each of the entities’ websites.
ABOUT SIERRA INCOME
CORPORATION
Sierra is a non-traded business development company (“BDC”) that
invests primarily in first lien senior secured debt, second lien
secured debt and, to a lesser extent, subordinated debt of middle
market companies in a broad range of industries with annual revenue
between $50 million and $1 billion. Sierra’s investment objective
is to generate current income, and to a lesser extent, long-term
capital appreciation. Sierra is externally managed by SIC Advisors
LLC, which is an investment adviser registered under the Investment
Advisers Act of 1940, as amended. For additional information,
please visit Sierra Income Corporation at
www.sierraincomecorp.com.
ABOUT MEDLEY CAPITAL
CORPORATION
Medley Capital Corporation is a closed-end, externally managed
business development company (“BDC”) that trades on the New York
Stock Exchange (NYSE: MCC) and the Tel Aviv Stock Exchange (TASE:
MCC). Medley Capital Corporation’s investment objective is to
generate current income and capital appreciation by lending to
privately-held middle market companies, primarily through directly
originated transactions, to help these companies expand their
businesses, refinance and make acquisitions. Our portfolio
generally consists of senior secured first lien loans and senior
secured second lien loans. Medley Capital Corporation is externally
managed by MCC Advisors LLC, which is an investment adviser
registered under the Investment Advisers Act of 1940, as amended.
For additional information, please visit Medley Capital Corporation
at www.medleycapitalcorp.com.
ABOUT MEDLEY
Medley is an alternative asset management firm offering yield
solutions to retail and institutional investors. Medley’s national
direct origination franchise is a premier provider of capital to
the middle market in the U.S. Medley has over $5
billion of assets under management in two business development
companies, Medley Capital Corporation (NYSE: MCC) (TASE:
MCC) and Sierra Income Corporation, a credit interval
fund, Sierra Total Return Fund (NASDAQ: SRNTX) and
several private investment vehicles. Over the past 15 years, Medley
has provided capital to over 400 companies across 35 industries
in North America.2
Medley LLC, the operating company of Medley Management
Inc., has outstanding bonds which trade on the NYSE under
the symbols (NYSE: MDLX) and (NYSE: MDLQ). Medley Capital
Corporation is dual-listed on the New York Stock
Exchange (NYSE: MCC) and the Tel Aviv Stock
Exchange (TASE: MCC) and has outstanding bonds which trade on
both the New York Stock Exchange under the symbols (NYSE:
MCV), (NYSE: MCX) and the Tel Aviv Stock Exchange under
the symbol (TASE: MCC.B1).
Forward-Looking
Statements
This communication contains “forward-looking” statements as that
term is defined in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended by the Private Securities Litigation Reform Act of 1995,
including statements regarding the proposed transactions. Such
forward-looking statements reflect current views with respect to
future events and financial performance, and each of Sierra, MCC
and Medley may make related oral forward-looking statements on or
following the date hereof. Statements that include the words
“should,” “would,” “expect,” “intend,” “plan,” “believe,”
“project,” “anticipate,” “seek,” “will,” and similar statements of
a future or forward-looking nature identify forward-looking
statements in this material or similar oral statements for purposes
of the U.S. federal securities laws or otherwise. Because
forward-looking statements, such as the date that the parties
expect the proposed transactions to be completed and the
expectation that the proposed transactions will provide improved
liquidity for Sierra, MCC, and Medley stockholders and will be
accretive to net investment income for both Sierra and MCC, include
risks and uncertainties, actual results may differ materially from
those expressed or implied and include, but are not limited to,
those discussed in each of Sierra’s, MCC’s and Medley’s filings
with the Securities and Exchange Commission (the “SEC”), and (i)
the satisfaction or waiver of closing conditions relating to the
proposed transactions described herein, including, but not limited
to, the requisite approvals of the stockholders of each of Sierra,
MCC, and Medley, Sierra successfully taking all actions reasonably
required with respect to certain outstanding indebtedness of MCC
and Medley to prevent any material adverse effect relating thereto,
certain required approvals of the SEC and the Small Business
Administration, the necessary consents of certain third-party
advisory clients of Medley, and any applicable waiting period (and
any extension thereof) applicable to the transactions under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
shall have expired or been terminated, (ii) the parties’ ability to
successfully consummate the proposed transactions, and the timing
thereof, and (iii) the possibility that competing offers or
acquisition proposals related to the proposed transactions will be
made and, if made, could be successful. Additional risks and
uncertainties specific to Sierra, MCC and Medley include, but are
not limited to, (i) the costs and expenses that Sierra, MCC and
Medley have, and may incur, in connection with the proposed
transactions (whether or not they are consummated), (ii) the impact
that any litigation relating to the proposed transactions may have
on any of Sierra, MCC and Medley, (iii) that projections with
respect to dividends may prove to be incorrect, (iv) Sierra’s
ability to invest our portfolio of cash in a timely manner
following the closing of the proposed transactions, (v) the market
performance of the combined portfolio, (vi) the ability of
portfolio companies to pay interest and principal in the future;
(vii) the ability of Medley to grow its fee earning assets under
management; (viii) whether Sierra, as the surviving company, will
trade with more volume and perform better than MCC and Medley prior
to the proposed transactions; and (ix) negative effects of entering
into the proposed transactions on the trading volume and market
price of the MCC’s or Medley’s common stock.
The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with the
other cautionary statements that will be included in the Joint
Proxy Statement/Prospectus (as defined below) relating to the
proposed transactions, and in the “Risk Factors” sections of each
of Sierra’s, MCC’s and Medley’s most recent Annual Report on Form
10-K and most recent Quarterly Report on Form 10-Q. The forward-
looking statements in this press release represent Sierra’s, MCC’s
and Medley’s views as of the date of hereof. Sierra, MCC and Medley
anticipate that subsequent events and developments will cause their
views to change. However, while they may elect to update these
forward-looking statements at some point in the future, none of
Sierra, MCC or Medley have the current intention of doing so except
to the extent required by applicable law. You should, therefore,
not rely on these forward-looking statements as representing
Sierra’s, MCC’s or Medley’s views as of any date subsequent to the
date of this material.
Additional Information and Where to
Find It
In connection with the proposed transactions, Sierra intends to
file with the SEC and mail to its stockholders a Registration
Statement on Form N-14 that will include a proxy statement and that
also will constitute a prospectus of Sierra, and MCC and Medley
intend to file with the SEC and mail to their respective
stockholders a proxy statement on Schedule 14A (collectively, the
“Joint Proxy Statement/Prospectus”). The definitive Joint Proxy
Statement/Prospectus will be mailed to stockholders of Sierra, MCC,
and Medley, respectively. INVESTORS AND SECURITY HOLDERS ARE URGED
TO READ THE JOINT PROXY STATEMENT/PROSPECTUS, AS WELL AS ANY
AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT SIERRA, MCC, AND MEDLEY, THE PROPOSED
TRANSACTIONS AND RELATED MATTERS. When available, investors and
security holders will be able to obtain the Joint Proxy
Statement/Prospectus and other documents filed with the SEC by
Sierra, MCC, and Medley, free of charge, from the SEC’s web site
at www.sec.gov and from Sierra’s website
(www.sierraincomecorp.com), MCC’s website
(www.medleycapitalcorp.com), or Medley’s website
(www.mdly.com). Investors and security holders may
also obtain free copies of the Joint Proxy Statement/Prospectus and
other documents filed with the SEC from Sierra, MCC, or Medley by
contacting Sam Anderson, Medley’s Investor Relations contact, at
212-759-0777.
Participants in the
Solicitation
Sierra, MCC, and Medley and their respective directors,
executive officers, other members of their management, employees
and other persons may be deemed to be participants in the
anticipated solicitation of proxies in connection with the proposed
transactions. Information regarding Sierra’s directors and
executive officers is available in its definitive proxy statement
for its 2018 annual meeting of stockholders filed with the SEC on
March 14, 2018 (the “Sierra 2018 Proxy Statement”).
Information regarding MCC’s directors and executive officers is
available in its definitive proxy statement for its 2018 annual
meeting of stockholders filed with the SEC on December 21, 2017
(the “MCC 2018 Proxy Statement”). Information regarding
Medley’s directors and executive officers is available in its
annual report for the year ended December 31, 2017 on Form 10-K
filed with the SEC on March 29, 2018 (the “Medley 2017
10-K”). To the extent holdings of securities by such directors
or executive officers have changed since the amounts disclosed in
the Sierra 2018 Proxy Statement, the MCC 2018 Proxy Statement, and
the Medley 2017 Form 10-K, such changes have been or will be
reflected on Statements of Change in Ownership on Form 4 filed by
such directors or executive officers, as the case may be, with the
SEC. More detailed information regarding the identity of potential
participants, and their direct or indirect interests, by security
holdings or otherwise, will be set forth in the Joint Proxy
Statement/Prospectus when such documents become available and in
other relevant materials to be filed with the SEC. These documents
may be obtained free of charge from the sources indicated
above.
No Offer or Solicitation
The information in this press release is for informational
purposes only and shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities or the solicitation of any vote or approval in
any jurisdiction pursuant to or in connection with the proposed
transactions or otherwise, nor shall there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of
applicable law. No offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10
of the Securities Act of 1933, as amended.
1 Estimates of Sierra’s post-merger financial position are based
on the publicly reported financial information of Sierra, MCC and
MDLY as of June 30, 2018.2 Medley Management Inc. is the
parent company of Medley LLC and several registered
investment advisors (collectively, “Medley”). Assets under
management refers to assets of our funds, which represents the sum
of the net asset value of such funds, the drawn and undrawn debt
(at the fund level, including amounts subject to restrictions) and
uncalled committed capital (including commitments to funds that
have yet to commence their investment periods). Assets under
management are as of June 30, 2018.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180809005829/en/
Investor Relations
Contact:Medley Management Inc.Sam Anderson,
212-759-0777Head of Capital Markets & RiskorMedia Contact:Teneo Holdings LLCErin Clark,
646-214-8355
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