SLR Investment Corp. closed its previously announced merger with SLR Senior Investment Corp. (SUNS), with SLR Investment Corp. as the surviving company. The combined company will operate as SLR Investment Corp. and continue to trade on the NASDAQ Global Select Market under the ticker symbol “SLRC.” As of Dec. 31, 2021, the combined company has approximately $2.6 billion of total assets and $1.1 billion of total net assets on a pro forma basis.
“We believe the combined company will provide several long-term benefits to shareholders,” Bruce Spohler, co-CEO of SLR Investment Corp., said. “The reduction of the base management fee, cost savings through synergies and opportunities to reduce our borrowing costs will enhance the combined company’s net interest margin.”
“The combined portfolio provides shareholders with increased diversification and access to a broader set of niche private lending strategies,” Michael Gross, co-CEO of SLR Investment Corp., said. “As of Dec. 31, 2021, on a pro forma basis, approximately 70% of the combined company’s income was attributed to specialty finance loans and approximately 30% was attributed to cash flow loans. We believe SLRC’s unique mix of asset-based loans and first lien senior secured cash flow loans to sponsor-backed U.S. upper middle-market companies provides shareholders with an attractive and differentiated return profile.”
In connection with the merger, former SUNS shareholders will receive 0.7796 shares of SLR Investment Corp. for each share of SUNS they own based on the final exchange ratio, subject to payment of cash in lieu of fractional shares. As a result of the merger, legacy SLR Investment Corp. shareholders and former SUNS shareholders own approximately 77% and 23%, respectively, of the combined company.
In addition, upon closing of the merger, SLR Investment Corp.’s annual base management fee payable by SLR Investment Corp. to SLR Capital Partners, was lowered from 1.75% to 1.5% on gross assets up to 200% of SLR Investment Corp.’s total net assets, and SLR Investment Corp. retained the annual base management fee payable by SLR Investment Corp. to SLR Capital Partners of 1% on gross assets that exceed 200% of SLR Investment Corp.’s total net assets. SLR Investment Corp.’s target leverage ratio will remain at 0.9x to 1.25x debt-to-equity.
Keefe, Bruyette & Woods served as financial advisor and Blank Rome served as the legal counsel to the special committee of SLR Investment Corp. for this transaction. Houlihan Lokey Capital served as financial advisor and Dechert served as the legal counsel to the special committee of SUNS. Katten Muchin Rosenman served as the legal counsel to SLR Investment Corp., SUNS and SLR Capital Partners.