PORTMAN RIDGE FINANCE CORPORATION Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On
The Merger Agreement provides that (i) Acquisition Sub will merge with and into GARS (the "Merger"), with GARS continuing as the surviving corporation and as a wholly owned subsidiary of PTMN, and (ii) immediately after the effectiveness of the Merger, GARS will merge with and into PTMN (the "Second Merger" and, together with the Merger, the "Mergers"), with PTMN continuing as the surviving corporation.
The boards of directors of each of PTMN and Acquisition Sub, and the managing member of Sierra Crest, have each unanimously approved the Merger Agreement and the transactions contemplated thereby. The board of directors of GARS, on the unanimous recommendation of a special committee thereof comprised solely of the independent directors of GARS, has unanimously approved the Merger Agreement and the transactions contemplated thereby.
Merger Consideration
At the effective time of the Merger (the "Effective Time"), each share of common
stock, par value
Two days prior to the Closing Date (as defined in the Merger Agreement) (such
date, the "Determination Date"), each of GARS and PTMN will deliver to the other
a calculation of its estimated net asset value as of
Additional Cash Consideration
In connection with the transactions contemplated by the Merger Agreement, as
additional consideration to the holders of shares of GARS Common Stock that are
issued and outstanding immediately prior to the Effective Time (excluding any
Cancelled Shares), Sierra Crest will pay or cause to be paid to such holders an
aggregate amount in cash equal to
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Representations, Warranties and Covenants
The Merger Agreement contains customary representations and warranties of GARS, PTMN and Sierra Crest. Additionally, the Merger Agreement contains customary pre-closing covenants, including covenants requiring each party (i) to use reasonable best efforts to cause the consummation of the transactions contemplated by the Merger Agreement, (ii) to conduct its business in the ordinary course and (iii) to refrain from taking certain actions prior to the consummation of the Merger without the other party's consent.
The Merger Agreement also contains customary non-solicitation provisions that prohibit GARS from soliciting or initiating discussions or negotiations with third parties regarding other proposals to acquire GARS and limit GARS' ability to engage with third parties that make unsolicited proposals. In addition, the Merger Agreement provides that (i) GARS must call and hold the Company Special Meeting (as defined in the Merger Agreement) solely for the purpose of seeking the adoption of the Merger Agreement and the approval of the Mergers by the holders of at least a majority of the outstanding shares of GARS Common Stock entitled to vote thereon at the Company Special Meeting (the "GARS Stockholder Approval"), (ii) GARS must include, in the proxy statement that is sent to stockholders of GARS relating to the Company Special Meeting, the recommendation of the board of directors of GARS that the stockholders of GARS adopt the Merger Agreement and approve the Mergers (the "GARS Recommendation") and (iii) subject to limited exceptions, the board of directors of GARS must not withhold or withdraw, or modify or qualify in a manner adverse to PTMN, the GARS Recommendation. Similarly, the Merger Agreement provides that PTMN (i) must call and hold the Parent Special Meeting (as defined in the Merger Agreement) solely for the purpose of seeking the approval of the issuance of shares of PTMN Common Stock in connection with the Merger by the holders of at least a majority of the outstanding shares of PTMN Common Stock represented and voting at the Parent Special Meeting (the "PTMN Stockholder Approval"), and (ii) must include, in the proxy statement that is sent to stockholders of PTMN relating to the Parent Special Meeting, the recommendation of the board of directors of PTMN that the stockholders of PTMN approve the issuance of shares of PTMN Common Stock in connection with the Merger (the "PTMN Recommendation").
Conditions to the Mergers
The consummation of the Mergers is subject to the satisfaction or (to the extent permitted by law) waiver of certain customary mutual closing conditions, including (i) the GARS Stockholder Approval and (ii) the PTMN Stockholder Approval. The obligation of each party to consummate the Mergers is also conditioned upon, among other things, (A) the other party's representations and warranties being true and correct (subject to certain materiality exceptions), (B) the other party having performed in all material respects its obligations under the Merger Agreement required to be performed by it at or prior to the Closing and (C) such party's receipt of an opinion that the Mergers, taken together, will qualify as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. In addition, the obligation of PTMN to consummate the Mergers is conditioned on the satisfaction of the CLO Conditions (as defined in the Merger Agreement).
Termination
The Merger Agreement contains customary termination rights. In particular, at any time prior to receipt of the GARS Stockholder Approval, GARS may terminate the Merger Agreement in order to simultaneously enter into a binding definitive agreement providing for the consummation of a Superior Proposal (as defined in the Merger Agreement), subject to GARS' compliance with notice and other specified conditions contained in the non-solicitation covenants, including giving PTMN the opportunity to propose revisions to the terms of the transactions contemplated by the Merger Agreement during a period following notice, and provided that GARS has not otherwise materially breached any provision of the non-solicitation covenants.
If the Merger Agreement is terminated by GARS as provided in the foregoing
paragraph or is terminated under certain other circumstances, GARS must pay PTMN
a termination fee equal to
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General
The foregoing summary description of the Merger Agreement and the transactions contemplated thereby is subject to and qualified in its entirety by reference to the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and the terms of which are incorporated herein by reference.
The Merger Agreement has been attached as an exhibit to this Current Report on Form 8-K in order to provide investors and security holders with information regarding its terms. It is not intended to provide any other financial information about the parties thereto or their respective subsidiaries and . . .
Item 8.01. Other Events.
On
Forward-Looking Statements
This document may contain forward-looking statements that involve substantial
risks and uncertainties, including statements regarding the completion of the
transaction between GARS and PTMN. The use of 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 GARS
stockholders voting in favor of the transaction, (v) the percentage of PTMN
stockholders voting in favor of the share issuance pursuant to the terms of the
transaction, (vi) the possibility that competing offers or acquisition proposals
for GARS will be made; (vii) the possibility that any or all of the various
conditions to the consummation of the merger may not be satisfied or waived;
(viii) risks related to diverting management's attention from GARS' ongoing
business operations, (ix) the risk that stockholder litigation in connection
with the transactions contemplated by the merger agreement may result in
significant costs of defense and liability, (x) the future operating results of
our portfolio companies or the combined company, (xi) regulatory factors,
(xii) changes in regional or national economic conditions, including but not
limited to the impact of the COVID-19 pandemic, and their impact on the
industries in which we invest, and (xiii) other changes in the conditions of the
industries in which we invest and other factors enumerated in our filings with
the
Additional Information and Where to Find It
In connection with the proposed transaction, GARS and PTMN plan to file with the
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Statement and the Registration Statement will each contain important information
about GARS, PTMN, the proposed transaction and related matters. 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 of 1933. STOCKHOLDERS OF GARS
AND PTMN ARE URGED TO READ THE JOINT PROXY STATEMENT AND REGISTRATION STATEMENT,
AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT GARS, PTMN, THE PROPOSED TRANSACTION AND RELATED MATTERS.
Investors and security holders will be able to obtain the documents filed with
the
Participants in the Solicitation
GARS, its directors, certain of its executive officers and certain employees and
officers of
No Offer or Solicitation
This Current Report is not, and under no circumstances is it to be construed as, a prospectus or an advertisement and the communication of this Current Report is not, and under no circumstances is it to be construed as, an offer to sell or a solicitation of an offer to purchase any securities in PTMN, GARS or in any fund or other investment vehicle.
Item 9.01 Financial Statements and Exhibits.
(d) The following exhibits are filed with this report:
Exhibit No. Description
2.1 Agreement and Plan of Merger, dated as of June 24, 2020 by and
among Portman Ridge Finance Corporation , Citadel Acquisition Sub
Inc. , Garrison Capital Inc. and Sierra Crest Investment
Management LLC .
99.1 Press Release dated June 24, 2020 .
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