NexPoint offers $25m in cash, $50m in share purchases in latest MCC bid

NexPoint Advisors has sweetened its bid for Medley Capital Corporation (MCC) by upping its cash compensation and the amount of MCC stock it pledges to purchase should it ultimately acquire the beleaguered business development company.

Dallas-based NexPoint Advisors, an affiliate of Highland Capital Management, has said it will provide a $25 million cash payment, up from the $10 million the suitor initially said it would pay. It has also said it would purchase $50 million in MCC shares, up from the $30 million contemplated in the original proposal.

Fee adjustments in the proposal remain unchanged: NexPoint would cut the MCC management fee to 1.25 percent on gross assets and the incentive fee to 15 percent, down from the current 1.5 percent and 17.5 percent, respectively. NexPoint would also institute an expense cap of 0.50 percent.

“NexPoint continues to be interested in pursuing our proposal with the company and stands ready and able to negotiate,” the bidder said in a letter to the two remaining independent directors on the MCC board. A source familiar with the matter said NexPoint had not yet received a response.

Medley declined to comment.

Under the MCC management-backed merger, the management fee would be 1.75 percent and the incentive fee would be 20 percent. In addition, NexPoint plans to put forward two board nominees: Mark Goglia and Stephen Mongillo. Two of MCC’s independent directors, John Mack and Mark Lerdal, resigned last month.

The updated NexPoint bid comes after Marathon Asset Management submitted a counteroffer for MCC.

Marathon plans to lower the BDC’s management fee to 1.25 percent and incentive fee to 17.5 percent rather than the 1.75 percent and 20 percent the resulting entity from the management-backed merger would charge. In addition, Marathon proposes buying back 3 percent of outstanding shares at book value, which would be distributed to shareholders as a special dividend.