Item 7.01. Regulation FD Disclosure.
OnNovember 18, 2021 ,Barings BDC, Inc. (the "Company", "Barings" or "BBDC") issued the updated information set forth in the "Capitalization" table below regarding the actual capitalization of the Company and Sierra Income Corporation ("Sierra") as ofSeptember 30, 2021 and the Company's pro forma capitalization as ofSeptember 30, 2021 adjusted to give effect to its proposed acquisition of Sierra (the "Sierra Acquisition"). CAPITALIZATION
The following table sets forth the Company's and Sierra's cash and
capitalization as of
(1) on an actual basis; and
(2) on an as adjusted basis giving effect to the Sierra Acquisition, as described
in the footnotes to the "Capitalization" table below.
Investors should read this table together with the "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company and Sierra and the consolidated financial statements and related notes thereto included in the Company's and Sierra's Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2021 .
Dollar amounts are presented in thousands, except share data.
As of
Pro forma for the Sierra Barings Actual Sierra Actual Acquisition Assets: Investments at fair value Non-Control / Non-Affiliate investments (Barings cost of$1,346,611 at September 30, 2021)$ 1,355,088 $ 423,154 $ 1,765,548 (1) Affiliate investments (Barings cost of$211,274 at September 30, 2021) 223,000 18,843 241,278 (1) Control investments (Barings cost of$25,826 at September 30, 2021) 24,395 102,271 123,597 (1) Short-term investments (Barings cost of$50,000 at September 30, 2021) 50,000 - 50,000 Total investments at fair value 1,652,483 544,268 2,180,423 (1) Cash (Barings restricted cash of$0 at September 30, 2021) 30,248 74,931 11,079 (2) Foreign currencies (Barings cost of$11,311 at September 30, 2021) 11,137 - 11,137 Interest and fees receivable 24,997 4,321 29,318 Prepaid expenses and other assets 1,786 2,754 4,540 Credit support agreement (Barings cost of$13,600 at September 30, 2021) 14,300 - 64,300 (3) Deferred financing fees 3,145 - 3,145 Receivable from unsettled transactions 61,438 9,240 70,678 Total assets$ 1,799,534 $ 635,514 $ 2,374,620 Liabilities: Accounts payable and accrued liabilities 2,711 5,084 7,795 Interest payable 4,318 217 4,535 Administrative fees payable 750 442 1,192 Base management fees payable 5,274 2,780 8,054 Incentive management fees payable 4,443 - 4,443 Derivative liabilities 229 - 229 Payable from unsettled transactions 59 - 59 Borrowings under credit facilities 662,664 79,000 662,664 (2) Notes payable (net of deferred financing fees) 374,265 - 374,265 Deferred tax liability - 3,017 3,017 Taxes payable - 933 933 Total liabilities$ 1,054,712 $ 91,473 $ 1,067,186 Net Assets Common stock Outstanding as ofSeptember 30, 2021 , (Barings common stock$0.001 par value per share, 150,000,000 shares authorized and 65,316,085 shares issued and outstanding) (Sierra common stock$0.001 **) 65 102 167 (4) Additional paid-in capital 1,027,707 848,736 1,876,443 Total distributable earnings (loss) (282,951 ) (304,796 ) (569,175 ) Total net assets 744,822 544,042 1,307,434 Net asset value per share $ 11.40 $ 5.32 $ 11.75
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(1) Includes estimated reduction in fair value of investments of (a)
approximately
(2) Assumes all Sierra cash is used to repay the Existing Sierra Loan Agreement (as defined under "Description of the Merger Agreement-Additional Covenants-Repayment of Existing Sierra Loan Agreement" in the Form N-14 registration statement filed by the Company with theSEC onOctober 29, 2021 (the "Sierra Merger N -14") and a portion of our cash is used to pay the remainder of the Existing Sierra Loan Agreement and the associated transaction expenses of approximately$6.0 million for us and approximately$9.1 million for Sierra. Does not include any adjustment for the Cash Consideration (as defined in the Sierra Merger N-14) as the Cash Consideration is being paid by the Company' investment adviser and not the Company.
(3) Estimated initial value of the Credit Support Agreement (as defined in the
Sierra Merger N-14) of
(4) Represents 65,316,085 shares of our common stock outstanding prior to the Sierra First Merger (as defined in the Sierra Merger N-14) plus 45,996,985 shares of the Company's stock to be issued to Sierra stockholders in connection with the Sierra First Merger. The number of shares of our common stock to be issued to Sierra stockholders in the Sierra First Merger was determined by multiplying 102,276,889.12 shares of Sierra common stock outstanding prior to the Sierra First Merger by the exchange ratio of 0.44973.
Additional Information and Where to Find It
This communication relates to a proposed business combination involving BBDC and Sierra, along with related proposals for which stockholder approval will be sought (collectively, the "Proposals").
In connection with the proposed transaction, BBDC and Sierra will file with theSEC and mail to their respective stockholders a definitive joint proxy statement on Schedule 14A (the "Proxy Statement"), and BBDC will file with theSEC a registration statement on Form N-14 which is subsequently declared effective (the "Registration Statement") that will include the Proxy Statement and a prospectus of BBDC. The Proxy Statement and the Registration Statement will each contain important information about BBDC, Sierra, the proposed transaction and related matters. STOCKHOLDERS OF EACH OF BBDC AND SIERRA ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY ALL RELEVANT DOCUMENTS FILED WITH THESEC , INCLUDING THE PROXY STATEMENT AND THE REGISTRATION STATEMENT ONCE IN FINAL FORM, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS THERETO, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BBDC, SIERRA, THE TRANSACTION AND THE PROPOSALS. Investors and securityholders will be able to obtain the documents filed with theSEC free of charge at theSEC's web site at http://www.sec.gov and, for documents filed by BBDC, from the BBDC website at http://www.baringsbdc.com or for documents filed by Sierra, from the Sierra website at http://www.sierraincomecorp.com.
Participants in the Solicitation
BBDC and Sierra and their respective directors, executive officers and certain other members of management and employees ofBarings Advisors LLC ,SIC Advisors LLC and their respective affiliates, may be deemed to be participants in the solicitation of proxies from the stockholders of BBDC and Sierra in connection with the Proposals. Information about the directors and executive officers of BBDC is set forth in its proxy statement for its 2021 annual meeting of stockholders, which was filed with theSEC onMarch 26, 2021 . Information about the directors and executive officers of Sierra is set forth in its proxy statement for its 2021 annual meeting of stockholders, which was filed with theSEC onApril 28, 2021 . Information regarding the persons who may, under the rules of theSEC , be considered participants in the solicitation of BBDC's and Sierra's stockholders in connection with the Proposals will be contained in the Proxy Statement and other relevant materials to be filed with theSEC when such documents become available. Investors should read the Proxy Statement and Registration Statement carefully and in their entirety when they become available before making any voting or investment decisions. These documents may be obtained free of charge from the sources indicated above.
No Offer or Solicitation
This Current Report on Form 8-K is not, and under no circumstances is it to be construed as, a prospectus or an advertisement and the communication of this Current Report on Form 8-K 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 BBDC, Sierra or in any fund or other investment vehicle. 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.
Forward-Looking Statements and Important Disclosure Notice
This filing may contain certain forward-looking statements, including statements with regard to future events or the future performance or operations of the Company. Words such as "believes," "expects," "projects," and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, including changes in the economy, risks associated with possible disruption in the Company's operations or the economy generally due to pandemics, terrorism or natural disasters, and future changes in laws or regulations and conditions in the Company's operating area. Some of these factors are enumerated in the filings the Company makes with theSEC . The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should carefully review the "Risk Factors" section of the Company's most recent annual report on Form 10-K and any updates in its quarterly reports on Form 10-Q for a discussion of the risks and uncertainties that the Company believes are material to its business, operating results, prospects and financial condition. Except as otherwise required by federal securities laws, the Company does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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