Garrison Capital (GARS) and Portman Ridge Finance (PTMN) entered into a definitive agreement under which Garrison Capital will merge with and into Portman Ridge Finance, which is a business development company managed by Sierra Crest Investment Management, an affiliate of BC Partners Advisors and LibreMax Capital.
This transaction is the result of a previously announced review of strategic alternatives by Garrison Capital and was approved by a unanimous vote of the boards of directors of Garrison Capital and Portman Ridge Finance.
The combined company will be externally managed by Sierra Crest and, based on respective March 31, 2020 balance sheets not adjusted for transaction expenses, would have total investments of approximately $638.5 million and a net asset value of approximately $207 million.
Stockholders should expect to realize immediate net investment income per share accretion following the closing of the transaction, which is expected to deliver operational synergies for the combined company as a result of the pro forma larger scale and elimination of redundant Garrison Capital expenses.
Portman Ridge Finance will assume Garrison Capital’s on-balance sheet CLO liabilities at the closing of the transaction and, following the transaction, current Garrison Capital stockholders are expected to own approximately 41.6% of the combined company.
“After a robust and thorough strategic alternatives process conducted by the board of directors, we believe this transaction is an excellent result for the GARS stockholders, along with continuing the growth objective and value creation for PTMN stockholders,” Joseph Tansey, chairman and CEO of Garrison Capital, said. “In addition to a significant cash consideration component, we believe the continued ownership of PTMN stock and their affiliation with the BCP Credit team and the overall BC Partners platform will provide stockholders with enhanced value and significant future upside.”
“We are very excited to merge Garrison Capital Inc. with Portman Ridge Finance Corporation, as it represents the continued execution of our vision for consolidation in the BDC space and is expected to be an accretive transaction for GARS and PTMN stockholders,” Ted Goldthorpe, president and CEO of PTMN and head of BC Partners Credit, said. “With the combined entity being almost double the size of either current company, we believe stockholders will benefit from larger scale and hold sizes on the investment portfolio side, a reduction in per share public company costs and increased trading liquidity in the equity.”
Keefe, Bruyette & Woods, a Stifel Company, served as exclusive financial advisor to the special committee of Garrison Capital’s board of directors. Proskauer Rose served as counsel to Garrison Capital and Eversheds Sutherland served as counsel to the special committee of Garrison Capital’s board of directors. Simpson Thacher & Bartlett served as counsel to Portman Ridge Finance.
Garrison Capital is an externally managed, non-diversified, closed-end management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Garrison Capital is managed by its investment adviser, Garrison Capital Advisers, an affiliate of Garrison Investment Group.
Portman Ridge Finance is a publicly traded, externally managed investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. Portman Ridge Finance’s middle market investment business originates, structures, finances and manages a portfolio of term loans, mezzanine investments and selected equity securities in middle market companies.