Medley Merger: The week of the three-way Medley Group vote has arrived. On Friday April 19, 2019 the ballots at Medley Capital (MCC); Sierra Income (SIC) and Medley Management (MDLY) will be counted and we’ll know if the three will become one under a newly public SIC banner. Or will we ? The chances of yet another postponement of the vote are high. Although the BDC Reporter noted – just last week – that the SBA has caused MCC to promise to redeem all its $135mn in subordinated debentures in short order, no official word has come to investors by dint of an update of the Proxy. Nor have the disclosures required by the Delaware Chancery Court following a lawsuit regarding this vote been made by the Medley defendants. Nor have shareholders been officially updated on the multiple offers made by third parties in recent weeks and the Board’s reaction to them. Speaking of the Board, MCC has lost two of its “independent” directors. Can a BDC even function – legally speaking – with those positions still unfilled ? We don’t know the answer but we may be about to find out.
Medley Merger: The next scheduled vote on the merger of the three Medley Group entities into a public BDC fronted by Sierra Income, which will go from non-traded to public company, is another week away. Nonetheless, we’ll be looking out for developments during this penultimate week. There are still a number of outstanding items for which some resolution is required. Will Medley Capital (MCC) be following the instructions of the Delaware Chancery Court and providing an updated Proxy with a fuller account of how the merger was conceived ? Or has MCC – as indicated in when the judge’s opinion was first published – decided to appeal ? Or ignore ? Also, we wonder what the status is of the proposed transfer of the MCC SBA licenses to Sierra Income. Has the SBA – in charge of such things – decided to give the go ahead, or not ? That’s a major item. Also, the initial deadline for the merger is past. How will an extension be handled ? Also, what’s happening about replacing the “independent” directors and meeting stock exchange rules for corporate governance ? (We’ve written multiple feature articles about these and a multitude of other aspects of this subject. Just type “Medley” into the Search box at the top of the website and see what we mean !)
LBO to take out Wrench Group debt held by Crescent; BDVC's holdings include Hexion’s prepetition notes
Investor demand for large transactions such as Ultimate Software and Staples underscored a palpable shift in loan market tone last week as accounts scrambled to commit to the relatively few deals in syndication. A few stragglers aside, numerous deals have accelerated, upsized or flexed lower in recent days, for a lopsided downward-to-upward flex ratio of 7:3. Bonds, meanwhile, plowed forward with oversubscribed new issuance, steady retail cash inflows, and an upside grind in more active trading.
Medley Redux Redux: Now that the vote on the three way Merger has been postponed for the umpteenth time, we’ll be looking this week for the reasons why the delay has occurred. That may or may not come from Medley Capital (MCC) or Medley Management (MDLY) by way of press release or SEC filing. Or, we might hear from one of the activists as to the why of the situations, or read a court transcript to learn what shareholders – who are mostly playing the role of spectator in this situation – have a right to know.
Refinancings seen in several portfolios; Barings BDC’s holdings unaffected by Calpine refi
Download: LFI BDC Portfolio News 3-25-19
With the jumbo Power Solutions LBO financing out the door early last week after an over-the-weekend delay, the primary loan market assumed a more subdued tone as arrangers cobbled together a smattering of opportunistic business in the face of a dwindling pipeline. Arrangers continue to flock to the high-yield market for attractive rates—a trend that is likely to continue with the Fed’s dovish stance last week—with Allison Transmission the latest issuer to step forward with a bond-for-loan takeout exercise.
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