Item 1.01. Entry into a Material Definitive Agreement.
As previously disclosed, on December 9, 2019, Goldman Sachs BDC, Inc., a Delaware corporation (“GSBD”), entered into the Agreement and Plan of
Merger (the “Original Merger Agreement”), with Goldman Sachs Middle Market Lending Corp., a Delaware corporation (“MMLC”), Evergreen Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of GSBD (“Merger
Sub”) and Goldman Sachs Asset Management, L.P., a Delaware limited partnership and investment adviser to each of GSBD and MMLC (“GSAM,” and together with GSBD, MMLC and Merger Sub, the “Parties”).
Due to the volatility of the market price of GSBD common stock precipitated by the COVID-19 pandemic, it became
unclear whether a closing condition in the Original Merger Agreement that required MMLC stockholders to receive shares of GSBD common stock that have a market value in excess of MMLC’s net asset value would be satisfied. As a result, on June
11, 2020, the Parties amended and restated the Original Merger Agreement in its entirety (as amended and restated, the “Amended and Restated Merger Agreement”) to, among other things, change the consideration to be paid to MMLC
stockholders from 0.9939 shares of GSBD common stock for each share of MMLC common stock under the Original Merger Agreement to net asset value (“NAV”) for net asset value (i.e., a number of shares of GSBD common stock with a NAV equal to
the NAV per share of MMLC common stock, each determined no earlier than 48 hours (excluding Sundays and holidays) prior to the effective time of the Initial Merger) (the “Exchange Ratio”).
The Amended and Restated Merger Agreement provides that, on the terms and subject to the conditions set forth in the Amended and Restated Merger Agreement,
Merger Sub will merge with and into MMLC, with MMLC continuing as the surviving company and as a wholly-owned subsidiary of GSBD (the “Initial Merger”) and, immediately thereafter, MMLC will merge with and into GSBD, with GSBD continuing
as the surviving company (the “Second Merger” and, together with the Initial Merger, the “Mergers”). The boards of directors of both GSBD and MMLC, including all of the respective independent directors, in each case, on the
recommendation of a special committee (such company’s “Special Committee”) comprising solely of the independent directors of GSBD or MMLC, as applicable, have approved the Amended and Restated Merger Agreement and the transactions
contemplated therein. The Parties intend the Mergers to be treated as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
In the Initial Merger, each share of MMLC common stock issued and outstanding immediately prior to the effective time of the Initial Merger (other than
certain excluded shares as described in the Amended and Restated Merger Agreement) will be converted into the right to receive a number of shares of GSBD common stock equal to the Exchange Ratio. Any holder of MMLC common stock converted pursuant to
the Initial Merger that would otherwise have been entitled to receive a fraction of a share of GSBD common stock will receive cash in lieu thereof.
The
Amended and Restated Merger Agreement contains representations, warranties and covenants, including, among others, covenants relating to the operation of each of GSBD’s and MMLC’s businesses during the period prior to the closing of the
Merger. GSBD and MMLC have agreed to convene and hold stockholder meetings for the purpose of obtaining the approvals required of GSBD’s and MMLC’s stockholders, respectively, and the boards of directors of GSBD and MMLC have agreed to
recommend that their respective stockholders approve the applicable proposals (as described below).
In connection with the transaction, GSBD will adopt
an amended and restated certificate of incorporation to be effective upon the closing of the Second Merger (the “GSBD Charter Amendment”) that will generally restrict all stockholders who received shares of GSBD common stock in the Initial
Merger (the “Affected Stockholders”) from transferring their respective shares for at least 90 days following the date of filing of the GSBD Charter Amendment (the “Filing Date”), subject to a
modified lock-up schedule thereafter (lock-up restrictions on 1/3 of the Affected Stockholders’ shares will lapse after 90 days from the Filing
Date, lock-up restrictions on an additional 1/3 of the Affected Stockholders’ shares will lapse after 180 days from the Filing Date,
and lock-up restrictions on the remaining 1/3 of the Affected Stockholders’ shares will lapse after 270 days from the Filing Date).
2
The Amended and Restated Merger Agreement provides that neither GSBD nor MMLC may solicit proposals relating to
alternative transactions, or, subject to certain exceptions, initiate or participate in discussions or negotiations regarding, or provide information with respect to, any proposal for an alternative transaction. However, each of the GSBD board of
directors and the MMLC board of directors may, subject to certain conditions, change its recommendation to the applicable stockholders or terminate the Amended and Restated Merger Agreement and enter into an agreement with respect to, in the case of
GSBD, a “GSBD Superior Proposal” or, in the case of MMLC, a “MMLC Superior Proposal” (each as defined in the Amended and Restated Merger Agreement) if it determines in its reasonable good faith judgment, after consultation with
its outside legal counsel and on the recommendation of the applicable Special Committee, that the failure to take such action would be reasonably likely to breach its fiduciary duty under applicable law (taking into account any changes to the
Amended and Restated Merger Agreement proposed by MMLC or GSBD, as applicable).
Consummation of the Initial Merger, which is currently anticipated to
occur during the fourth quarter of calendar year 2020, is subject to certain closing conditions, including (1) adoption of the Amended and Restated Merger Agreement by a majority of the outstanding shares of MMLC common stock and by a majority
of the outstanding shares of MMLC common stock not held by GSAM or its affiliates, (2) adoption of the Amended and Restated Merger Agreement by a majority of the outstanding shares of GSBD common stock and by a majority of the outstanding
shares of GSBD common stock not held by GSAM or its affiliates, (3) approval of the issuance of GSBD common stock to be issued in the Initial Merger by a majority of the votes cast by the GSBD stockholders on the matter, (4) the requisite
approval of GSBD stockholders of the GSBD Charter Amendment, (5) the requisite approval of MMLC stockholders of the GSBD Charter Amendment, (6) the absence of certain legal impediments to the consummation of the Mergers,
(7) effectiveness of the registration statement for the GSBD common stock to be issued as consideration in the Initial Merger, (8) approval for listing on the New York Stock Exchange of the GSBD common stock to be issued as consideration
in the Initial Merger, (9) subject to certain materiality standards, the accuracy of the representations and warranties and compliance with the covenants of each party to the Amended and Restated Merger Agreement, (10) required regulatory
approvals, and (11) a requirement that the existing GSBD credit facility be maintained or expanded to permit the repayment of the existing MMLC credit facility in full at the closing.
The Amended and Restated Merger Agreement also contains certain termination rights in favor of GSBD and MMLC, including if the Initial Merger is not completed
on or before February 24, 2021 or if the requisite approvals of GSBD stockholders or MMLC stockholders are not obtained.
The description above is
only a summary of the material provisions of the Amended and Restated Merger Agreement and is qualified in its entirety by reference to a copy of the Amended and Restated Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form
8-K and incorporated by reference herein.
The representations and warranties and covenants set forth in the
Amended and Restated Merger Agreement have been made only for purposes of such agreement and were solely for the benefit of the parties to the Amended and Restated 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 Amended and Restated 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 Amended and Restated Merger Agreement is included with this filing only to provide investors with information regarding
the terms of the Amended and Restated Merger Agreement, and not to provide investors with any factual information regarding the parties to the Amended and Restated Merger Agreement or their respective businesses.