OHA Investment Corporation to Merge with Portman Ridge Finance Corporation
- The combined company will be externally managed by Sierra Crest and is expected to have total assets of approximately
$372 million, and net asset value of approximately $181 million(each based on March 31, 2019balance sheets, not adjusted for transaction expenses);
- OHAI stockholders will benefit from PTMN’s lower fee structure (1.50% management fee vs current management fee of 1.75%; 17.5% incentive fee vs current incentive fee of 20.0%) and should expect to realize net investment income, net asset value and distribution accretion within the first year following closing of the transaction;
- Following the transaction, current OHAI stockholders are expected to own approximately 16% of the combined company;
- OHAI’s credit facility will be paid off in full at the closing of the transaction. Based on PTMN’s lower borrowing cost, the combined company can expect to realize interest savings of approximately
$0.5 millionper annum;
- The transaction is expected to deliver operational synergies for the combined company as a result of the pro forma larger scale and elimination of redundant OHAI expenses;
- Pursuant to the merger agreement, if at any time within one year after the closing date of the transaction shares of PTMN are trading at a price below 75% of its net asset value, PTMN will initiate a share buyback program of up to
$10 millionto support the trading price of the combined entity for up to one year from the date such program is announced;
- PTMN stockholder approval is not required for the merger transaction, contributing to additional certainty of closing; and
Oak Hill Advisors, L.P., the external advisor to OHAI, intends to vote its OHAI shares in favor of the transaction.
Under the terms of the proposed transaction, OHAI’s stockholders will receive value per share (based on the net asset value per share of PTMN’s stock and the aggregate value of cash consideration) of approximately 108% of OHAI’s net asset value per share at the time of the closing of the transaction from PTMN and Sierra Crest. As of
If the aggregate number of shares of PTMN stock to be issued in connection with the merger would exceed 19.9% of the issued and outstanding shares of PTMN common stock immediately prior to the transaction closing, then the cash consideration payable by PTMN will be increased to the minimum extent necessary such that the aggregate number of shares of PTMN common stock to be issued in connection with the merger does not exceed such threshold. The exact exchange ratio for the stock component of the merger will be determined by the net asset value of OHAI and PTMN as of the closing, calculated as of
“We believe this transaction, which is the culmination of a thorough strategic process that OHAI’s Board of Directors initiated to enhance stockholder value, provides an attractive outcome for and is in the best interest of OHAI stockholders, while providing continued value creation opportunity for PTMN stockholders,” said Steven Wayne, OHAI’s President and Chief Executive Officer. “In addition to a significant cash consideration component, we believe our stockholders will continue to realize significant identifiable value through their continued ownership of PTMN stock and partnership with the credit team at
“We are very excited to merge
Keefe, Bruyette & Woods served as exclusive financial advisor to the Special Committee of OHAI’s Board of Directors.
Investor Presentation and Conference Call
PTMN and OHAI will host a joint conference call on
PTMN's filings with the SEC, earnings releases, press releases and other financial, operational and governance information are available on PTMN's website at www.portmanridge.com.
This press release may contain forward-looking statements that involve substantial risks and uncertainties, including statements regarding the completion of the transaction between OHAI and PTMN. We may use words such as "anticipates," "believes," "intends," "plans," "expects," "projects," "estimates," "will," "should," "may" and similar expressions to identify forward-looking statements. These forward-looking statements are subject to various risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with (i) the timing or likelihood of the transaction closing, (ii) the expected synergies and savings associated with the transaction, (iii) the expected elimination of certain expenses and costs due to the transaction, (iv) the percentage of OHAI stockholders voting in favor of the transaction, (v) the possibility that competing offers or acquisition proposals for OHAI will be made; (vi) the possibility that any or all of the various conditions to the consummation of the merger may not be satisfied or waived; (vii) risks related to diverting management’s attention from OHAI’s ongoing business operations, (viii) the risk that stockholder litigation in connection with the transactions contemplated by the merger agreement may result in significant costs of defense and liability, (ix) the future operating results of our portfolio companies or the combined company, (x) regulatory factors, (xi) changes in regional or national economic conditions and their impact on the industries in which we invest, and (xii) other changes in the conditions of the industries in which we invest and other factors enumerated in our filings with the SEC. You should not place undue reliance on such forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to update our forward-looking statements made herein, unless required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this press release. You should read this communication and the documents that we reference in this communication completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Additional Information and Where to Find It
This communication relates to a proposed business combination involving OHAI and PTMN for which OHAI stockholder approval will be sought (the “Proposal”). In connection with the Proposal, each of OHAI and PTMN intend to file relevant materials with the SEC, including a registration statement on Form N-14, which will include a proxy statement of OHAI and a prospectus of PTMN. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act. STOCKHOLDERS OF OHAI ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT OF OHAI REGARDING THE PROPOSAL (THE “PROXY STATEMENT”) WHEN IT BECOMES AVAILABLE, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS THERETO, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT OHAI, PTMN, THE MERGER AND THE PROPOSAL. Investors and security holders will be able to obtain the documents filed with the SEC free of charge at the SEC’s web site, http://www.sec.gov or, for documents filed by OHAI, from OHAI’s website at http://ir.ohainvestmentcorporation.com/home.
Participants in the Solicitation
OHAI and PTMN and their respective directors, executive officers and certain other members of management, employees of
Steven T. Wayne – President and Chief Executive Officer
Cory E. Gilbert – Chief Financial Officer
For media inquiries, contact
Jeremy Fielding – Jeremy.Fielding@kekst.com
Ted Gilpin – Chief Financial Officer (212) 891-5007
New York, NY 10022
For media inquiries, contact:
+1 (646) 818-9266
Source: Portman Ridge Finance Corporation