Item 1.01.
|
Entry into a Material Definitive Agreement.
|
On
July 31, 2019, OHA Investment Corporation, a Maryland corporation (“
OHAI
”), entered into an Agreement and Plan
of Merger (the “
Merger Agreement
”) with Portman Ridge Finance Corporation, a Delaware corporation (“
PTMN
”),
Storm Acquisition Sub Inc., a Maryland corporation and direct wholly owned subsidiary of PTMN (“
Acquisition Sub
”),
and Sierra Crest Investment Management LLC, a Delaware limited liability company, the investment adviser to PTMN (“
PTMN
Adviser
”) and an affiliate of BC Partners
Advisors L.P. and LibreMax Capital LLC.
The
Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, Acquisition Sub will merge with and
into OHAI, with OHAI surviving as a wholly-owned subsidiary of PTMN (the “
First Merger
”) and, immediately thereafter,
OHAI will merge with and into PTMN, with PTMN continuing as the surviving company (the “
Second Merger
” and,
together with the First Merger, the “
Merger
”). The boards of directors of both OHAI and PTMN, including the
special committee of OHAI’s board of directors (the “
OHAI Board
”), have approved the Merger Agreement
and the transactions contemplated therein.
In
connection with the Merger, OHAI stockholders will receive a combination of (i) a minimum of $8 million in
cash (approximately $0.40 per share) from PTMN (as may be adjusted as described below); (ii) PTMN shares of common stock
valued at 100% of PTMN’s net asset value per share at the time of closing of the Merger in an aggregate number equal to
OHAI’s net asset value at closing minus the $8 million PTMN cash merger consideration (as may be adjusted as described
below); and (iii) an additional cash payment from PTMN Adviser directly to OHAI stockholders of $3 million in the aggregate,
or approximately $0.15 per share.
If
the aggregate number of shares of PTMN stock to be issued in connection with the merger would exceed 19.9% of the issued and outstanding
shares of PTMN common stock immediately prior to the closing, then the cash consideration payable by PTMN in the Merger
will be increased to the minimum extent necessary such that the aggregate number of shares of PTMN common stock to be issued in
connection with the merger does not exceed such threshold. The exchange ratio for the stock component of the merger consideration
will be determined by the net asset value of OHAI and PTMN as of 5:00 P.M. New York City time on the day prior to the closing
of the Merger (the “
Determination Date
”).
The
Merger Agreement contains representations, warranties and covenants, including, among others, covenants relating to the
operation of each of PTMN’s and OHAI’s businesses during the period prior to the closing of the Merger. OHAI has
agreed to convene and hold a stockholder meeting for the purpose of obtaining the approval for the First Merger by
OHAI’s stockholders, and has agreed to recommend that the stockholders approve the proposal.
The
Merger Agreement provides that OHAI may not solicit proposals relating to alternative transactions, or, subject to certain exceptions,
enter into discussions or negotiations or provide information in connection with any proposal for an alternative transaction.
However, the OHAI Board may, subject to certain conditions and payment of a termination fee of approximately $1.3 million, terminate
the Merger Agreement and enter into an agreement with respect to a bona fide, unsolicited, written and binding competing proposal
that is fully financed or has fully committed financing made by a third party if it determines in good faith, after consultation
with its financial advisors and outside legal advisors, and considering all legal, financial, regulatory and other material aspects
of, and the identity of the third party making, the competing proposal and such factors as the OHAI Board considers in good faith
to be appropriate, (1) is more favorable to stockholders of OHAI from a financial point of view than the transactions contemplated
by the Merger Agreement (including any revisions to the terms and conditions of the Merger Agreement proposed by PTMN to OHAI
in writing in response to such competing proposal) and (2) is reasonably likely of being completed on the terms proposed on a
timely basis (the “
Superior Proposal
”).
Consummation
of the Merger, which is currently anticipated to occur during the fourth quarter of 2019, is subject to certain closing conditions,
including (1) requisite approval of OHAI stockholders, (2) approval for listing on The Nasdaq Global Select Market of the shares
of PTMN common stock to be issued in the Merger, (3) effectiveness of the registration statement on Form N-14, which will include
a proxy statement of OHAI (“
Proxy Statement
”) and a prospectus of PTMN (the “
Prospectus
”),
(4) the absence of certain legal impediments to the consummation of the First Merger, (5) subject to certain exceptions, the accuracy
of the representations and warranties and compliance with the covenants of each party to the Merger Agreement, and (6) a requirement
that, as of the Determination Date, each of OHAI and PTMN deliver to each other a calculation of the net asset value as of the
day prior to the closing date of OHAI and PTMN, as applicable.
The
Merger Agreement also contains certain termination rights in favor of PTMN and OHAI, including if the Merger is not completed
on or before January 31, 2020 or if the requisite approval of OHAI’s stockholders are not obtained. The Merger Agreement
also provides that, upon the termination of the Merger Agreement under certain circumstances, OHAI may be required to pay PTMN,
a termination fee of approximately $1.3 million or, at PTMN’s option, pay PTMN for damages subject to certain caps. Similarly, the Merger Agreements provides that, upon the termination of the
Merger Agreement under certain circumstances, PTMN may be required to pay OHAI, a termination fee of approximately $1.3 million
or, at OHAI’s option, pay OHAI for damages subject to certain caps. If this Merger Agreement is terminated by OHAI or PTMN
under certain circumstances, including when the requisite approval of OHAI’s stockholders are not obtained, and no termination
fee is otherwise required to be paid by OHAI in connection therewith, then OHAI will be required to reimburse PTMN and its affiliates
for half of their reasonable and documented out-of-pocket fees and expenses incurred and payable by PTMN or Acquisition Sub or
on their behalf in connection with or related to the Merger Agreement or the transactions contemplated thereby, subject to a cap
of $500,000.
The
representations and warranties and covenants set forth in the Merger Agreement have been made only for purposes of such agreement
and were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting
parties, including qualification by confidential disclosures made for purposes of allocating contractual risk between the parties
to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable
to the contracting parties that differ from those applicable to investors. Accordingly, the Merger Agreement is included with
this filing only to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors
with any factual information regarding the parties to the Merger Agreement or their respective businesses.
The foregoing summary description of the Merger Agreement and the
transactions contemplated thereby is subject to and qualified in its entirety by reference to the Merger Agreement, a copy of which
is attached hereto as Exhibit 2.1 and the terms of which are incorporated herein by reference.