Court delays TICC shareholder meeting

A federal judge ordered TICC management to provide additional information about the planned sale of its investment manager to Benefit Street Partners, delaying a special shareholder meeting about the deal scheduled for 27 October.  

The US District Court for the District of Connecticut has ruled that TICC Capital Corp must provide additional disclosures about the planned sale of its investment manager to Benefit Street Partners (BSP). The extra information must include “the consideration that may be paid to TICC Management’s owners and the process the special committee of TICC’s board followed in rejecting NexPoint’s alternative proposal,” TICC confirmed on Friday (23 October).

As a result, the special meeting of TICC shareholders scheduled for 27 October has been postponed until after the disclosures are made. The results of a shareholder vote on whether to accept the BSP deal was due to wrap up with the meeting tomorrow (27 October) but will now remain open.

The court denied NexPoint Advisors’ motion for a preliminary injunction that sought to have new director nominees added to the ballot at TICC’s planned special stockholder meeting. The court said that TICC’s board would only be expanded if TICC’s stockholders voted in favour of the new agreement with BSP. The court rejected NexPoint’s claim that it had the right to put six directors up for election at the special meeting.

The judge recognised that NexPoint’s director nominations were a “quasi-takeover attempt”, TICC claimed in its statement.

NexPoint and TPG Specialty Lending have both submitted competing bids to acquire TICC’s shares (rather than the investment manager as BSP is seeking). Some BDCs and industry analysts have argued that the BSP transaction pays an undeserved $60 million to an underperforming manager, though neither BSP, nor TICC have ever publicly confirmed the sale price.

TPG issued a statement today (26 October) saying that the court’s decision suggests that TICC violated the law and misled investors. TPG added that independent proxy advisors, several prominent BDC analysts, various TICC stockholders and a federal judge have now expressed concerns about the BSP transaction.

Morgan Stanley and Wachtell, Lipton, Rosen & Katz are advising the special committee of the TICC board. The committee was recently set up to advise TICC on the sale. Both TPG’s BDC and NexPoint are also TICC shareholders.

Greenwich, Connecticut-based TICC is a publicly-traded business development company that invests in syndicated bank loans and purchases debt and equity tranches of CLOs.

BSP is the credit arm of private equity firm Providence Equity Partners. The manager is planning to turn TICC’s portfolio into more directly originated investments to improve performance.