Houlihan Lokey Advises Triangle Capital Corporation
Houlihan Lokey is pleased to announce that Triangle Capital Corporation (TCAP) has completed its previously announced asset sale transaction with an affiliate of Benefit Street Partners L.L.C. (BSP), under which the company sold its investment portfolio to funds advised by BSP for $793 million in cash. It has also completed its previously announced externalization transaction with Barings LLC, through which Barings has become the investment adviser to the company in exchange for a payment by Barings of $85 million, or $1.78 per share, directly to the company's shareholders. Houlihan Lokey served as exclusive financial advisor to TCAP. The transactions were announced on April 4, 2018, and approved by stockholders on July 24, 2018. The BSP and Barings transactions closed on July 31, 2018, and August 2, 2018, respectively. TCAP has been renamed Barings BDC, Inc., and its shares now trade on the New York Stock Exchange under the ticker symbol "BBDC."
As a part of the externalization transaction, Barings made an investment of $100 million in newly issued shares of the company's common stock at $11.72, TCAP's pro forma NAV estimate, accounting for the sale of TCAP's assets to BSP as well as other transaction expenses and adjustments. Furthermore, Barings has committed to purchase up to $50 million of shares of the company's common stock in the open market at a price up to and including the then-current net asset value for a period of two years post-closing, after which Barings has agreed to use any funds remaining to purchase shares from the company at the greater of the then-current net asset value and market price. Barings' total financial commitment to the transaction is $235 million. Immediately following the closing of these transactions, the company is launching a $50 million issuer tender to purchase shares of its common stock at prices up to and including net asset value per share.
On April 4, 2018, TCAP announced the sale of the investment portfolio to BSP and the $85 million shareholder payment by Barings, which, on a pro forma basis, represented total cash consideration to the company and to TCAP shareholders, net of the repayment of outstanding debt, of $691 million, or approximately $14.48 per share as of December 31, 2017 (1.08x TCAP's December 31, 2017, net asset value per share). Net of estimated transaction expenses and adjustments, the pro forma expected total cash consideration to the company and to TCAP shareholders was $659 million, or approximately $13.80 per share as of December 31, 2017 (1.03x TCAP's December 31, 2017, net asset value), which represents a 43% and 26% premium to the November 2, 2017 (date of announcement to pursue strategic alternatives) and April 3, 2018 (date prior to transaction announcement) closing market prices of TCAP's common stock, respectively.
In connection with the stockholder vote for the asset sale and externalization transaction, the company's stockholders also voted to approve a proposal to authorize the company to be subject to a reduced asset coverage ratio of at least 150% under the Investment Company Act of 1940, as amended. As a result of the approval, and subject to the satisfaction of certain ongoing disclosure requirements, effective July 25, 2018, the minimum asset coverage ratio applicable to the company under the 1940 Act is 150%. The company has elected to be treated as a business development company under the Investment Company Act of 1940.
Barings is a global financial services firm with more than $300 billion under management dedicated to meeting the evolving investment and capital needs of their clients. Part of MassMutual, Barings maintains a strong global presence with over 1,800 associates and offices in 16 countries.
BSP is a leading credit-focused alternative asset management firm with $25 billion in assets under management that manages assets across a broad range of complementary credit strategies and is in partnership with Providence Equity Partners L.L.C., a leading global private equity firm with more than $57 billion in capital under management. The BSP platform was established in 2008 and is based in New York.
Houlihan Lokey served as exclusive financial advisor to TCAP.