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TPG Specialty Lending Increases Proposal to Acquire TICC Capital

November 02, 2015, 07:36 AM
Filed Under: Industry News

TPG Specialty Lending, Inc (TSLX), a specialty finance company focused on lending to middle-market companies, announced that it has increased its offer, as a percentage of net asset value, to acquire TICC Capital Corp. in a stock-for-stock transaction. TSLX believes that its updated proposal is superior in that it would deliver to all TICC stockholders an immediate, upfront premium and the opportunity to participate in an industry-leading platform with a sustainable dividend.

Under the terms of the updated proposal, TICC stockholders would receive a number of shares of TSLX common stock that results in TICC stockholders receiving 90% of TICC net asset value per share as of the signing date of a definitive agreement. Based on TICC’s reported net asset value as of June 30, 2015, the updated proposal is equal to stockholders receiving $7.74 per share.

TICC’s stock price has not closed above 90% of its most recently reported net asset value since December 10, 2014 and, based on its closing stock price on Friday, October 30, 2015, is currently trading at a 25.7% discount to TICC’s most recently reported net asset value. The updated proposal adds certainty for stockholders, indexing the value of TSLX’s proposal with the most recently reported net asset value. For example, should TICC’s recent investment performance increase net asset value, the TSLX proposal would automatically increase to compensate stockholders for this value.

Josh Easterly, Chairman and Co-Chief Executive Officer of TSLX, commented: “In recent weeks, TICC has readily admitted that the status quo is not a viable path for the company and is not in the best interest of its stockholders, who are overwhelmingly against TICC’s proposed transaction with Benefit Street Partners L.L.C. (“BSP”). The broader market has recognized this as well. All of the major proxy advisory firms, five out of six of TICC’s own independent equity analysts, as well as many significant stockholders have called on TICC to pursue a sale of TICC to deliver real value to long-suffering TICC stockholders.

“Today we have increased the value of our proposal to demonstrate that we are fully committed to completing this transaction. Our announcement today addresses many of TICC’s previous concerns and, most importantly, gives stockholders a clear view on how our proposal delivers immediate and upfront value for their investment. It is now time for TICC’s board of directors to act in the best interest of its stockholders and make the right choice by engaging in substantive discussions with us.

“We also note that TICC is one of only approximately four BDCs that have yet to announce the date on which they will release their latest financial results. Stockholders should wonder why TICC is holding back on informing stockholders about when it will update them regarding the state of their investment.

“We stand by our superior proposal and remain confident that our increased proposal is the most compelling option for TICC stockholders. We are ready and willing to engage with TICC to make this transaction a reality.”

In addition to the increased value and immediate upfront premium, key benefits of the updated TSLX proposal include:

  • Only the TSLX proposal provides TICC stockholders with an immediate, upfront premium for ALL of their shares;
  • The TSLX proposal is superior to the proposal made by BSP, whose share repurchase program would result in the acquisition of only $50-$100 million of shares at 90% of net asset value, representing only 13.0-26.1% of TICC’s outstanding shares based on its October 30, 2015 closing stock price of $6.39;
  • TICC stockholders would have the opportunity to participate in an industry-leading platform that has delivered three-year total stockholder returns of 51.6%, a period in which the BDC sector generated 7.4% and TICC generated NEGATIVE 13.9%;
  • TSLX pays sustainable dividends funded by the income it generates rather than its investors’ own capital and expects to grow its dividend over time as it executes its proven investment strategy;
  • TSLX has a stockholder-friendly approach to share buybacks and is committed to repurchasing its stock if the share price falls below net asset value;
  • TSLX has had lower relative fees than TICC since 2012, even when compared to the most recent BSP fee structure, after taking into account total economic profit; and
  • TICC stockholders would benefit from the opportunity for increased liquidity by owning shares in a combined company expected to have a pro forma market capitalization in excess of $1.3 billion, as compared to TICC’s current market capitalization of approximately $380 million.

Goldman, Sachs & Co. is acting as financial advisor and Cleary Gottlieb Steen & Hamilton LLP is acting as legal advisor to TSLX.

TPG Specialty Lending, Inc. is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities.

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