Item 1.01
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Entry into a Material Definitive Agreement.
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Agreement and Plan of Merger
On
July 31, 2019, Portman Ridge Finance Corporation, a Delaware corporation (
PTMN
), entered into an Agreement and Plan of Merger (the
Merger Agreement
) with Storm Acquisition Sub Inc., a Maryland corporation and a
direct wholly-owned subsidiary of PTMN (
Acquisition Sub
), OHA Investment Corporation, a Maryland corporation (
OHAI
), and Sierra Crest Investment Management LLC, a Delaware limited liability company and the
external investment adviser to PTMN (
Sierra Crest
).
The Merger Agreement provides that (i) Acquisition Sub will
merge with and into OHAI (the
First Merger
), with OHAI continuing as the surviving corporation, and (ii) immediately after the effectiveness of the First Merger, OHAI will merge with and into PTMN, with PTMN continuing as the
surviving corporation.
The Merger Agreement and the transactions contemplated thereby have been approved by a unanimous vote of the board
of directors of each of PTMN, Acquisition Sub and OHAI (other than directors affiliated with Oak Hill Advisors, L.P., the external advisor to OHAI, who abstained from voting), and the managing member of Sierra Crest.
Merger Consideration
At the
effective time of the First Merger (the
Effective Time
), each share of common stock, par value $0.001 per share, of OHAI (
OHAI Common Stock
) issued and outstanding immediately prior to the Effective Time (other
than shares held by subsidiaries of OHAI or held, directly or indirectly, by PTMN or Acquisition Sub (
Canceled Shares
)) will be converted into the right to receive (i) an amount in cash equal to (A) $8,000,000 (as such amount
may be adjusted as described in the last paragraph of this section entitled Merger Consideration) (the
Aggregate Cash Consideration
) divided by (B) the number of shares of OHAI Common Stock issued and outstanding
as of the Determination Date (as defined below) (excluding any Canceled Shares), and (ii) a number of shares of common stock, par value $0.01 per share, of PTMN (
PTMN Common Stock
) equal to the Exchange Ratio (as defined
below).
Under the Merger Agreement, three days prior to the Closing Date (as defined in the Merger Agreement) (such date, the
Determination Date
), each of OHAI and PTMN will deliver to the other a calculation of its net asset value as of 5:00 pm eastern time on the day prior to the Closing Date (such calculation with respect to OHAI, the
Closing
OHAI Net Asset Value
and such calculation with respect to PTMN, the
Closing PTMN Net Asset Value
), in each case using a
pre-agreed
set of assumptions, methodologies and
adjustments. Based on such calculations, the parties will calculate the OHAI Per Share NAV, which will be equal to (i) (A) the Closing OHAI Net Asset Value minus (B) the Aggregate Cash Consideration divided by (ii) the
number of shares of OHAI Common Stock issued and outstanding as of the Determination Date (excluding any Canceled Shares), and the PTMN Per Share NAV, which will be equal to (I) the Closing PTMN Net Asset Value divided by
(II) the number of shares of PTMN Common Stock issued and outstanding as of the Determination Date. For purposes of the Merger Agreement, the Exchange Ratio will be equal to (i) the OHAI Per Share NAV divided by (ii) the
PTMN Per Share NAV.
If the aggregate number of shares of PTMN Common Stock to be issued in connection with the First Merger would exceed
19.9% of the number of issued and outstanding shares of PTMN Common Stock immediately prior to the Effective Time (the
Maximum Share Number
), the Aggregate Cash Consideration for all purposes of the Merger Agreement will be
increased to the minimum extent necessary such that the aggregate number of shares of PTMN Common Stock to be issued in connection with the First Merger does not exceed the Maximum Share Number.
Additional Cash Consideration
In
connection with the transactions contemplated by the Merger Agreement, as additional consideration to the holders of shares of OHAI Common Stock that are issued and outstanding immediately prior to the Effective Time (excluding any Canceled Shares),
Sierra Crest will cause to be paid directly to such holders an aggregate amount in cash equal to $3,000,000.