MCG Capital Corporation up for sale

The BDC, which has been winding down its assets, announced that was exploring options to maximise shareholder value, including a sale.

MCG Capital Corporation, a Nasdaq-listed business development company, announced today (9 February) that it could put itself up for sale. The lender is examining how to maximise shareholder value as it winds down.

A spokesperson for MCG Capital declined to comment.

The firm has hired Morgan Stanley as financial advisor and engaged legal firm, Wachtell, Lipton, Rosen & Katz, the statement said.

The firm has been winding down its business since last year. In its fourth quarter and full  year 2013 results, the firm said that it believed the market was at the peak of a credit cycle. “The current supply of debt capital exceeds the demand by issuers in our markets, resulting in lower pricing and weaker contractual protections,” the earnings release said.

The following quarter, in its first quarter earnings release for 2014, MCG said that it would weigh up new investments against the risk-reward relative to buying its own stock, the price of which had fallen considerably.

Since then the firm has bought-back shares and engaged in a share tender offer in November. It also exited its SBIC Fund, left behind its non-accrual loans and cut operating costs.

The firm’s share price bounced up to $3.95 a share this morning following the announcement, from around $3.80 last Friday.

Arlington, Virginia-based MCG is a commercial finance company providing capital and advisory services to lower middle-market companies in the US.