Sierra Income, Medley Capital (MCC), and Medley Management (MDLY) have entered into 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, Sierra will be the surviving entity, and 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 company will have approximately $4.7 billion of assets under management, including $1.8 billion of internally managed assets
- 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
- The transaction is expected to increase share trading liquidity for stockholders of Sierra, MCC and MDLY
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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.
“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.”
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.
Transaction Advisors:
- The special committee of Sierra’s board of directors is served by financial advisor Broadhaven Capital Partners, and legal counsel Sullivan & Worcester.
- The special committee of MCC’s board of directors is served by financial advisor Sandler O’Neill + Partners, and legal counsel Kramer Levin Naftalis & Frankel.
- 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 and legal counsel Eversheds Sutherland (US)
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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.
MCC is a closed-end, externally managed BDC that trades on the New York Stock Exchange and the Tel Aviv Stock Exchange.
Medley is an alternative asset management firm offering yield solutions to retail and institutional investors.
