MCC, MDLY, Sierra merger receives endorsement from ISS

The Institutional Shareholder Service recommends voting in favour of the proposed transaction, despite more than 11% of MCC shareholders coming out against it.

The Institutional Shareholder Service (ISS) became the first external entity to come out in favour of the proposed merger of Medley Capital Corporation (MCC) and Medley Management (MDLY) into Sierra Income Corporation, with less than a fortnight until the shareholder vote.

The ISS recommended shareholders cast a “yes” ballot for the proposed transaction in a statement put out by MCC on 27 January. The recommendation comes two weeks after FrontFour Capital, an activist investor owning approximately 3.7 percent of MCC’s common shares, submitted a presentation to the ISS. The Greenwich, Connecticut-based hedge fund argued that the deal doesn’t maximise MCC shareholder value.

Medley declined to comment beyond the statements made in the press release. ISS declined to comment. FrontFour Capital was unable to be reached for comment by press time.

In addition to FrontFour, Roumell Asset Management, Moab Capital Partners, BLR Partners and Josh Schechter, who collectively own over 11 percent of MCC shares, have voiced opposition and plan to vote against the merger.

Shareholders have until 8 February to vote on the proposed merger that was originally announced in August.

If the merger passes, MCC shareholders will receive 0.8050 shares of Sierra stock for every share they own. MDLY Class A stock holders will receive 0.3836 Sierra shares, $3.44 cash consideration and a $0.65 special cash dividend. MDLY unitholders will receive 0.3836 shares of common stock, a $3.44 cash consideration and a $0.35 special cash dividend.

Medley Management is a New York-based investment firm with more than $4.8 billion in assets under management.