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Harvest Capital Credit to Merge Into Portman Ridge Finance
January 4, 2021
Source: S&P Global Market Intelligence
Harvest Capital Credit Corp. entered into a definitive agreement to merge with and into Portman Ridge Finance Corp., a business development company managed by Sierra Crest Investment Management LLC.
The transaction was unanimously approved by Harvest Capital's special committee and board as well as Portman Ridge's board. The parties expect the merger to be completed by the second quarter of 2021.
The combined company will be externally managed by Sierra Crest and is expected to have total assets of approximately $757 million and a net asset value of approximately $248 million. The additional scale and cutting of redundant expenses at Harvest Capital is expected to generate net investment income per share accretion after the deal is closed.
Assuming a transaction based on respective Sept. 30 net asset values for the companies, adjusted for expected transaction expenses and other items, the merger transaction values Harvest Capital's stock at approximately $10.11 per share, which represents 104% of Harvest's Sept. 30 net asset value. Using Portman's closing price of $1.80 on Dec. 22, the merger transaction values Harvest Capital's shares at approximately $7.71 apiece, which represents 79% of its Sept. 30 net asset value and a 30% premium to Harvest Capital's closing price Dec. 22.
Current Harvest Capital stockholders are expected to own about 16.6% of the new company and will receive aggregate consideration equal to Harvest's net asset value at closing in Portman Ridge shares and cash.
Harvest Capital's stockholders can elect to receive either cash or Portman Ridge shares in consideration for their Harvest Capital shares. All Harvest Capital stockholders will receive an additional cash payment from Sierra Crest of about $2.2 million, or about 36 cents per share.
Keefe Bruyette & Woods acted as financial adviser to Harvest Capital's special committee. Dechert LLP served as counsel to Harvest Capital and its special committee. Simpson Thacher & Bartlett LLP served as counsel to Portman Ridge.
Sierra Crest Investment Management is an affiliate of BC Partners Advisors LP.
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