Shareholders of business development company (BDC) TICC Capital Corporation did not approve TICC’s planned sale of the investment management contract to Benefit Street Partners (BSP) at a special meeting today (22 December).
While more than 50 percent of the shareholders voted for the agreement, the BDC failed to gather the 67 percent majority required for the transaction to pass. “As a result, the change of control of the adviser will not occur and the company will continue to be managed under the existing investment advisory agreement,” read a statement from TICC.
The underperforming BDC has been the subject of several rival bids in recent months. TPG Specialty Lending (TSLX) and NexPoint Advisors, an affiliate of Highland Capital Management, submitted competing bids for the BDC after Benefit Street signed its original agreement.
BSP and the two parties have all since updated their offers with better benefits for shareholders. TSLX and NexPoint have been urging TICC shareholders to vote against the BSP proposal, though the adverse vote will not force TICC’s board to engage with either of the rival bidders.
TICC today reaffirmed that it will retain its current investment advisor, partly owned by some of the BDC’s senior management. “Although the proposed transaction was not approved, we were pleased to achieve support from over 50 percent of shares present at the meeting and are grateful for the feedback we have received from shareholders and others throughout this process,” said Jonathan Cohen, chief executive of TICC. “We look forward to continuing to execute on our strategy of rotating out of lower-yielding, more liquid corporate loans, into higher-yielding, middle-market loans, repurchasing shares, lowering leverage and continuing our ongoing dialogue with our stockholders.”
On Wednesday December 23, the chief executive of BSP, Tom Gahan and the firm's president, Rich Byrne, issued an open letter to TICC shareholders welcoming the majority vote in favour but expressing disappointment that it had fallen short. They also reaffirmed their commitment to the deal: “We plan to continue to evaluate ways to help deliver value to TICC stockholders and remain committed to being a leader in the BDC sector.”
Commenting on the decision, Josh Easterly, chief executive of TSLX, said: “TICC has already endorsed the need for change in its argument in support of the BSP transaction, and with today’s rejection of the conflicted BSP transaction, TICC’s board now must follow through on its mandate to maximize value for stockholders by engaging with TSLX.”
TICC’s board has so far showed no signs of engaging with either TSLX, NexPoint or any other competing party. A spokeswoman for the BDC couldn’t immediately provide comment on whether the directors plan to entertain these or other offers.
This article was updated on 24 December to include a reference to BSP's open letter restating their commitment to the deal and entering the BDC sector.