NEW YORK, July 29, 2019 /PRNewswire/ -- Sierra Income
Corporation ("Sierra" or the "Company"), Medley Capital Corporation
(NYSE: MCC, "MCC") (TASE: MCC), and Medley Management Inc. (NYSE:
MDLY, "MDLY" or "Medley") today announced that they have entered
into definitive amended agreements under which MCC will merge with
and into Sierra and Sierra will simultaneously acquire MDLY and its
existing asset management business, which will operate as a wholly
owned subsidiary of the Company. Following the closing of the
transactions, in which Sierra will be the surviving entity, the
Company will be operated as an internally managed business
development company ("BDC"). Based upon the recommendation of
each of their respective special committees of independent
directors, the Boards of Directors of Sierra, MCC and MDLY
unanimously approved the transactions.
Transaction Highlights:
- The Combined Company1 will have
approximately $4.7 billion of assets
under management, including $1.8
billion of internally managed
assets;2
- Upon closing, the Combined Company will have enhanced scale and
is expected to be the third largest internally managed BDC and the
13th largest publicly traded BDC by assets;
- The transaction is expected to be accretive to net investment
income ("NII") per share for both Sierra and MCC; and
- The transaction is expected to increase share trading liquidity
for stockholders of Sierra, MCC and MDLY.
Upon closing, the Combined Company will be led by MDLY's senior
leadership team and the investment management team will remain in
place. The Combined Company Board will initially consist of four
independent directors and one interested director. The four
independent directors will consist of the three current independent
directors of Sierra and one independent director from MCC to be
chosen prior to closing by Sierra's special
committee.3
"We believe the amended proposed mergers are in the best
interests of the stockholders of each entity," said Brook Taube, CEO of Medley. "The Combined
Company will have a broadened BDC platform, increased operational
efficiencies, a stronger balance sheet and improved portfolio
diversification. In addition, MDLY's asset management business is
expected to add to Sierra's NII and net asset value over time."
Terms of the Transactions
MCC stockholders will receive 0.66x to 0.68x shares of
Sierra Common Stock for each share
of MCC Common Stock; the actual exchange ratio will be determined
prior to closing and will be subject to adjustment for certain
potential costs associated with the transactions. In addition, upon
closing, the eligible class members will participate pro rata in a
settlement fund consisting of $17
million of cash and $30
million of Sierra common stock.4
MDLY Class A stockholders, other than Medley LLC Unitholders,
will receive 0.2668 shares of Sierra Common
Stock for each Medley Class A share and $2.96 per share of cash consideration.
Medley LLC Unitholders have agreed to convert their units into
MDLY Class A Common Stock immediately prior to closing, and will
receive 0.2072 shares of Sierra Common
Stock for each MDLY Class A share and $2.66 per share of cash consideration. 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. Additionally, Medley LLC Unitholders will roll over 100%
of their after-tax equity value into the Combined Company, which
will be subject to a 12-month lock-up period, further aligning
management's interests with stockholders.
At close, current Sierra stockholders 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 the Tel Aviv
Stock Exchange.5 There are no expected changes to
the current distribution policies of the respective entities prior
to the closing of the transactions. It is anticipated that
the Combined Company will continue with Sierra's current
distribution policy after the close of the transactions.
The mergers are subject to approval by Sierra, MCC and MDLY
stockholders, regulatory approval, other customary closing
conditions and third party consents. The Sierra-MCC merger requires
court approval of the stipulation of settlement. The
transactions are expected to close in the fourth quarter of
2019.
The Sierra-MCC merger agreement provides for a 60-day "go-shop"
period, during which MCC's special committee and advisors may
actively solicit alternative proposals and enter into negotiations
with other parties. During this period, MCC will have the right to
terminate the merger agreement to enter into a superior proposal.
There can be no assurance this 60-day "go-shop" period will result
in a superior proposal.
Transaction Advisors
- The Special Committee of Sierra's Board of Directors is served
by financial advisor Broadhaven Capital Partners, LLC and legal
counsel Sullivan & Worcester LLP
- The Special Committee of MCC'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 MDLY'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
ABOUT SIERRA INCOME CORPORATION
Sierra is a non-traded 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 at www.sierraincomecorp.com.
ABOUT MEDLEY CAPITAL CORPORATION
MCC is a closed-end, externally managed BDC that trades on the
New York Stock Exchange (NYSE: MCC) and the Tel Aviv Stock Exchange
(TASE: MCC). MCC'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. MCC's portfolio generally consists
of senior secured first lien loans and senior secured second lien
loans. MCC 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 MCC at
www.medleycapitalcorp.com.
ABOUT MEDLEY MANAGEMENT INC.
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 $4.7 billion of
assets under management in two BDCs, MCC (NYSE: MCC) (TASE: MCC)
and Sierra, a credit interval fund, Sierra Total Return Fund
(NASDAQ: SRNTX), and several private investment vehicles. Over the
past 17 years, Medley has provided capital to over 400 companies
across 35 industries in North
America.6
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). MCC 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,
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 MDLY 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 MDLY 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 MDLY'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 MDLY, Sierra successfully taking all actions reasonably
required with respect to certain outstanding indebtedness of MCC
and MDLY to prevent any material adverse effect relating thereto,
certain required approvals of the SEC (including necessary
exemptive relief to consummate the merger transactions), court
approval of a stipulation of settlement, the necessary consents of
certain third-party advisory clients of MDLY, 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; (iii) the results of the
go-shop process that will be conducted by MCC's special committee;
and (iv) 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 MDLY include, but are not limited to,
(i) the costs and expenses that Sierra, MCC and MDLY 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
MDLY; (iii) that projections with respect to distributions may
prove to be incorrect; (iv) Sierra's ability to invest its
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 MDLY 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 MDLY 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 MDLY's common
stock. There can be no assurance of the level of any distributions
to be paid, if any, following consummation of the proposed
transactions.
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 Amended
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 MDLY'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 MDLY's views as of the date of hereof. Sierra,
MCC and MDLY 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 MDLY 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 MDLY'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 an amendment to the
Registration Statement on Form N-14 that will include a proxy
statement and that also will constitute a prospectus of Sierra, and
MCC and MDLY intend to file with the SEC and mail to their
respective stockholders an amendment to the proxy statement on
Schedule 14A (the "Joint Proxy Statement/Prospectus" and, as
amended, the "Amended Joint Proxy Statement/Prospectus). The Joint
Proxy Statement/Prospectus, as applicable, was first mailed or
otherwise delivered to stockholders of Sierra, MCC, and MDLY on or
about December 21, 2018. INVESTORS
AND STOCKHOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS, AS WELL AS THE AMENDED JOINT PROXY
STATEMENT/PROSPECTUS, WHEN THEY BECOME AVAILABLE, OR ANY
SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT SIERRA, MCC, AND
MDLY, THE PROPOSED TRANSACTIONS AND RELATED MATTERS. Investors
and stockholders can obtain the Joint Proxy Statement/Prospectus
and other documents filed with the SEC by Sierra, MCC, and MDLY,
free of charge, from the SEC's website (www.sec.gov) and from
Sierra's website (www.sierraincomecorp.com), MCC's website
(www.medleycapitalcorp.com), or MDLY's website (www.mdly.com).
Investors and stockholders may also obtain free copies of the Joint
Proxy Statement/Prospectus and other documents filed with the SEC
from Sierra, MCC, or MDLY by contacting Sam
Anderson, Medley's Investor Relations contact, at
212-759-0777.
Participants in the Solicitation
Sierra, MCC, and MDLY and their respective directors, executive
officers, other members of their management and certain employees
of Medley LLC 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 2019 annual meeting of stockholders filed with the SEC on
April 30, 2019 (the "Sierra
2019 Proxy Statement"). Information regarding MCC's
directors and executive officers is available in its definitive
proxy statement for its 2019 annual meeting of stockholders filed
with the SEC on May 9, 2019 (the
"MCC 2019 Proxy Statement"). Information regarding
MDLY's directors and executive officers is available in its
definitive proxy statement for its 2019 annual meeting of
stockholders filed with the SEC on April 30,
2019 (the "MDLY 2019 Proxy Statement"). To the
extent holdings of securities by such directors or executive
officers have changed since the amounts disclosed in the Sierra
2019 Proxy Statement, the MCC 2019 Proxy Statement, and the MDLY
2019 Proxy Statement, 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 Amended 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 The Combined Company refers to the surviving entity
following the merger of MCC with and into Sierra and the merger of
MDLY with and into Sierra Management, Inc., a wholly owned
subsidiary of Sierra. All of the financial metrics described herein
assume that both mergers are consummated. However, as the
merger of Sierra and MDLY is not contingent upon the closing of the
merger of Sierra and MCC, the surviving entity at the closing of
the transaction could be Sierra, operated as an internally managed
BDC, with MDLY and its existing asset management business operated
as its wholly owned subsidiary. In that event, MCC could,
among other outcomes, pursue a strategic transaction with another
entity or continue to be managed by MCC Advisors LLC for the near
or long term. All of these scenarios, among others, will be
described in the amendment to the Joint Proxy Statement/Prospectus
of Sierra, MCC and MDLY.
2 Estimates of the Combined Company's post-merger
financial position are based on the publicly reported financial
information of Sierra, MCC and MDLY as of March 31, 2019.
3 The independent directors of Sierra will also have the
option to elect in their sole discretion an additional independent
director who will be selected by the independent directors of
Sierra.
4 The $30 million of
Sierra common stock is to be calculated based on the pro forma net
asset value to be reported in the amendment to the Joint Proxy
Statement/Prospectus disclosing the amendment to the MCC merger
agreement. The stipulation of settlement, which will be filed with
the Delaware Chancery Court,
provides for release of all claims that were or could have been
asserted in the action captioned as In re Medley Capital
Corporation Stockholder Litigation, C.A. No. 2019-0100-KSJM.
5 Listing on the Tel Aviv Stock Exchange will only
be necessary if the merger of Sierra and MCC is consummated, and is
therefore not a condition to closing of the merger of Sierra and
MDLY.
6 Medley Management Inc. is the parent company
of Medley LLC and several registered investment advisers
(collectively, "Medley"). Assets under management refers to assets
of Medley's 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 March 31, 2019.
Investor Relations Contact:
Sam Anderson
Head of Capital Markets & Risk Management
Medley Management Inc.
212-759-0777
Media Contacts:
Jonathan
Gasthalter/Nathaniel
Garnick
Gasthalter & Co.
212-257-4170
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SOURCE Medley Management Inc.
