BC Partners is set to acquire Marret Resource Corporation, a Toronto-based natural resource lender that plans to pivot away from its current business model of investing in energy, precious metal and other commodity-based sectors.
Marret would raise at least C$25 million ($19.46 million; €15.95 million), according to an announcement, though a source familiar with the matter noted up to C$100 million could be raised. It currently charges a 1 percent management fee and a 15 percent incentive fee over a 5 percent hurdle.
The vehicle would become a source of permanent capital for London-based BC Partners, which runs its credit operations out of New York, this person said. The firm is currently raising a separate source of permanent capital via a business development company, as Private Debt Investor previously reported.
BC Partners declined to comment, while a Marret representative could not be reached for comment.
BC will focus on senior secured loans across a variety of non-cyclical sectors and industries, this person said, a decidedly different tack than natural resources lending. The vehicle, currently traded on the Toronto Stock Exchange, will remain public, the source said.
Marret will terminate its management services agreement with Marret Asset Management. BC Partners Credit managing partner Ted Goldthorpe will oversee the vehicle, according to a statement.
In connection with the deal, Marret will give its shareholders the option to retain their common stock, cash out their shares at C$0.53 or convert their common stock to warrants. There would be 7.8 warrants per common share, and each will have a seven-year price term with an exercise price equal to 140 percent of the capital raised.
Marret will solicit its shareholders for final approval of the deal, 28.2 percent of which have agreed to vote in favor of the transaction, including its largest shareholder, Anson Funds.
Three years ago, Marret said it was “reviewing various alternatives” to address its stock price, which was at a “significant… discount”. In June 2015, the firm’s shareholders agreed to amend Marret’s bylaws to allow for the redemption of stock.