SLR Investment Corp. (NASDAQ: SLRC) (“SLRC”) and SLR Senior
Investment Corp. (NASDAQ: SUNS) (“SUNS”) today announced that they
have entered into an agreement to merge together, with SLRC as the
surviving company, subject to stockholder approval and customary
closing conditions. The Boards of Directors of both SLRC and SUNS,
on the recommendation of their special committees consisting only
of the independent directors, have unanimously approved the
transaction.
Under the terms of the proposed merger, SUNS shareholders will
receive an amount of SLRC shares with a net asset value (“NAV”)
equal to the NAV of SUNS shares that they hold at the time of
closing. The exchange ratio will be determined within forty-eight
hours prior to the closing such that shares issued by SLRC to SUNS
shareholders will result in an ownership split of the combined
company based on the respective NAVs of each of SLRC and SUNS. For
illustrative purposes, based on NAVs as of September 30, 2021 and
including expected transaction costs and distributions, SLRC would
issue approximately 0.7763 shares for each SUNS share outstanding,
resulting in approximate pro forma ownership of 77.2% for current
SLRC stockholders and 22.8% for current SUNS stockholders.
SLR Capital Partners, LLC (“SLR Capital Partners” or “we,” “us,”
or “our”) will continue to serve as the investment adviser of the
combined company and all current SLRC officers and directors will
remain in their current positions. Effective upon closing of the
merger, SLR Capital Partners has voluntarily agreed to a 25 basis
points reduction of the base management fee, resulting in a base
management fee of 1.50% on gross assets up to 200% of SLRC’s total
net assets as of the immediately preceding quarter end. SLRC will
retain the contractual annual base management fee payable by SLRC
of 1.00% on gross assets that exceed 200% of SLRC’s total net
assets as of the immediately preceding quarter end.
The combined company will trade under the ticker symbol “SLRC”
on the Nasdaq Global Select Market and currently expects to
continue to pay a quarterly distribution of $0.41 per share to the
combined company’s shareholders. However, there can be no assurance
that the combined company will pay quarterly distributions at this
amount or in any amount, and all future distributions will be
subject to the approval of the combined company’s board of
directors.
“Our announcement represents an important step to further drive
value for the shareholders of SLRC and SUNS,” said Michael Gross,
Co-Chief Executive Officer of SLRC and SUNS. “We look forward to
leveraging the benefits provided by the larger combined company
which will operate with greater scale, portfolio diversity and
financial flexibility.”
Bruce Spohler, Co-Chief Executive Officer of SLRC and SUNS,
said, “We believe the proposed merger of SUNS into SLRC will
provide several immediate and long-term benefits to shareholders of
both companies and will position us to continue to deliver strong
risk-adjusted returns and investment performance for both groups of
shareholders.”
Key Transaction Highlights
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The merger is expected to be accretive to the net investment income
of the combined company, reflecting anticipated operational
synergies through the elimination of duplicative expenses, the 25
basis points voluntary reduction of SLRC’s base management fee
described above, and interest expense savings resulting from more
efficient debt financing. |
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The larger market capitalization following completion of the merger
may result in greater secondary market trading liquidity and
broader equity research coverage. |
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The merger brings SLRC’s and SUNS’s niche commercial finance
investment strategies into one entity, promoting further
cross-collaboration and additional synergies, while providing both
investor bases access to a broader and more diversified set of
investment verticals with the potential to invest in larger
portfolio companies. |
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The combination of two known portfolios, with approximately 29% of
the combined portfolio consisting of previously overlapping SLRC
and SUNS investments, based on the portfolio fair values as of
September 30, 2021, will help to facilitate a seamless portfolio
integration. |
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The combined portfolio will result in greater diversification
through a larger portfolio and more individual borrowers. |
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The combined company would have had over $2 billion of assets
invested in more than 125 portfolio companies as of September 30,
2021. The combined investment portfolio would have been composed of
approximately 65% senior secured loans and approximately 35% equity
of which over 98% is invested in commercial finance companies which
lend and/or lease on a senior secured first lien basis. Investments
on non-accrual would have been low at 1.5% of the
combined portfolio at fair value. |
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Prior to the anticipated closing in the first half of 2022, the
SLRC Board of Directors intends to declare its ordinary course
$0.41 quarterly distribution for the first fiscal quarter of 2022.
Also prior to the closing, the SUNS Board of Directors intends to
declare and pay its ordinary course monthly distributions of $0.10
per month for the first fiscal quarter of 2022, including the March
2022 distribution, which will be declared and paid just prior to
the anticipated closing of the transaction. |
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We currently anticipate that SLRC’s quarterly distribution will
remain at $0.41 per share post-closing, which translates to a
distribution increase for SUNS shareholders of approximately 6%,
based on the illustrative conversion rate at 9/30. However, there
can be no assurance that the combined company will pay quarterly
distributions at this amount or in any amount, and all future
distributions will be subject to the approval of the combined
company’s board of directors. |
The transaction, which is intended to be treated as
a tax-free reorganization, is subject to various
approvals by SLRC and SUNS stockholders and other customary closing
conditions. Assuming these conditions are satisfied, the
transaction is expected to close in the first half of 2022.
Keefe, Bruyette & Woods, A Stifel Company, serves
as financial advisor and Blank Rome LLP serves as the legal counsel
to the special committee of SLRC. Houlihan Lokey Capital, Inc.
serves as financial advisor and Dechert LLP serves as the legal
counsel to the special committee of SUNS. Katten Muchin Rosenman
LLP serves as the legal counsel to SLRC, SUNS and SLR Capital
Partners.
Conference Call and Webcast
SLR Capital Partners will host a press conference to discuss
this transaction tomorrow, December 2, 2021, at 9:00 a.m. (Eastern
Time). All interested parties may participate in the conference
call by dialing (844) 889-7786 approximately 5-10 minutes prior to
the call, international callers should dial (661) 378-9930.
Participants should reference SLRC and the participant passcode of
5915529 when prompted. This conference call will also be broadcast
live over the Internet and can be accessed by all interested
parties through SLRC’s or SUNS’s website, www.slrinvestmentcorp.com
or www.slrseniorinvestmentcorp.com.
A presentation containing a discussion of this transaction will
be referenced on the conference call and has been posted to the
Investors sections of SLRC’s and SUNS’s websites and filed with the
U.S. Securities and Exchange Commission (the “SEC”).
To listen to the webcast, please go to either of these websites
prior to the start of the call to register and download any
necessary audio software. For those who are not able to listen to
the live broadcast, a replay of the webcast will be available soon
after the call. A telephone replay will be available until December
14, 2021 and can be accessed by dialing (855) 859-2056 and using
the passcode 5915529. International callers should dial (404)
537-3406.
About SLR Investment Corp.
SLR Investment Corp. is a closed-end investment company
that has elected to be regulated as a business development company
under the Investment Company Act of 1940. A specialty finance
company with expertise in several niche markets, SLRC primarily
invests directly and indirectly in leveraged, U. S. middle market
companies in the form of cash flow senior secured loans including
first lien and second lien debt instruments and asset-based loans
including senior secured loans collateralized on a first lien basis
primarily by current assets. For more information, please visit:
www.slrinvestmentcorp.com
About SLR Senior Investment Corp.
SLR Senior Investment Corp. is a closed-end
investment company that has elected to be regulated as a business
development company under the Investment Company Act of 1940. A
specialty finance company with expertise in several niche markets,
SUNS primarily invests directly and indirectly in leveraged, U.S.
middle market companies primarily in the form of cash flow first
lien senior secured debt instruments and asset-based loans
including senior secured loans collateralized on a first lien basis
primarily by current assets. For more information, please visit:
www.slrseniorinvestmentcorp.com
About SLR Capital Partners, LLC
SLR Capital Partners is an SEC-registered investment adviser
that primarily invests in leveraged, U.S. middle market companies
in the form of cash flow and asset-based senior secured
investments. Currently, SLR Capital Partners manages public and
private business development companies, private credit funds and
separately managed accounts, including serving as the investment
adviser to SLRC and SUNS.
Since its formation in 2006, SLR Capital
Partners and its affiliates have invested over $14 billion in
approximately 1,400 different portfolio companies with
approximately 250 private equity sponsors. SLR Capital Partners was
founded by Michael Gross and Bruce Spohler, who each have over 30
years of investment experience through multiple credit cycles. For
more information, please visit:
https://www.slrcapitalpartners.com/
Forward-Looking Statements
Some of the statements in this press release constitute
forward-looking statements because they relate to future events,
future performance or financial condition or
the two-step merger of SUNS with and into SLRC (the
“Mergers”). The forward-looking statements may include statements
as to: future operating results of SLRC and SUNS and distribution
projections; business prospects of SLRC and SUNS and the prospects
of their portfolio companies; and the impact of the investments
that SLRC and SUNS expect to make. In addition, words such as
“anticipate,” “believe,” “expect,” “seek,” “plan,” “should,”
“estimate,” “project” and “intend” indicate forward-looking
statements, although not all forward-looking statements include
these words. The forward-looking statements contained in this press
release involve risks and uncertainties. Certain factors could
cause actual results and conditions to differ materially from those
projected, including the uncertainties associated with (i) the
timing or likelihood of the Mergers closing; (ii) the expected
synergies and savings associated with the Mergers; (iii) the
ability to realize the anticipated benefits of the Mergers,
including the expected elimination of certain expenses and costs
due to the Mergers; (iv) the percentage of SLRC and SUNS
stockholders voting in favor of the proposals submitted for their
approval; (v) the possibility that competing offers or
acquisition proposals will be made; (vi) the possibility that
any or all of the various conditions to the consummation of the
Mergers may not be satisfied or waived; (vii) risks related to
diverting management’s attention from ongoing business operations;
(viii) the risk that stockholder litigation in connection with
the Mergers may result in significant costs of defense and
liability; (ix) changes in the economy, financial markets and
political environment, (x) risks associated with possible
disruption in the operations of SUNS and SLRC or the economy
generally due to terrorism, natural disasters or
the COVID-19 pandemic; (xi) future changes in laws
or regulations (including the interpretation of these laws and
regulations by regulatory authorities); (xii) conditions in SLRC’s
and SUNS’s operating areas, particularly with respect to business
development companies or regulated investment companies;
(xiii) general considerations associated with
the COVID-19 pandemic; and (xiv) other
considerations that may be disclosed from time to time in SLRC’s
and SUNS’s publicly disseminated documents and filings. SLRC and
SUNS have based the forward-looking statements included in this
presentation on information available to them on the date of this
presentation, and they assume no obligation to update any such
forward-looking statements. Although SLRC and SUNS undertake no
obligation to revise or update any forward-looking statements,
whether as a result of new information, future events or otherwise,
you are advised to consult any additional disclosures that they may
make directly to you or through reports that SLRC and SUNS in the
future may file with the SEC, including the Joint Proxy Statement
and the Registration Statement (each as defined below), annual
reports on Form 10-K, quarterly reports on
Form 10-Q and current reports on Form 8-K.
Additional Information and Where to Find It
In connection with the Mergers, SLRC and SUNS plan to file with
the SEC and mail to their respective stockholders a joint proxy
statement on Schedule 14A (the “Joint Proxy Statement”), and SLRC
plans to file with the SEC a registration statement on
Form N-14 (the “Registration Statement”) that will
include the Joint Proxy Statement and a prospectus of SLRC. The
Joint Proxy Statement and the Registration Statement will each
contain important information about SLRC, SUNS, the Mergers and
related matters. This communication does not constitute an offer to
sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. 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.
STOCKHOLDERS OF SUNS AND SLRC ARE URGED TO READ THE JOINT PROXY
STATEMENT AND REGISTRATION STATEMENT, AND OTHER DOCUMENTS THAT ARE
FILED OR WILL BE FILED WITH THE SEC, 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 SLRC, SUNS, THE MERGERS AND RELATED MATTERS.
Investors and security holders will be able to obtain the documents
filed with the SEC free of charge at the SEC’s website,
http://www.sec.gov or, for documents filed by SLRC, from SLRC’s
website at www.slrinvestmentcorp.com and, for documents filed by
SUNS, from SUNS’s website at www.slrseniorinvestmentcorp.com.
Participants in the Solicitation
SLRC, its directors, certain of its executive officers and
certain employees and officers of SLR Capital Partners and its
affiliates may be deemed to be participants in the solicitation of
proxies in connection with the Mergers. Information about the
directors and executive officers of SLRC is set forth in its proxy
statement for its 2021 Annual Meeting of Stockholders, which was
filed with the SEC on August 20, 2021. SUNS, its directors, certain
of its executive officers and certain employees and officers of SLR
Capital Partners and its affiliates may be deemed to be
participants in the solicitation of proxies in connection with the
Mergers. Information about the directors and executive officers of
SUNS is set forth in its proxy statement for its 2021 Annual
Meeting of Stockholders, which was filed with the SEC on August 20,
2021. Information regarding the persons who may, under the rules of
the SEC, be considered participants in the solicitation of the SLRC
and SUNS stockholders in connection with the Mergers will be
contained in the Joint Proxy Statement when such document becomes
available. These documents may be obtained free of charge from the
sources indicated above.
No Offer or Solicitation
This press release is not, and under no circumstances is it to
be construed as, a prospectus or an advertisement and the
communication of this press release is not, and under no
circumstances is it to be construed as, an offer to sell or a
solicitation of an offer to purchase any securities in SLRC, SUNS
or in any fund or other investment vehicle managed by SLR Capital
Partners or any of its affiliates.
ContactSLR Investment Corp. and SLR Senior
Investment Corp.Investor Relations(646) 308-8770
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