{"id":540711,"date":"2021-09-21T16:25:49","date_gmt":"2021-09-21T20:25:49","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/sierra-income-corporation-to-merge-with-barings-bdc-inc-and-combined-company-to-be-managed-by-barings-llc\/"},"modified":"2021-09-21T16:25:49","modified_gmt":"2021-09-21T20:25:49","slug":"sierra-income-corporation-to-merge-with-barings-bdc-inc-and-combined-company-to-be-managed-by-barings-llc","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/sierra-income-corporation-to-merge-with-barings-bdc-inc-and-combined-company-to-be-managed-by-barings-llc\/","title":{"rendered":"Sierra Income Corporation To Merge With Barings BDC, Inc. And Combined Company To Be Managed By Barings LLC"},"content":{"rendered":"
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Enhances Scale, Earnings Profile and Positions the Combined Company as a Market Leading BDC<\/h2>\n

PR Newswire<\/p>\n<\/p><\/div>\n

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\n CHARLOTTE, N.C.<\/span> and\u00a0NEW YORK, Sept. 21, 2021<\/span> \/PRNewswire\/ — Barings BDC, Inc. (NYSE: BBDC) (“Barings BDC”) and Sierra Income Corporation (“Sierra”) announced today that they have entered into a definitive merger agreement under which Sierra will merge with and into Barings BDC (the “Transaction”). The combined company, which will remain externally managed by Barings LLC, is expected to have approximately $2.2 billion<\/span> of investments on a pro forma basis. The boards of directors of both companies, the Sierra Special Committee, which is comprised of all of the independent directors of Sierra, and the independent directors of Barings BDC have unanimously approved the Transaction, which is currently expected to close in the first quarter of 2022.<\/p>\n

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Under the terms of the merger agreement, Sierra stockholders will receive aggregate consideration in the form of cash and stock consideration valued at approximately $623.7 million<\/span> based on Barings BDC’s June 30, 2021<\/span> net asset value (“NAV”) of $11.39<\/span> per share and representing total book value consideration of $6.10<\/span> per fully diluted Sierra share. On a market value basis, based on the closing price of Barings BDC common stock on September 20, 2021<\/span>, the Transaction represents total consideration for Sierra stockholders of approximately $588.6 million<\/span> or approximately $5.76<\/span> per Sierra share, representing a premium of 6.1% to Sierra’s NAV as of June 30, 2021<\/span>. <\/p>\n

Sierra’s stockholders will receive 0.44973 shares of Barings BDC common stock for each share of Sierra common stock, resulting in approximately 46.0 million newly issued Barings BDC shares, having a total value of approximately $523.7 million<\/span>, or $5.12<\/span> per fully diluted Sierra share, based on Barings BDC’s June 30, 2021<\/span> NAV of $11.39<\/span> per share. In addition, Barings LLC will pay $100 million<\/span> in cash, or approximately $0.98<\/span> per share, directly to Sierra stockholders at closing. Following the Transaction, Barings BDC’s pro forma equity base is expected to be approximately $1.3 billion<\/span> and Barings BDC stockholders and Sierra stockholders are expected to own approximately 58.7% and 41.3%, respectively, of the combined company. <\/p>\n

In addition, Barings LLC will enter into a credit support agreement (“CSA”) with Barings BDC, for the benefit of the combined company, to protect against net cumulative unrealized and realized losses of up to $100.0 million<\/span> on the acquired Sierra investment portfolio over the next 10 years. <\/p>\n

Additionally, Barings LLC will amend its current investment advisory agreement with Barings BDC to raise the incentive fee hurdle rate from 8.0% to 8.25%, effective as of closing. \u00a0<\/p>\n

Barings BDC will also provide up to $30.0 million<\/span> in secondary-market support via accretive share repurchases over a 12-month period in the event the combined company’s shares trade below a specific level of NAV per share following the completion of the first quarterly period ended after the consummation of the Transaction, subject to covenant and regulatory constraints (including Rule 10b<\/span>-18 under the Securities Exchange Act of 1934).<\/p>\n

Barings BDC has agreed that, on the closing date, it will increase the size of its board of directors and cause two current independent members of the board of directors of Sierra to be selected by Barings BDC to be appointed to the Barings BDC board of directors as Class II directors.<\/p>\n

In connection with the closing of the proposed Transaction, Sierra will repay all outstanding amounts under its existing credit facility and any remaining obligations thereunder will be terminated. <\/p>\n

Barings BDC believes that the increased size and scale of the combined company will create many strategic and financial benefits to shareholders and will position the combined company to capitalize on favorable market conditions. Including the financial support provided by Barings LLC, it is anticipated that the combination will provide the following benefits: <\/p>\n