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Transaction Provides Financial and Strategic Benefits to All Shareholders
Creates a Larger, More Scaled BDC Focused on Middle Market Direct Lending
Combined Company Will Have Approximately $3.4 Billion of Total Investments and $1.4 Billion of Net Assetsi
NEW YORK, Nov. 07, 2023 (GLOBE NEWSWIRE) -- MidCap Financial Investment Corporation (NASDAQ:MFIC), Apollo Senior Floating Rate Fund Inc. (NYSE:AFT) and Apollo Tactical Income Fund Inc. (NYSE:AIF) (AFT and AIF, together, the "CEFs") today announced that they have entered into separate definitive agreements pursuant to which AFT and AIF will merge with and into MFIC (the "Mergers" or the "Transactions"), subject to certain shareholder approvals and customary closing conditions. MFIC is a publicly traded business development company ("BDC") managed by an affiliate of Apollo Global Management, Inc. (("Apollo", NYSE:APO), and the CEFs are publicly traded closed-end management investment companies also managed by an affiliate of Apollo.ii Under the terms of the merger agreements, MFIC will be the surviving entity and will continue to operate as a BDC and trade on the NASDAQ Global Select Exchange under the ticker symbol "MFIC." MFIC's investment strategy will continue to focus on first lien floating rate loans to middle market companies, primarily sourced by MidCap Financial,iii a leading middle market lender. All current MFIC officers and directors will remain in their current positions.
Under the terms of the merger agreements, shareholders of the CEFs will receive an amount of newly issued shares of MFIC common stock based on the ratio of the net asset value ("NAV") per share of the applicable CEF divided by the NAV per share of MFIC, each determined shortly before the closing of each Merger (the "Exchange Ratios").iv Assuming both Mergers close, the estimated pro forma post-merger shareholder ownership is approximately 69% for current MFIC shareholders, 16% for current AFT shareholders, and 15% for current AIF shareholders.v In addition, in consideration of the closing of each Merger, following the closing of the Merger, an affiliate of Apollo will make a special cash payment of $0.25 per share to each AFT or AIF shareholder of record as of the closing date of the applicable transaction.vi In addition, following the closing of the Merger(s), as applicable, MFIC will pay a cash dividend of $0.20 per share. The exact record date for the $0.20 per share special dividend will be determined by the MFIC Board of Directors based upon the timing of the closings of the Merger(s).vii
Mr. Howard Widra, MFIC's Executive Chairman, said "We are excited to announce a transformative merger of AFT and AIF with MFIC, which we believe will create a stronger combined company. We look forward to realizing the benefits of a larger combined company, including enhanced returns for all shareholders, greater scale, and enhanced portfolio diversification. We also believe that a larger combined company may improve market visibility and lead to increased market value for its shareholders."
Key Transaction Highlights
The Transactions, which are intended to be treated as tax-free reorganizations, are subject to various approvals of MFIC, AFT, and AIF shareholders, which will be described in further detail in the Joint Proxy Statement and Registration Statement (each as defined below), which will be filed in the coming weeks, and other customary closing conditions. Assuming satisfaction of these conditions, the Transactions are expected to close in the first half of 2024. Each Merger will not be contingent on the other, and MFIC may merge with only one of the CEFs if shareholder approval is not received for both sets of CEF shareholders. Prior to the anticipated closings of the Mergers, MFIC, AFT, and AIF intend to operate in the normal course including declaring regular distributions.ix
The CEFs' existing indebtedness will be repaid by MFIC contemporaneously with the closings of the Mergers.
To aid in the analysis of the Transactions, the Boards of Directors of MFIC and the CEFs each established a special committee, consisting solely of certain of their respective independent directors. The Boards of Directors of MFIC and the CEFs, on the recommendation of their respective special committees, have unanimously approved the Transactions.
Lazard served as financial advisor and Proskauer Rose LLP as legal counsel to the special committee of MFIC.
Keefe, Bruyette & Woods, A Stifel Company, served as financial advisor and Dechert LLP as legal counsel to the special committees of the CEFs.
Simpson Thacher & Bartlett LLP served as legal counsel to MFIC, AFT and AIF with respect to the Mergers.