Monroe Capital and Horizon Technology Finance, both business development companies (BCD) managed by affiliates of Monroe Capital, have entered into an agreement under which MRCC would merge with and into HRZN, subject to the receipt of certain shareholder approvals and the satisfaction of other closing conditions. Pursuant to the merger agreement, HRZN will be the surviving public entity and will continue to be managed by Horizon Technology Finance Management (HTFM) and trade on the NASDAQ under the symbol “HRZN.”
Monroe Capital Income Plus Corporation (MCIP), the Monroe Capital platform’s privately offered BDC, has agreed that, immediately prior to the merger, it will acquire substantially all of the assets of MRCC at fair value, as determined shortly before closing, for cash, subject to the satisfaction or waiver of the closing conditions in the merger agreement and certain other closing conditions applicable to the asset sale. Following the asset sale, MRCC’s only assets will be the net cash proceeds from the sale after giving effect to the receipt of proceeds from the asset sale, repayment of liabilities, transaction costs and distribution of undistributed net investment income. Pursuant to the merger agreement, MRCC will subsequently merge with HRZN.
Under the terms of the merger agreement, shareholders of MRCC will receive a number of HRZN shares with a net asset value (NAV) equal to the NAV of the shares that they hold in MRCC, as determined shortly before closing and after giving effect to the asset sale. Upon closing of the merger, the former MRCC shareholders are expected to own approximately 37% of HRZN. The merger transaction is structured as a NAV-for-NAV exchange of shares.
“We believe this innovative, shareholder-friendly transaction unlocks shareholder value within MRCC while also placing the combined HRZN entity in a much better position to serve borrowers and execute on its key long-term strategic initiatives,” Theodore L. Koenig, chairman and CEO of Monroe Capital, said. “This transaction is expected to be accretive to both shareholders of MRCC and HRZN, while also offering compelling synergies and cost-savings that will allow us to continue to deliver attractive, sustainable risk-adjusted returns to our investors for years to come. To accelerate its next phase of growth, HRZN will have the full support and backing of Monroe Capital, an approximately $22 billion AUM, premier asset manager.”
“This transaction provides HRZN with significant incremental leverageable capital, and a larger shareholder base to execute on its strategy of being a leading lender in providing both venture debt and also growth capital in the public small cap company space,” Michael P. Balkin, CEO of Horizon Technology Finance, said. “We are confident that the enhanced earnings power and expanded investing opportunity set will translate into stronger long-term total returns for our shareholders.”
The boards of directors of MRCC, HRZN and MCIP — each acting on the unanimous recommendation of their respective special committees consisting solely of certain independent directors — have unanimously approved either or both the merger and/or the asset sale (respectively, as required by each board of directors). In addition, the board of directors of MRCC will recommend that shareholders of MRCC vote in favor of the merger and asset sale, and the board of directors of HRZN will recommend that shareholders of HRZN vote in favor of the issuance of HRZN common stock in connection with the Merger.
The parties expect to close the transactions in Q4/25, subject to customary regulatory approvals, certain approvals by MRCC and HRZN shareholders and other closing conditions. Each of the asset sale and the merger will be conditioned upon the substantially concurrent consummation of the other.
Houlihan Lokey is serving as financial advisor to the special committee of MRCC in connection with the transaction. Nelson Mullins Riley & Scarborough is serving as legal counsel to the Special Committee of MRCC. Keefe, Bruyette & Woods, a Stifel company, is serving as financial advisor to the special committee of MCIP in connection with the transaction. Eversheds Sutherland is serving as legal counsel to the special committee of MCIP. Oppenheimer is serving as financial advisor to the special committee of HRZN in connection with the transaction. Blank Rome is serving as legal counsel to the special committee of HRZN. Dechert is serving as legal counsel to each BDC’s investment adviser in connection with the transaction.
