MMAC MMA Capital Holdings Inc

THE MERGER (PROPOSAL 1)

If the Merger Agreement is adopted by our stockholders and all other conditions to the closing of the Merger are either satisfied or validly waived, the Company will merge with and into Merger Sub. Merger Sub will be the Surviving Entity in the Merger and will continue as a wholly owned subsidiary of Parent. Our common stock is currently traded on Nasdaq under the symbol “MMAC.” If the Merger is completed, we will cease to be an independent public company and our successor will become a subsidiary of Parent. Following the completion of the Merger, the registration of our common stock and our reporting obligations under the Exchange Act will be terminated. In addition, upon the completion of the Merger, our common stock will no longer be listed on any stock exchange or quotation system, including Nasdaq.

Merger Consideration

If the Merger is completed, at such time as the Certificate of Merger has been filed with the Secretary of State of the State of Delaware or at such subsequent time as is agreed between the parties and specified in the Certificate of Merger in accordance with the relevant provisions of the DGCL (the “Effective Time”), each outstanding share of common stock (other than shares of common stock held by (a) Parent, Merger Sub, or the Company (or held in the Company’s treasury) or by any direct or indirect wholly owned subsidiary of Parent or Merger Sub, in each case outstanding immediately prior to the Effective Time (such shares, “Excluded Shares”) or (b) any stockholder who is entitled to demand and properly demands appraisal of such shares in accordance with Section 262 of the DGCL and who does not fail to perfect or otherwise effectively withdraw such demand or otherwise lose the right to appraisal (such shares, “Dissenting Shares”)) and each deferred share of common stock reserved for the account of any Company director will be converted into the right to receive $27.77 in cash, without interest and reduced by the amount of any withholding that is required under applicable laws. Following the Effective Time on the closing date, Parent will cause to be deposited with the paying agent sufficient cash to pay to the holders of the common stock the Merger Consideration. Promptly after the Effective Time, Parent and the Surviving Entity will cause the paying agent to mail to each record holder of shares of common stock that were converted into the right to receive the Merger Consideration a letter of transmittal and instructions for use in effecting the delivery of shares to the paying agent and for effecting the surrender of certificates in exchange for the Merger Consideration.

Background of the Merger

Company History

The Company and its predecessor were originally engaged in the business of financing affordable apartment properties, initially through the acquisition of tax-exempt bonds that finance such properties and, following a series of corporate acquisitions, by syndicating low income housing tax credits. In 2006, the Company expanded its investment strategy to include renewable energy financing.

The great recession that began in 2008 coincided with a restatement of the Company’s financial statements and proved to be a significant challenge for the Company. In order to survive, the Company was forced to sell a number of the business units it had created or assembled, including its renewable energy finance unit. In 2015, several of its former renewable energy finance employees expressed an interest in rejoining the Company and creating a new renewable energy finance business with a target market of late-stage development and construction loans. In order to build that business, in addition to utilizing capital on hand, the Company began selling off certain legacy assets, such as its remaining tax-exempt bond portfolio, and reinvesting the proceeds in the renewable energy business. The Company remained capital constrained, however, and sought to bring partners into its renewable energy business, one of which was an affiliate of Fundamental. The Company and the affiliate of Fundamental established three joint ventures known as Solar Development Lending, Solar Construction Lending and Solar Permanent Lending (collectively, the “Solar Ventures”).

Externalization of Management

Despite the success of the Solar Ventures and the participation by the affiliate of Fundamental in the Company’s renewable energy business, the Company continued to face two significant challenges. First, the trading price of the Company’s shares consistently traded below book value, which made it undesirable to seek additional equity capital because such capital would have been dilutive. Second, without such capital, it was difficult for the Company to grow its business and simultaneously bear the costs of operating as a public company.

On January 8, 2018, the Company entered into a series of transactions pursuant to which the Company sold certain of its non-core assets to affiliates of the Hunt Companies, Inc. (collectively, “Hunt”), and Hunt Investment Management, LLC became the Company’s external manager (the “Manager”). That sale transaction allowed the Company to monetize certain assets for re-investment in the solar lending business sooner than might otherwise have been possible, while taking back an income producing note receivable that provided a consistent earnings stream over the next seven years. In addition, externalizing the management of the Company, including having the Manager hire all of the Company’s employees, resulted in savings on the overhead burden previously borne by the Company, helping with the goal of reducing the costs associated with operating a public company of its size. Finally, partnering with Hunt was anticipated to provide the Company with access to a greater breadth of origination capacity and investing experience. To facilitate the reduction in the Company’s overhead costs, the management agreement by and between the Company and the Manager (the “Management Agreement”) also provided for an annual cap on employee expense reimbursement until the Company reached a total GAAP stockholders’ equity level of $500 million.

Despite the management externalization and the accompanying reduction in costs and the profitability of the renewable energy finance business, the Company’s share price continued to lag the Company’s book value per share, perpetuating the Company’s historical difficulty of raising capital without dilution and hindering the Company’s growth.

The following chronology summarizes the key meetings and events leading up to the execution of the Merger Agreement. The following chronology does not purport to catalog every conversation of our Board of Directors, the Disinterested Directors, the Transaction Committee, the Manager, our advisors and other parties.

At a Board meeting on January 29, 2020, in light of the Company’s stock performance and inability to access capital markets in a meaningful way, one of the directors, Chris Hunt, the Chief Executive Officer of Hunt, expressed his view that the short-term loans that characterized the Company’s solar portfolio were not well-suited to the long term capital structure of a public company and that the Company would be better served by investing in long-term infrastructure assets with steady income streams.

Following Mr. Hunt’s suggestion on behalf of the Manager of a strategic shift to investing in long-term infrastructure opportunities, the directors not affiliated with the Manager (the “Disinterested Directors”) commenced informal discussions and consultations with outside counsel regarding a potential strategic change to investing in long-term infrastructure assets.

In early March 2020, the Disinterested Directors engaged King & Spalding LLP (“King & Spalding”) as their counsel, began the process of engaging TD Securities as their financial advisor, and commenced an inquiry into the merits of such a strategic change. As the Disinterested Directors began this process, the COVID-19 pandemic began to have a pronounced effect on the economy.

During a Board call held on March 30, 2020, the Disinterested Directors met for an initial presentation from Mr. Hunt regarding the elements and details of the potential strategic shift, including proposals to change the fee structure in the Management Agreement and for Hunt to make an additional equity investment in the Company in exchange for a primary issuance of additional shares of the Company.

On April 1, 2020, the Disinterested Directors met with their outside advisors for a written and oral presentation by TD Securities regarding the full range of strategic options that might be available for the Company to consider, including maintaining the status quo, early termination of the Management Agreement and either engaging a new manager or internalizing management, sale of the Company, liquidation of the Company and a strategic shift to long-term infrastructure assets with an accompanying adjustment in management personnel. TD Securities noted that termination of the Management Agreement would require the payment of a termination fee of approximately $21 million, and without the Manager’s consent, the agreement could not be terminated until an effective date of December 31, 2022. TD Securities explained that the Board would need to take this into consideration in evaluating strategic alternatives.

On April 7, 2020, the Disinterested Directors and TD Securities executed an engagement letter regarding the Disinterested Directors’ consideration of strategic options.

On April 20, 2020, the Board met for the primary purpose of discussing the effect of the COVID -19 pandemic and the importance of maintaining liquidity. At the meeting, the head of the Manager’s solar origination team described three projects located in the Electric Reliability Council of Texas (“ERCOT”) service area, all of which had a single sponsor (“Sponsor X”), as being at a somewhat greater than normal repayment risk because of uncertainty in the solar tax credit equity market due to COVID -19. In executive session of the Disinterested Directors and their advisors, the Disinterested Directors received a presentation from TD Securities in which TD Securities indicated that it had received cash flow and balance sheet projections from the Manager including a five-year projection assuming the retention of the solar business, a five-year projection assuming repositioning into long-term infrastructure and some conceptual ideas for raising capital, including an additional investment by Hunt. Following discussions with the advisors throughout April 2020, the Disinterested Directors concluded that internalizing management was not a very likely scenario due to costs and other constraints.

During a Board meeting on May 6, 2020, the Manager noted that the Solar Ventures had started the year off well, but that COVID -19 had slowed new investments and could impact tax equity investments because the investors might not be able to use as many tax credits in a faltering economy. The Manager also gave the Board an update on the Sponsor X projects, explaining that they were typical Solar Ventures projects, except that they were large projects, requiring larger buyers to supply the tax equity, and that the projects were located in a market that had a number of competing solar projects. Following the full Board meeting, the Disinterested Directors met in executive session with their advisors. TD Securities gave an update on various models previously provided by the Manager. TD Securities also discussed Hunt’s suggestion it could provide some additional capital through the purchase of additional shares and that such additional capital plus the effect of various Management Agreement changes proposed by Hunt would need to be factored into TD Securities’ analysis of the various scenarios.

Throughout May 2020, the advisors met regularly by telephone with Mr. Gallagher, the Chair of the Board, to discuss the Manager’s proposals, the nature and benefits of the long-term infrastructure investment proposal and the competitive status of that market.

On May 22 and May 23, 2020, the Disinterested Directors held meetings to discuss the overall process for evaluating and reaching a conclusion on the various proposals made by the Manager and the alternatives to those proposals. TD Securities made a presentation to the Disinterested Directors of the financial projections being evaluated. The Disinterested Directors discussed whether a long-term infrastructure investment strategy would produce stable, recurring income that would enable the Company to pay a stable and recurring dividend, whether this could help narrow the persistent gap between the Company’s book value and share price, and what the timing and challenges of a transition to infrastructure might be, concluding that more input was needed on execution and transition risks. The Disinterested Directors also discussed the challenges of achieving net proceeds in a liquidation scenario that might approximate adjusted book value, given the impacts of not being able to terminate the Management Agreement until December 31, 2022, the requirement to pay a termination fee at that time, the continuing costs of operating as a public company, the ongoing management fees payable during this period, and the uncertainty of being able to wind down or sell off the solar portfolio over time or in a bulk sale.

On May 26, 2020, Mr. Gallagher and another director, Suzanne Kucera, met with the advisors to further understand the issues and risks involved in making a transition to long-term infrastructure investments as well as in making adjustments to the Management Agreement.

On June 4, 2020, the Disinterested Directors held a meeting to which Mr. Hunt and various representatives of the Manager were invited for the purpose of making an in-depth presentation regarding the long-term infrastructure investment market and reviewing in greater detail the elements of the Manager’s proposal that were discussed at the March 30, 2020 meeting. The Disinterested Directors and the Manager’s representatives discussed the long-term infrastructure market, how to achieve proof of concept and the potential effect of COVID -19. They also discussed the extent to which transitioning to a long-term infrastructure strategy possibly could alleviate the Company’s key business challenges.

In executive session following a Board meeting on June 12, 2020, the Disinterested Directors continued to discuss whether the change to long-term infrastructure assets could be successfully achieved and whether it would achieve the desired results for the Company and the stockholders. They also discussed the fact that Michael Falcone, the Company’s Chief Executive Officer and an employee of Hunt, was engaging in discussions with Mr. Hunt regarding a transaction whereby Mr. Falcone and other members of the Company’s legacy management team might seek to acquire assets from the Manager relating to the Manager’s solar lending origination platform, which is comprised primarily of the Manager’s personnel and management expertise for its solar lending business (the “Solar Platform”). This management-led vehicle could then contract with the Company or the Manager to manage the Company’s orderly exit from the solar portfolio and enable the Company to focus on the new strategy. The Disinterested Directors determined that it would be premature to make a strategic decision pending the outcome of those discussions.

Following additional discussions among the Disinterested Directors, on June 28, 2020, Mr. Gallagher advised TD Securities that the Disinterested Directors voted unanimously for TD Securities to proceed with an analysis of the proposed infrastructure strategy and for TD Securities to have the Manager provide a more detailed analysis of the strategy and the availability of suitable investments as well.

On June 30, 2020, Gary Mentesana, the Company’s then-Chief Operating Officer and an employee of Hunt, on behalf of the Company emailed Robert Jacobsen of Fundamental indicating that the Company would want to discuss “some strategic matters at MMAC in the coming weeks,” and requesting that Fundamental enter into a confidentiality agreement with the Company.

During July 2020, Mr. Falcone continued to pursue the possibility that he and Mr. Mentesana, with financial backing from Hunt, might acquire the Manager’s Solar Platform and in connection therewith facilitate the Company in making a transition to long-term infrastructure while enabling Messrs. Falcone and Mentesana to remain in the solar loan origination business. The advisors and Mr. Gallagher had several conversations among themselves and with Mr. Falcone and his counsel on their progress in reaching an agreement with Hunt on the terms of such an arrangement.

In July 2020, following discussions with King & Spalding, the Manager engaged in discussions with third party institutions who could potentially facilitate a restructuring of the Company’s solar portfolio and, as a part of that process, the Company entered into a confidentiality agreement dated July 7, 2020 among the Company, Fundamental and the Manager (the “Fundamental NDA”), to allow for such discussions. In the latter part of July 2020, it became clear that Messrs. Falcone, Mentesana and Hunt were not going to be able to reach an agreement on the proposed new arrangement due to various factors, including relative investment amounts and governance terms, and, in a call on July 22, 2020, the advisors so notified J. P. Grant, who had become temporary acting Chair of the Company.

In early August, the Disinterested Directors met without advisors to discuss the status of the potential transition to long-term infrastructure assets, the associated change in staffing dedicated to the management of the Company and the plan for execution.

On August 12, 2020, Mr. Falcone advised Hunt personnel and Mr. Falcone’s counsel advised King & Spalding, that Mr. Falcone was resigning effective immediately as Chief Executive Officer of the Company and as an employee of Hunt, but that he planned to remain on the Company’s Board.

On August 13, 2020, the Disinterested Directors met with the advisors. After a review of their duties by the advisors, and a review by King & Spalding of the history of the strategic discussions to date, including the various alternative scenarios that had been considered, the time committed to the expectation that Messrs. Falcone and Mentesana would reach an agreement with the Manager to acquire the Manager’s Solar Platform and the additional negotiations regarding transition plans. The Disinterested Directors discussed various proposals for updating the Management Agreement as part of a transition to long-term infrastructure investments.

In various internal discussions over the next few days, the Disinterested Directors determined that they desired that Mr. Mentesana be named interim Chief Executive Officer, and on August 17, 2020, the Company issued a press release and a current report on Form 8-K announcing the appointment of Mr. Mentesana as interim Chief Executive Officer. In addition to discussing the search for a permanent Chief Executive Officer, over the next several weeks, there were multiple discussions among the Disinterested Directors and the advisors, primarily confined to personnel matters resulting from Mr. Falcone’s resignation and from the potential change to long-term infrastructure investments.

There was no communication between the Company and Fundamental regarding the contemplated subject matter of the Fundamental NDA until on or about August 18, 2020, when a telephone conversation took place between Messrs. Jacobsen and Falcone. During the course of the conversation, Mr. Falcone stated to Mr. Jacobsen that if Fundamental were interested, Mr. Jacobson should address the potential for a purchase with the appropriate Manager employees responsible for managing the Company.

On August 24, 2020, the Disinterested Directors again addressed the Company’s strategic alternatives and held a meeting with Mr. Falcone and the Company’s advisors. Mr. Grant reported that the Disinterested Directors had met without advisors the prior evening and expressed the view that they felt like they were in the early stages of the strategic process given Mr. Falcone’s departure, the Company’s personnel needs, transition considerations, the need for greater detail on infrastructure investments and strategy, and related matters. The Disinterested Directors voiced their ongoing desire for David Bjarnason to remain as Chief Financial Officer for continuity, leadership and knowledge of the Company’s accounting.

On August 25, 2020, the full Board met with numerous Hunt personnel to review in detail a presentation from the Manager regarding the transition to infrastructure, including how deals were to be originated and acquired, staffing, monetization of the solar portfolio in order to enable the transition, management issues, maintenance of regulatory and accounting infrastructure and related matters.

On August 31, 2020, the Board met without Mr. Hunt to engage in a detailed discussion of the proposal and related possible changes to the Management Agreement and discussion of these topics continued throughout the month of September, including with input from their advisors.

On September 22, 2020, the Disinterested Directors met with King & Spalding to discuss all aspects of the proposed change in strategy, as well as alternatives for the Company if the Disinterested Directors determined not to undertake such a change.

On September 29, 2020, an affiliate of Fundamental sent a letter to the Company offering to purchase the Company’s interest in the solar portfolio jointly owned by Fundamental and the Company, excluding certain loans to the extent defaulted or underperforming, which would remain jointly owned by Fundamental and the Company (the “Initial FA Offer”). The Initial FA Offer also indicated that Fundamental wanted a commitment for the parties to use best efforts to facilitate employment of individuals with responsibility for operating and managing the solar business. With this offer having been received, the Disinterested Directors continued their evaluation of the long-term infrastructure opportunity, and whether to sell the Company’s interest in the solar portfolio in order to facilitate the transition. Following receipt of the Initial FA Offer, the Chairman of the Board and Mr. Hunt discussed the proposal, and the Manager was tasked with exploring and negotiating this proposal with Fundamental on behalf of the Company.

On October 5, 2020, the Disinterested Directors met with their advisors and Mr. Falcone as an invited guest, to review the Initial FA Offer. The Disinterested Directors also revisited the question of evaluating all reasonable strategic alternatives including liquidation, a buy-out of the Management Agreement and other potential strategic combinations.

On October 12, 2020, the Board held a meeting with several representatives of the Manager in order for the Manager to respond to a series of questions that had been delivered to the Manager in connection with its most recent presentation of the elements of a pivot to a long-term infrastructure strategy. The Manager representatives reviewed a sample transaction, potential returns, benefits to stockholders, and how to define infrastructure assets, among other topics.

On October 19, 2020, Daniel Singer, one of the Manager’s representatives, had a call with Robert Jacobsen, a representative of Fundamental to discuss the Initial FA Offer. Mr. Singer indicated that the Company did not expect any assets to be excluded from any potential acquisition of the solar portfolio and that the Company expected Fundamental to pay a premium for the proposed acquisition of the solar portfolio. During this call, Mr. Jacobsen clarified to Mr. Singer that, as part of Fundamental’s desire to employ the individuals responsible for operating and managing the solar business noted in the Initial FA Offer, Fundamental desired to acquire the Solar Platform from the Manager in connection with any acquisition of the Company’s interest in the solar portfolio.

On October 22, 2020, Mr. Singer and Mr. Jacobsen had a call wherein Mr. Jacobsen indicated that Fundamental would be willing to acquire the Company’s interest in the solar portfolio without exclusions at par and desired to acquire the Solar Platform from the Manager for a price of $2.5 million.

On October 26, 2020, Mr. Singer and Mr. Jacobsen had a call wherein Mr. Singer responded to Mr. Jacobsen’s proposal of October 22, 2020, indicating that a price of par plus accrued interest for all of the Company’s interest in the solar portfolio could be recommended to the Board by the Manager and that the Manager would be willing to further consider a sale of its Solar Platform at a price of $7 million. Mr. Jacobsen indicated that he thought a price of $5 million for the Manager’s Solar Platform might be possible and asked if that would be acceptable to the Manager.

On October 27, 2020, Mr. Singer and Mr. Jacobsen had a call wherein Mr. Singer indicated that the Company and Manager would be willing to further consider the proposals as outlined on their October 26, 2020 call and encouraged Mr. Jacobsen to submit an updated term sheet.

In late October and early November 2020, in light of the Initial FA Offer, the Manager began to consider how best to operate the Company and its relatively few remaining assets if the Initial FA Offer were accepted and what a go-forward strategy for the Company would entail, including whether a back-end transaction for the Company and its remaining assets would better enable the Company to maximize value to the stockholders from the Initial FA Offer.

On November 2, 2020, the Board met to continue its discussion of the issues presented by the Initial FA Offer, the transition to infrastructure and related issues. During executive session, the Disinterested Directors discussed the complications presented by the Sponsor X projects, both as a value matter and a matter of transition logistics.

On November 5, 2020, during executive session following a regularly scheduled Board meeting, Mr. Hunt stated that progress had been made in the discussions with Fundamental and that Fundamental was willing to pay par plus accrued interest for all solar assets including the Sponsor X loans despite the soft ERCOT market issues. Mr. Hunt and Mr. Singer advised the Disinterested Directors that Fundamental was also interested in acquiring the Solar Platform from the Manager, and stated that a term sheet was expected shortly and that the price to be paid to the Manager for the Solar Platform was still under discussion.

Later on November 5, 2020, Mr. Singer received a draft term sheet from Mr. Jacobsen reflecting the revised proposal from Fundamental (the “Revised FA Offer”). The Revised FA Offer included the acquisition of all of the Company’s solar business assets, including the acquisition of the Company’s interest in all of the Solar Ventures’ loans at a value based on par plus accrued interest, and the acquisition from the Manager of the Solar Platform for $5 million, including the right to hire the Manager’s employees involved in the solar loan originations. The Revised FA Offer did not address the remainder of the Company’s assets.

On November 9, 2020, Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul Weiss”), counsel to Hunt, transmitted the Revised FA Offer to King & Spalding.

On November 10, 2020, the advisors held an update call with Mr. Gallagher to discuss the terms of the Revised FA Offer. Over the following four weeks, representatives of Hunt, Fundamental, counsel for the Disinterested Directors and Fundamental’s counsel, Sidley Austin LLP (“Sidley”), had a number of calls and discussions to discuss certain aspects of the Revised FA Offer including structural considerations associated with Fundamental’s acquisition of the Manager’s Solar Platform.

On November 11, 2020, Mr. Hunt called TD Securities to discuss a potential back-end transaction whereby Hunt would acquire, via a merger with the Company, the Company’s assets that were not part of the Revised FA Offer subject to the closing of the proposed transaction with Fundamental and facilitate the Revised FA Offer in agreeing to sell its Solar Platform to Fundamental. Mr. Hunt noted that, to ensure proper governance procedures were in place, Hunt would require any such transaction to be subject to review and approval of a fully empowered special committee of independent directors. TD Securities subsequently called Ryan McCrory, a representative of Hunt, to discuss process associated with a potential transaction with Hunt.

On November 13, 2020, a representative of Paul Weiss called King & Spalding to indicate that, in order to potentially maximize stockholder value and to provide the Board with an additional option for addressing what would become of the Company and its remaining assets following the consummation of a transaction with Fundamental, Hunt was preparing to submit a proposal to the Board to acquire by way of merger the Company’s outstanding common stock following the consummation of the sale of the Company’s interest in the solar portfolio in an all-cash transaction. The proposed transaction would also enable the Company to avoid the uncertainty and risks of a transition to infrastructure, allow the Company to realize immediate stockholder value without assuming the long-term risks and uncertainties of operating the business, and at the same time address the recurring suggestion of several large stockholders to create liquidity opportunities for stockholders. Because of Hunt’s interest in the proposed transaction, the respective legal counsel discussed the mechanics upon which any such transaction would be negotiated and consummated, including the implementation of a fully empowered special committee of the Board and a stockholder approval requirement that included a “majority of the minority” provision for the shares not held by Hunt or other potentially conflicted parties.

On November 19, 2020, the Company received a detailed, non-binding offer letter from Hunt Capital Holdings Investments, LLC (“HCHI”), an affiliate of Hunt and the Manager, that included the procedural requirements discussed above, an acquisition price of $29.14 per share (which accounted for and would not be reduced by any termination fee owed to the Manager on account of and following the transaction), and the financial assumptions and requirements which would need to be achieved in order to support that proposed price, including the payment to the Company of the purchase price for the Company’s interest in the Solar Ventures as set forth in the Initial FA Offer, the proceeds of which would be utilized in paying the acquisition price offered by Hunt (the “Hunt Offer”). Accordingly, the Hunt Offer was conditioned on a successful sale of the Company’s interests in the Solar Ventures to Fundamental (the “Fundamental Transaction”) or another third party immediately prior to the consummation of a merger of the Company with an affiliate of HCHI (the “Hunt Merger Transaction”), such that the Company’s stockholders would receive an aggregate of $29.14 per share, and in connection with the Fundamental Transaction, the Manager would sell its Solar Platform to Fundamental for $5 million. The letter indicated that it was Hunt’s proposal that the stockholders would be entitled to vote separately on each of the Fundamental Transaction and the Hunt Merger Transaction. The proposal further contemplated that both the Fundamental Transaction and the Hunt Merger Transaction would be negotiated, executed and announced simultaneously, with the Hunt Merger Transaction being conditioned on the consummation of the Fundamental Transaction; provided, however, that the Fundamental Transaction would be consummated on a stand-alone basis if the Company’s stockholders approved it, but failed to approve the Hunt Merger Transaction.

On November 23, 2020, the Disinterested Directors met with their advisors to discuss the proposed terms of the Hunt Offer, as well as the fiduciary duties applicable to such a transaction and the procedural requirements needed to address the various conflicts of interest. The Disinterested Directors instructed TD Securities to prepare a detailed analysis of all of the Company’s other assets, in addition to the Solar Ventures. These other assets included, among other things, (i) the Company’s investment in an Alabama retail real estate project known as Spanish Fort and an associated bond investment, (ii) a real estate investment in Virginia, known as Russell 150, (iii) equity investments in two South African entities, and (iv) the Company’s subordinated debt.

On December 2 and 3, 2020, counsel for Hunt and counsel for the Disinterested Directors met to identify issues, process and deal protections for the proposed transactions and thereafter had related discussions with counsel to Fundamental.

On December 3, 2020, the full Board met and adopted resolutions forming a formal transaction committee of disinterested and independent directors (the “Transaction Committee”). The designated members of the Transaction Committee were J.P. Grant (Chair), Cecil Flamer, Frank Gallagher, Lisa Kay, Suzanne Kucera and Fred Puddester, which comprised the same group of disinterested and independent directors that had been previously evaluating the Company’s strategic alternatives with Hunt and with Fundamental. The Transaction Committee then met separately with its advisors, TD Securities, King & Spalding, and Company counsel Gallagher, Evelius & Jones LLP (“Gallagher”) to discuss the proposed timeline and next steps in order to continue discussions with Hunt regarding its offer and Fundamental regarding its offer. The Transaction Committee instructed the Manager to continue negotiating the terms of the proposed offer from Fundamental. TD Securities offered the Transaction Committee a very preliminary assessment of assets and liabilities that would guide the price negotiations, as well as an overview of the process that would follow.

On December 7 and December 8, 2020, legal counsel for the Transaction Committee and Paul Weiss had several discussions regarding the structuring of the Hunt Merger Transaction. Over the next week, legal counsel for Hunt and the Transaction Committee, together with TD Securities, also held several additional conference calls to further discuss the structuring of the Hunt Merger Transaction and counsel for Fundamental, Hunt and the Transaction Committee began a multi-week negotiation over the terms and structure of the Fundamental Transaction. In addition, representatives of Hunt and TD Securities had a number of conference calls to discuss diligence and other process related matters.

On December 11, 2020, the Manager, King & Spalding and Gallagher received a revised term sheet from Sidley on behalf of Fundamental reflecting the par plus accrued interest pricing that had been discussed for the Company’s interest in the solar portfolio, a $5 million premium payable to Manager for its interest in the Solar Platform and various structural changes that had been discussed to facilitate the transfer of the Solar Platform from Hunt to Fundamental. On the same date, the Disinterested Directors and TD Securities executed an engagement letter regarding the Disinterested Directors’ consideration of a transfer of the Solar Platform and Solar Ventures, on one hand, or the disposition of the Company, on the other hand.

On December 14, 2020, the advisors met with Mr. Gallagher and Mr. Grant to discuss structure and pricing for the Fundamental Transaction and the Hunt Merger Transaction, including the status of updated terms proposed by Fundamental.

On December 15, 2020, the Transaction Committee met with its advisors to receive an update on activities that had occurred since the December 3, 2020 meeting. In addition, legal counsel to the Transaction Committee discussed with the directors their fiduciary duties in the proposed transactions and began to preview potential deal protections that would allow the Transaction Committee to maximize the value to be received by the Company. TD Securities presented its view of potential pricing for the transactions based on the Company’s September 30, 2020 financial statements and the Transaction Committee engaged in extensive discussions of valuation issues. The Transaction Committee then instructed its advisors to continue negotiating the terms of the potential transactions with Hunt and Fundamental.

On December 16, 2020, TD Securities and Messrs. Hunt and McCrory had a call to discuss the terms of the potential transaction with Hunt.

On December 17, 2020, representatives of Hunt, TD Securities, Paul Weiss, King & Spalding and Gallagher held a conference call to discuss next steps for pricing discussions, as well as issues related to due diligence and to structuring the potential transactions. The representatives also discussed the possibility of offering Fundamental the opportunity to bid on the whole Company and the need for deal protections.

On December 21, 2020, representatives of Hunt and TD Securities discussed valuation issues related to Spanish Fort and Russell 150. Mr. Grant was briefed on those discussions later in the day.

On December 22, 2020, the Transaction Committee held a meeting with its advisors to discuss their views of an appropriate pricing response to the Hunt Offer. Representatives of TD Securities reviewed with the Transaction Committee further preliminary valuation analyses of the consideration proposed in the Hunt Offer. After an extensive discussion, the Transaction Committee instructed TD Securities to continue with its valuation work. Later that day, TD Securities called Messrs. Hunt and McCrory to discuss next steps.

On December 23, 2020, representatives of Paul Weiss and King & Spalding had a call to discuss certain remaining issues and deal protections.

On December 24, 2020, the Manager sent Sidley comments to Fundamental’s December 11, 2020 proposed term sheet.

On January 5, 2021, Sidley sent a further revised term sheet to the Manager and counsel to the Disinterested Directors.

On January 6, 2021, representatives of TD Securities and legal counsel for the Transaction Committee held a conference call with Mr. Gallagher and Mr. Grant to further advance the pricing discussions, and, on January 7, 2021, a meeting of the Transaction Committee, together with its advisors, was held during which a counter-proposal on pricing was discussed and TD Securities was instructed to deliver a counter-proposal to Hunt of $34.50.

On January 7, 2021, representatives of Hunt, Paul Weiss, King & Spalding and Gallagher held a conference call to provide an update and discuss process, as well as the status of discussions with Fundamental.

On January 10, 2021, TD Securities orally delivered to Hunt the counter-proposal of $34.50 per share in response to the Hunt Offer.

On January 13, 2021, the Transaction Committee met with its advisors to discuss the initial reactions from Hunt on the $34.50 counter-proposal, and legal counsel was instructed to prepare a written offer to Hunt reflecting the terms of the proposal. TD Securities explained to the Transaction Committee the major differences between the Transaction Committee’s counter-proposal and the price Hunt was ascribing to certain of the assets.

On January 13, 2021, the Transaction Committee delivered to Hunt a letter indicating the $34.50 per share price and also containing additional requests of Hunt related to deal protections for the Hunt Merger Transaction. These requests included, among other items, a 45-day “go-shop” period with a related 1% termination fee, followed by a customary “no-shop” provision and a 2.5% termination fee.

On January 14, 2021, representatives of the Manager and TD Securities had a call with Mr. Jacobsen wherein they informed Mr. Jacobsen of the Hunt Merger Transaction.

On January 15, 2021, TD Securities raised with Fundamental the possibility of Fundamental acquiring the entire Company.

On January 17, 2021, Mr. Hunt called TD Securities to discuss certain aspects of the proposal, including the amount of transaction expenses and treatment of appraisal rights, and also to offer an increase in the purchase price from $29.14 to $30.50 per share for the Hunt Merger Transaction.

On January 20, 2021, following a call with Hunt’s counsel to discuss deal protections in the Fundamental Transaction, the Company’s advisors held a telephone conference with Mr. Grant and Mr. Gallagher to discuss the status of the drafts being exchanged with Fundamental regarding the terms of the offer from Fundamental to acquire the Company’s interests in the Solar Ventures at a price of par plus accrued interest, as well as Fundamental’s requests in connection with indemnification arrangements, for exclusivity and regarding the Company’s ability to terminate the Fundamental Transaction pursuant to a 45-day go-shop period with a 1.25% termination fee, which was higher than initial request of a 1.00% termination fee. Later in the day, legal representatives of Fundamental and the Transaction Committee held conference calls in an attempt to finalize those issues.

On January 21, 2021, the Transaction Committee met with its advisors to receive an update on the status of the Fundamental negotiations, including an increase in the price being paid to Hunt by Fundamental for the Solar Platform from $5 million to $7 million. TD Securities also advised the Transaction Committee that it had informed Fundamental of the Hunt Offer to take the Company private subject to and immediately following the closing of the Fundamental Transaction. Following extensive discussions, the Transaction Committee authorized TD Securities to make a counter-proposal to Hunt at $33.50 per share.

On January 22, 2021, representatives of Hunt, Paul Weiss, King & Spalding and Gallagher had a conference call to discuss remaining issues associated with Fundamental’s non-binding letter of intent.

On January 22, 2021, the Fundamental non-binding letter of intent to acquire the Company’s interests in the Solar Ventures was executed with a price of par plus accrued interest for the entire solar portfolio, a 45-day go-shop period with a 1.25% termination fee, and the acquisition of the Manager’s Solar Platform for a price of $7 million payable to the Manager, and the Transaction Committee agreed to exclusivity with Fundamental through March 5, 2021. The Transaction Committee also agreed that the negotiations with Hunt for the Hunt Merger Transaction could continue.

On January 25, 2021, following confirmation from the Transaction Committee, TD Securities orally delivered to Mr. Hunt the Transaction Committee’s response of $33.50 per share.

On January 26, 2021, Mr. Hunt orally delivered to TD Securities a revised proposal of $31.41 per share.

Following a regularly scheduled Board meeting on January 28, 2021, the Transaction Committee met with its advisors to discuss the most recent offer from Hunt of $31.41 per share. TD Securities reviewed with the directors additional preliminary valuation analyses.

On February 2, 2021, following several calls among members of the Transaction Committee and its advisors, the Transaction Committee instructed to TD Securities to deliver a counter-offer of $33.03 per share, which offer was subsequently delivered to Mr. Hunt on February 3, 2021, by TD Securities.

Over the course of the next week, representatives of Fundamental indicated to TD Securities that Fundamental may also be interested in pursuing a stand-alone acquisition of the Company, which would obviate the need for the Company to engage in the Hunt Merger Transaction.

On February 11, 2021, Mr. Jacobsen called Mr. Singer to advise Mr. Singer that Fundamental was considering the impact of certain developments with Sponsor X and the project loans therewith on Fundamental’s proposed price for the acquisition of the Company’s interest in the Solar Ventures.

On February 12, 2021, the Transaction Committee authorized Fundamental to have access to a virtual data room containing all relevant information so that Fundamental could assess its proposed pricing for an acquisition of the entire Company. Meanwhile, Fundamental’s counsel, Sidley, delivered to the Transaction Committee’s advisors an initial draft of a purchase agreement for the Fundamental Transaction providing only for the acquisition of the solar lending business.

Starting on February 13, 2021, a winter storm with prolonged, below-freezing temperatures impacted most of Texas, whereby certain components of the national and local energy production markets, including in the ERCOT service area, were affected by power outages, power production shortfalls, increased demand and associated changes in market dynamics, resulting in supply and demand imbalances and extraordinary pricing mandated by ERCOT. The Company subsequently determined that these market dynamics materially and negatively impacted the Solar Ventures’ ERCOT loan portfolio in a variety of ways, including the availability and pricing of tax equity, the deterioration of underlying project value, and $25 million in excess power costs at one of the Sponsor X projects. The Company also subsequently determined that these factors and the Solar Ventures’ concentration in ERCOT might further impact the timing and amount of loan payoffs.

On February 15, 2021, the advisors met with Mr. Gallagher and Mr. Grant. TD Securities advised that, based on a call it had with Mr. Singer of Hunt, Fundamental planned to lower its offer for the Company’s interest in the solar business given valuation impairments of certain Sponsor X projects, in the range of $2 to $3 per share, based on events that arose following the execution of the term sheet on January 22, 2021.

On February 16, 2021, Mr. Hunt delivered to TD Securities a revised offer price of $32.00 per share, subject to confirmation of the Fundamental Offer price following the events in the ERCOT service area.

On February 17, 2021, advisors to the Transaction Committee had extensive discussions with Mr. Grant and Mr. Gallagher regarding the proposed $32.00 per share, as well as the possibility that Fundamental may need to revisit its pricing for the Company’s interest in the Solar Ventures in light of the adverse developments at the Sponsor X projects in the ERCOT service area and the Company’s potential future exposure to valuation and operating losses.

Also on February 17, 2021, representatives of Houlihan Lokey Capital, Inc. (“Houlihan Lokey”), financial advisor to Fundamental, contacted TD Securities to discuss in further detail the possibility of Fundamental acquiring the entire Company in a merger transaction (the “Merger”), including the Transaction Committee’s timing expectations. TD Securities indicated that Fundamental would need to perform its diligence very quickly in order to present the Transaction Committee with an indicative range of pricing within one week to ten days. TD Securities further indicated that if Fundamental’s pricing was indeed attractive to the Transaction Committee, then the advisors would begin to negotiate with the Manager on the terms of Fundamental concurrently acquiring the Manager’s Solar Platform and also the fee that would be payable by the Company to the Manager upon termination of the existing Management Agreement in accordance with its terms.

On February 18, 2021, the advisors met with Mr. Gallagher and Mr. Grant to discuss a likely capital shortfall at one of the Sponsor X ERCOT projects as a result of the Texas storm.

On February 19, 2021, at a full Board meeting, personnel of the Manager made a presentation to the directors regarding the status of the ERCOT situation, expectations for its longer-term impact on the Company’s investments, and the potential for Fundamental to adjust downward its pricing for the Company’s interests in the Solar Ventures in light of these developments. Following the full Board meeting, the Transaction Committee met with its advisors and Mr. Falcone to further discuss these matters without management present. Fundamental’s interest in acquiring the whole Company was discussed, as well as the directors’ duties in the event of a Fundamental offer.

On February 23, 2021, Mr. Hunt called Mr. Grant and Mr. Gallagher to discuss the financial impacts of the ERCOT situation, including the longer-term impact on the solar industry in Texas. Mr. Hunt indicated that an impairment charge to the Company’s financials of $3.00 to $4.00 per share was possible, subject to the completion of a more detailed assessment.

On February 28, 2021, Mr. Gallagher indicated to the Board his intention to resign as a director and as Chairman for personal reasons, with the resignation becoming effective on March 3.

On March 1, 2021, in advance of a due diligence session, Fundamental called TD Securities to indicate that it was not currently in a position to advance its financial underwriting until the ERCOT situation was further assessed. In a subsequent phone call between TD Securities and Houlihan Lokey, Houlihan Lokey indicated that based on the current situation in Texas, an updated offer for the Company’s interests in the Solar Ventures would be less than par value, instead of the previously indicated 100% of par value, and that an offer price for the entire Company, reflecting those impairments and Fundamental’s evaluation of non-solar assets, would likely be in the range of $25.00 to $28.00 per share.

On March 3, 2021, at a special meeting of the full Board, Mr. Gallagher officially resigned for personal reasons as a member and Chairman. In connection with Mr. Gallagher’s resignation, the Board also determined to name Mr. Falcone as the replacement Chair of the Board, and determined that Mr. Grant would become the lead independent director.  In addition to the Board changes, the Board determined that Mr. Mentesana would be named permanent Chief Executive Officer of the Company.

From March 4 through March 8, 2021, TD Securities had several calls with Mr. Hunt to discuss his views of the Company and its potential exposure to the ERCOT situation and to Sponsor X.

On March 8, 2021, Mr. Hunt had a discussion with Mr. Grant and a representative of TD Securities in order to express Mr. Hunt’s continued concern over the investments in the ERCOT service area and the financial status of Sponsor X. Mr. Hunt indicated that he was expressing these concerns in his capacity as the Chief Executive Officer of the Company’s external Manager, and as a significant stockholder of the Company, and not in his capacity as a potential acquiror of the Company. Mr. Hunt also requested to address the full Board to explain his concerns about the Sponsor X’s financial status.

Also on March 8, 2021, Mr. Grant instructed TD Securities to solicit from Fundamental its renewed and current indications of pricing both for the Solar Ventures transaction on a stand-alone basis and an acquisition of the Company as a whole.

On March 9, 2021, a representative of Houlihan Lokey called TD Securities to indicate that Fundamental was prepared to offer $28.00 per share in an all-cash transaction, but that such offer was preliminary and subject to additional diligence. Houlihan also advised that Fundamental expected to acquire the Solar Platform, but would not provide any additional consideration for the Solar Platform or severance costs set forth in Fundamental’s offer letter of January 22, 2021, which would have the effect of reducing the net proceeds to shareholders by $1.33 per share.

On March 10, 2021, during a special meeting of the Transaction Committee to which all Board members were invited, the directors received a detailed presentation from personnel of the Manager regarding the ERCOT situation and the potential impairment of investments of the Solar Ventures located in the ERCOT service area. Mr. Hunt and the other directors engaged in an extensive discussion of these matters. Following the Board meeting, the Transaction Committee met with its advisors to discuss the offer of $28.00 per share from Fundamental and the potential alternatives for increasing the price in negotiations, including requesting that the Manager accept a lower price for its Solar Platform in order to maximize the cash payable to the Company’s stockholders. TD Securities advised the Transaction Committee that based on calls with Hunt regarding the ERCOT issues and the presumable resulting drop to the purchase price Fundamental would pay for the Company’s interests in the Solar Ventures in the Fundamental Transaction, the Hunt Offer price would likely drop to around $26 per share.

On March 11, 2021, TD Securities spoke separately with Houlihan Lokey and Mr. Hunt regarding pricing. Mr. Hunt advised TD Securities that with the ERCOT situation and the likely drop of the Fundamental Transaction purchase price on which Hunt’s offer was predicated, the Hunt Offer price would in fact likely be around $26 per share.

From March 11 through March 14, 2021, representatives of Hunt, TD Securities and the Transaction Committee negotiated the terms upon which the Manager would adjust downward its economic arrangements with respect to Fundamental’s acquisition of the Manager’s Solar Platform and the fee payable by the Company to the Manager upon termination of the existing Management Agreement in order to increase the net price payable to the Company’s stockholders in connection with the Merger with Fundamental.

On March 15, 2021, after discussions among the advisors, the Manager agreed to effectively reduce the termination fee that would otherwise be owed to the Manager under the terms of the Management Agreement by agreeing to accept the Company’s South African investments in lieu of $4.2 million cash toward payment of the Manager’s termination fee, to reduce the previously agreed to $7 million purchase price payable by Fundamental for its Solar Platform by $5 million, and to retain the severance obligations that Hunt would incur in connection with transitioning the employees of the Solar Platform to Fundamental (or one or more affiliated designees thereof), all of which was offered by Hunt in order to increase the net amount payable to stockholders to $28.38 per share. On that same day, Fundamental sent a draft exclusivity letter to the Transaction Committee requesting 60 days in order to finish its outstanding diligence.

On March 16, 2021, the Transaction Committee met with its advisors to consider the improved economic arrangements among Fundamental, Hunt and the Company in order for the Company’s stockholders to receive $28.38 per share. This meeting included a review of the Transaction Committee’s duties, deal protections, pricing risk pending definitive documents, Fundamental’s need for limited partner approval in connection with certain matters relating to the transaction, and a history of the pricing discussions to date. After extensive discussion, the Transaction Committee approved moving forward with Fundamental on those terms, subject to completion of diligence and negotiation of all definitive documentation.

On March 17, 2021, the full Board met with the advisors to ratify the actions of the Transaction Committee and advance discussions at $28.38 per share. Mr. Falcone and Mr. Hunt abstained from voting, and the remaining directors voted unanimously in favor of the proposal. The Board also approved entering into an exclusivity agreement with Fundamental through May 3, 2021.

On March 19, 2021, King & Spalding delivered an initial draft of the Merger Agreement to Sidley.

Between March 20 and March 28, 2021, legal counsel and financial advisors for all parties discussed numerous aspects of the transaction, including transaction structure, antitrust requirements, due diligence and documentation.

On March 29, 2021, Sidley delivered to the Transaction Committee and its advisors a revised draft of the Merger Agreement and the advisors gave a transaction update to Mr. Grant and committee member Lisa Kay, on behalf of the Transaction Committee.

On March 31, 2021, the Company filed its Annual Report on Form 10-K for calendar year 2020, which contained disclosure regarding the ERCOT situation and potential financial impacts on the Company, including a potential impairment of up to $4.00 per share.

On April 2, 2021, the Company held its earnings call and discussed the impact of the ERCOT situation.

From March 31, 2021 through the end of April 2021, the trading price of the Company’s common stock decreased from $22.80 to approximately $17.00 per share.

On April 6 and April 7, 2021, legal counsel exchanged initial drafts of an equity commitment letter, an assignment agreement for the transfer of the Solar Platform from the Manager to Fundamental or one or more of its affiliated designees (the “Assignment Agreement”), a termination of the Management Agreement (the “Termination Agreement,” and together with the Assignment Agreement, the “Hunt Agreements”), as well as revised drafts of the Merger Agreement.

Between April 5 and April 20, 2021, representatives of Sidley, King & Spalding, Paul Weiss and Gallagher continued to exchange drafts of the Merger Agreement, the Hunt Agreements and related transaction documents and negotiated open terms.

On April 23, 2021, the advisors provided Mr. Grant and Ms. Kay with an interim update on the progress on all issues, including document status, economic issues and next steps. TD Securities advised that three economic issues had emerged, with an aggregate impact of approximately $6 million, or $0.89 per share, which would bring Fundamental’s offer to approximately $27.49 per share.

Between April 25 and April 29, 2021, the financial advisors continued to negotiate the purchase price for the Merger, in light of the three economic issues. During this timeframe, the parties continued due diligence, legal counsel continued to negotiate the terms of the Merger Agreement and other documentation, including the proposed timing for Fundamental to obtain approval of certain matters relating to the transaction from its limited partner advisory committees for the two funds providing the equity financing for the Merger (the “LPACs”) and certain of the closing conditions proposed to be included in the Merger Agreement, as well as the amounts and triggers for the payment of transaction expenses in the event of termination of the Merger.

On April 30, 2021, Mr. Hunt, Mr. Laurence Gottlieb, Chief Executive Officer of Fundamental, and representatives of Houlihan Lokey and TD Securities participated in a telephone call, during which Mr. Gottlieb indicated that Fundamental required additional time until May 24, 2021, to obtain the necessary LPAC approvals of certain matters relating to the transaction, but that his proposed pricing for the Merger would not be subject to future downward adjustments during such additional time period.

On May 3, 2021, the Transaction Committee held a meeting to discuss the status of the negotiations. King & Spalding again reviewed with the directors their duties in connection their consideration of a transaction with Fundamental. TD Securities updated the directors on the differences in pricing between the parties, and representatives from King & Spalding and Gallagher walked the directors through the major elements of the core documents. After extensive discussion among the directors, it was agreed that exclusivity would extend through May 7, 2021, so that the price could continue to be negotiated and all of the documentation and diligence could be finalized. It was further agreed that, provided those conditions were met, exclusivity would continue to be extended through May 24, 2021, so that Fundamental could obtain the LPAC approvals of certain matters relating to the transaction.

On May 4 and May 5, 2021, TD Securities held pricing discussions with both Fundamental and the Manager.

On May 6, 2021, the full Board held a regular meeting. In executive session with the advisors, the Board discussed the status of the pricing negotiations with Fundamental. Given the existing pricing gap between the parties, Mr. Hunt agreed to an additional discount to the consideration expected to be received by the Manager from Fundamental for the Solar Platform, which discount equated to a 22 cents per share increase in the proposed price paid by Fundamental to the Company’s stockholders. Mr. Hunt then left the meeting, and the remaining directors, including Mr. Falcone, discussed the Company’s available strategic alternatives should the Fundamental transaction fail to proceed. Thereafter, Mr. Falcone left the meeting, and the Transaction Committee and its advisors continued their discussions. The committee then instructed TD Securities to continue negotiating for an increased purchase price from Fundamental.

Over the next few days, legal counsel for all parties continued to negotiate the terms of the transaction documents and held several conference calls to discuss open issues. On the evening of May 7, 2021, the Transaction Committee granted an extension of exclusivity through Sunday, May 9, 2021.

On May 9, 2021, Mr. Grant and the Company’s advisors participated in a call, during which TD Securities conveyed that Fundamental had increased its purchase price to $27.69 per share from its last offer of $27.49. Following discussions among Mr. Grant and the other members of the Transaction Committee later that day, the Transaction Committee agreed that exclusivity would extend through 11p.m. New York City time on Monday, May 10, 2021, in order to allow for continued negotiations.

On May 10, 2021, Mr. Grant and Mr. Gottlieb had a call to finalize the pricing discussions. After a lengthy conversation, Mr. Gottlieb agreed to increase Fundamental’s purchase price to $27.77 per share. That evening, the Transaction Committee held a meeting to approve proceeding with the Fundamental transaction at the agreed-upon price of $27.77 per share, on the condition that all other documentation be finalized by legal counsel that day in order for exclusivity to be extended. Later that night, legal counsel for all parties agreed that the transaction documentation was in final form and that exclusivity would therefore extend until May 24, 2021, in order for Fundamental to obtain the LPAC approvals of certain matters relating to the transaction.

Following a Board meeting on May 16, 2021, on May 17, 2021, the Company filed its Quarterly Report on Form 10-Q for the first quarter of 2021 and elected to defer the associated earnings call with investors until the week of May 24, 2021, on the expectation that the transaction would be announced on or before such date.

On May 21, 2021, the Transaction Committee held a telephonic meeting, together with representatives of TD Securities, King & Spalding and Gallagher, to discuss and review the draft Merger Agreement and related transaction documents. Representatives of King & Spalding reviewed the duties of the directors and the terms of the draft Merger Agreement. Representatives of Gallagher provided a presentation regarding the terms of the Hunt Agreements. Representatives of TD Securities reviewed with the directors certain preliminary valuation analyses of the consideration proposed in the Merger Agreement. Following extensive discussions, the Transaction Committee instructed management and the advisors to finalize all aspects of the potential transaction.

On May 23, 2021, the Transaction Committee held a telephonic meeting, together with representatives of TD Securities, King & Spalding and Gallagher, to discuss and review the draft Merger Agreement and related documentation and to consider the proposed transaction. Representatives of King & Spalding provided a presentation regarding the terms of the draft Merger Agreement and other transaction documents and reviewed with the directors their duties in connection with their consideration and potential approval of the transaction with Fundamental. Representatives of Gallagher provided a presentation regarding the terms of the Hunt Agreements. TD Securities again reviewed with the directors TD Securities’ financial analyses of the consideration proposed in the Merger. Following extensive discussion, the Transaction Committee unanimously resolved to recommend the Merger Agreement and the transactions contemplated by the Merger Agreement to the full Board. Immediately following this approval, a telephonic meeting of the full Board convened, and Mr. Falcone and Mr. Hunt joined the meeting along with the Transaction Committee. Representatives of King & Spalding led a discussion on the interests of directors and executive officers in the Merger Agreement that are different from, or in addition to, the Company’s stockholders generally, including the consideration payable to the Manager upon completion of the transactions. Representatives of TD Securities then delivered to the Board an oral opinion, which was subsequently confirmed by delivery of a written opinion, dated May 23, 2021, to the effect that, as of the date of such opinion and based upon and subject to the limitations, qualifications and assumptions set forth in such opinion, the Merger Consideration to be received by the holders of the Company’s common stock pursuant to the Merger Agreement is fair, from a financial point of view, to the holders of the Company’s common stock (other than Hunt, Fundamental or any affiliate of Hunt or Fundamental). Following these presentations and discussions and receipt of the recommendation of the Transaction Committee, the full Board, with each of Mr. Hunt and Mr. Falcone abstaining, (i) determined that the transactions contemplated by the Merger Agreement, including the Merger, are fair to, and in the best interests of, the holders of shares of the Company’s common stock; (ii) approved and declared advisable the execution, delivery and performance of the Merger Agreement and the transactions contemplated therein, including the Merger; and (iii) resolved to recommend that the holders of the Company common stock adopt the Merger Agreement and approve the Merger.

On the morning of May 24, 2021, the parties executed and delivered the Merger Agreement and other transaction documents, and the Company and Fundamental issued a joint press release publicly announcing the transaction.

On May 24, 2021, the Go-Shop Period (as further described under the section entitled “The Merger Agreement — Restriction on Solicitation of Company Acquisition Proposals” on page 63) commenced and it expired at 11:59 p.m. New York Time on July 8, 2021. During this period, at the direction of the Company, representatives of TD Securities broadly and actively solicited company acquisition proposals from third parties, ultimately approaching 21 parties to determine their interest in exploring a potential transaction. Of those parties contacted, two executed confidentiality agreements with the Company during the Go-Shop Period and were granted access to an electronic data room containing confidential information regarding the Company and its business. However, no company acquisition proposals were received during the Go-Shop Period.

Reasons for the Merger

In reaching its (i) determination that the transactions contemplated by the Merger Agreement, including the Merger, are fair to, and in the best interests of, the holders of shares of the Company’s common stock, (ii) approving and declaring advisable the execution, delivery and performance of the Merger Agreement and the transactions contemplated therein, including the Merger, and (iii) resolving to recommend that the holders of the Company common stock adopt of the Merger Agreement and approve the Merger, the Board consulted with the Manager’s personnel who serve as the Company’s senior management team, as well as our financial and legal advisors, and considered a number of factors, including the following material factors which the Board viewed as supporting its decision to approve the Merger Agreement, declare the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, to be advisable and in the best interests of the Company and its stockholders and to recommend approval of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement to its stockholders:

The Board also considered the following potentially negative factors in its consideration of the Merger Agreement and the Merger:

The foregoing discussion of the factors considered by the Board is not intended to be exhaustive, but rather includes the material factors considered by the Board. In reaching its (i) determination that the transactions contemplated by the Merger Agreement, including the Merger, are fair to, and in the best interests of, the holders of shares of the Company’s common stock, (ii) approving and declaring advisable the execution, delivery and performance of the Merger Agreement and the transactions contemplated therein, including the Merger, and (iii) resolving to recommend that the holders of the Company common stock adoption of the Merger Agreement and approval of the Merger, the Board did not quantify or assign any relative weights to, and did not make specific assessments of, the factors considered, and individual directors may have given different weights to different factors. The Board did not reach any specific conclusion with respect to any of the factors or reasons considered.

The above factors are not presented in any order of priority. The explanation of the factors and reasoning set forth above contain forward-looking statements and should be read in conjunction with the section of this proxy statement entitled “Cautionary Statement Regarding Forward-Looking Statements”.

Recommendation of Our Board of Directors

Our Board has approved the Merger Agreement and declared the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, advisable and in the best interest of the Company and its stockholders. Our Board recommends that you vote ‘‘FOR’’ the proposal to adopt the Merger Agreement and approve the Merger) and ‘‘FOR’’ the one or more adjournments of the special meeting to a later date or dates, if necessary or appropriate, including to solicit additional proxies, if there are insufficient votes at the time of the special meeting or any adjournment or postponement of the special meeting to approve the Merger Proposal.

Opinion of MMAC’s Financial Advisor

Opinion of TD Securities

MMAC retained TD Securities to act as financial advisor to the Transaction Committee in connection with the proposed Merger. The Transaction Committee selected TD Securities to act as its financial advisor based on TD Securities’ qualifications, expertise and reputation, its knowledge of recent transactions in the industry, its knowledge of MMAC’s business and affairs, and its independence. At the meeting of the Transaction Committee on May 23, 2021, TD Securities rendered its oral opinion, subsequently confirmed in writing, that as of such date, and based upon and subject to the assumptions, limitations and qualifications relating to the review undertaken by TD Securities as set forth in the written opinion, the Merger Consideration to be received pursuant to the Merger Agreement by the holders of shares of MMAC common stock is fair, from a financial point of view, to the holders of shares of MMAC common stock (other than the Manager, Parent or any affiliate of Parent or the Manager).

The full text of the written opinion of TD Securities, dated as of May 23, 2021, which sets forth, among other things, the assumptions, limitations and qualifications relating to the review undertaken by TD Securities in rendering its opinion, is attached to this proxy statement as Annex B. You are encouraged to read the entire opinion carefully and in its entirety. TD Securities’ opinion was rendered for the information and benefit of the Transaction Committee, in its capacity as such, and addressed only the fairness from a financial point of view of the Merger Consideration to be received pursuant to the Merger Agreement by the holders of shares of MMAC common stock (other than the Manger, Parent or any affiliate of Parent or the Manager) as of the date of the opinion. TD Securities’ opinion was not intended to, and does not, constitute a recommendation to any holder of MMAC common stock as to how to vote with respect to the proposed Merger and does not address the underlying business decision of MMAC to engage in the proposed Merger, the relative merits of the proposed Merger as compared to any alternative transactions or strategies that may be available to MMAC, or the fairness of the amount or nature of the compensation to any officers, directors or employees of MMAC, or any class of such persons, relative to the consideration to be received by the holders of shares of MMAC common stock pursuant to the proposed Merger. The opinion was addressed to, and rendered for the information and benefit of, the Transaction Committee and was not intended to, and does not, constitute a recommendation to any holder of MMAC common stock as to how to vote with respect to the proposed Merger and does not in any manner address the prices at which MMAC common stock will trade at any time.

In connection with rendering its opinion, TD Securities, among other things:

For purposes of rendering its opinion, TD Securities assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to, or discussed with, TD Securities by MMAC, the Manager and Parent. With respect to the MMAC Projections, TD Securities had been advised by the Manager, and assumed, that they have been reasonably prepared on bases reflecting the best available estimates and judgments of the Manager of the future financial performance of MMAC and other matters covered thereby. TD Securities assumed that the proposed Merger would be consummated in accordance with the terms set forth in the Merger Agreement, without any waiver, modification or amendment of any material term, condition or agreement, or delay, including, among other things, that the termination of the Management Agreement (as described below under “Management Agreement – Other Agreements Related to the Merger – Termination Agreement”) would occur in accordance with the terms of the Termination Agreement, and Parent would obtain financing in accordance with the terms set forth in the Equity Commitment Letter. TD Securities also assumed that any modification to the structure of the transaction would not vary in any respect material to its analysis. In addition, TD Securities assumed that in connection with the receipt of all the necessary approvals for the proposed Merger or any transaction contemplated therein, no delays, limitations, conditions, modifications or restrictions would be imposed that could have an adverse effect on MMAC. TD Securities also assumed that the final executed Merger Agreement, Termination Agreement and Equity Commitment Letter would not differ in any material respect from the Merger Agreement, Termination Agreement and Equity Commitment Letter reviewed by TD Securities. TD Securities has not made any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of MMAC. At the direction of the Transaction Committee, TD Securities reviewed and relied upon, without independent verification, the Appraisal Reports for purposes of its analysis. TD Securities expressed no views on the Appraisal Reports or any aspect of the Termination Agreement or the Assignment and Assumption Agreement. TD Securities’ opinion is not a solvency opinion and does not in any way address the solvency or financial condition of MMAC or any other entity. Its opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of its opinion and TD Securities assumes no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. In addition, TD Securities is a financial advisor only and has relied upon, without independent verification, the assessment of MMAC and its legal, tax, or regulatory advisors with respect to legal, tax, or regulatory matters. In arriving at its opinion, TD Securities was not authorized to solicit, and did not solicit, any expressions of interest from any party with respect to an acquisition, business combination or other extraordinary transaction involving MMAC prior to the date of its opinion.

Summary of Financial Analyses

The following is a summary of the material financial analyses performed by TD Securities in connection with its oral opinion and the preparation of its written opinion dated May 23, 2021. The following summary is not a complete description of TD Securities’ opinion or the financial analyses performed and factors considered by TD Securities in connection with its opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses. In connection with arriving at its opinion, TD Securities considered all of its analyses as a whole and did not attribute any particular weight to any analysis described below. Considering any portion of such analyses and factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying TD Securities’ opinion. The ranges of values resulting from any particular analysis described below should not be taken to be TD Securities’ view of the actual value of MMAC. In performing its analyses, TD Securities made judgments and assumptions with regard to industry performance, general business, regulatory, economic, market and financial conditions and other matters, which are beyond the control of MMAC and TD Securities. Any estimates contained in TD Securities’ analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by TD Securities, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Furthermore, mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using the data referred to below.

In performing the financial analyses summarized below and in arriving at its opinion, TD Securities utilized and relied upon the MMAC Projections.

Summary of Analyses

Net Asset Value Analysis

TD Securities performed a net asset value analysis of MMAC which consisted of (i) MMAC’s economic interest in Solar Construction Lending, LLC, Solar Permanent Lending, LLC, and Solar Development Lending, LLC (collectively, the “Solar Ventures”), (ii) MMAC’s investment in a parcel of land in the process of development just outside the city of Winchester in Frederick County, Virginia (“Heritage Commons”) and MMAC’s 80% ownership interest in a joint venture that owns and operates a mixed-use town center and undeveloped land parcels in Spanish Fort, Alabama (“SF”) (Heritage Commons and SF collectively, the “Real Estate Investments”), (iii) the estimated fair value of MMAC’s subordinated debt that had a total unpaid principal balance of $85.9 million as of March 31, 2021, (iv) value of MMAC’s net operating losses, (v) book values as of March 31, 2021 for MMAC’s other assets and liabilities, except as noted below, provided to TD Securities by MMAC, and (vi) the estimated value of MMAC's unallocated operating expenses, in each case using MMAC’s public filings and other financial information provided by MMAC, as approved for TD Securities’ use by the Transaction Committee and as described in further detail below:

Solar Ventures. The loan portfolio in Solar Ventures consisted of (i) certain loans associated with a single sponsor and secured by three renewable energy projects in the Electric Reliability Council of Texas (“ERCOT”) service area that were in non-accrual status as of March 31, 2021 (collectively the “ERCOT Loans”), and (ii) the remaining loan portfolio (the “Other Loans”).

TD Securities estimated the value of the Other Loans by multiplying the unpaid principal balance outstanding as of March 31, 2021 by a range of 97% to 100%, based on TD Securities’ experience and professional judgment.

For the ERCOT Loans, TD Securities valued each loan individually. TD Securities took into account payment status and the expected return with respect to the applicable project. TD Securities calculated the net present value of such loans by discounting the forecasted interest and principal payments. TD Securities used ranges of discount rates from 8.0% to 16.5%, depending on the loan. The range of discount rates reflected the stated interest rates of these loans as well as the estimated return expectations of an equity sponsor (where the loan was issued to fund the sponsor equity in the project), based on information provided by the Manager and TD Securities’ experience and professional judgement. Principal payments at maturity were estimated based on proceeds that would potentially be realized from the sale or recapitalization of the underlying ERCOT project using information and estimates provided by the Manager and TD Securities’ experience and professional judgement. As one of the ERCOT projects was sold on April 23, 2021, the value of the associated ERCOT Loans reflected the loss realized as a result of partial repayment of the unpaid principal balance.

TD Securities added the value of the Other Loans and the ERCOT Loans, as determined above, to the cash and other assets of Solar Ventures as of March 31, 2021 in order to calculate the gross value of Solar Ventures. TD Securities then deducted from the gross value of Solar Ventures the value of non-pro rata capital contributions made by MMAC’s capital partner, based on information provided by the Manager, in order to calculate the total value of the partners’ interest in Solar Ventures. For purposes of the net asset value of MMAC, TD Securities reflected the value of MMAC’s interest in the total partners’ interest in Solar Ventures pursuant to the foregoing calculations as a 50% member.

Real Estate Investments. At the direction of the Transaction Committee, TD Securities relied on the appraised values provided in the Appraisal Reports for purposes of valuing MMAC’s Real Estate Investments.

Subordinated Debt. TD Securities calculated the net present value of the forecasted interest and principal payments to be paid by MMAC on its subordinated debt securities using a range of discount rates from 8.0% to 8.5%. This range of discount rates was based on TD Securities’ experience and professional judgement, taking into account a review of MMAC’s methodology for estimating a market discount rate on these securities and other market information with respect to yields on subordinated/high-yield debt for estimating a market discount rate on MMAC’s subordinated debt. The resulting net present value implied a fair value gain on MMAC's subordinated debt, which was reflected in the net asset value of MMAC.

Net Operating Losses. TD Securities calculated the present value of future tax savings from MMAC’s net operating losses based on projections prepared by the Manager that included MMAC’s forecasted cash tax savings, taking into account any limitations on the usage of MMAC's net operating losses, including limitations imposed upon a change of control. TD Securities utilized discounts rates ranging from 13.0% to 15.0%, which was TD Securities’ estimated range of MMAC’s cost of equity.

Other Assets and Liabilities. The book values as of March 31, 2021 for MMAC’s other assets and liabilities provided to TD Securities by MMAC were used for the net asset value of MMAC, except for: (i) capitalized debt issue costs, which were excluded, and (ii) MMAC’s equity interest in a residential real estate investment trust listed on the Main Board of the Johannesburg Stock Exchange, the value of which was calculated using the closing share price on May 21, 2021.

Operating Expenses. In order to calculate the impact of operating expenses of MMAC on the net asset value of MMAC, TD Securities utilized the gross amount of MMAC’s external management fees and reimbursable expenses, general and administrative expenses, professional fees and other expenses (collectively, “Operating Expenses”), set forth in the Manager’s estimate for 2021 Operating Expenses (“2021E Opex”). TD Securities calculated an implied value for the Operating Expenses for purposes of the net asset value of MMAC by capitalizing the 2021E Opex using a range of multiples from 5.0x to 6.0x, based on TD Securities’ experience and professional judgement (the “Standalone Opex Value”). TD Securities also calculated a value for the Operating Expenses that reflected an estimate of potential savings in certain expenses as compared to the 2021E Opex (the "Adjusted 2021E Opex") as a result of internalizing management of MMAC (the “Internalized Opex Value”). For purposes of calculating the Internalized Opex Value, TD Securities used the same range of multiples from 5.0x to 6.0x in order to capitalize the Adjusted 2021E Opex and included the cost of the termination fee under the Termination Agreement. TD Securities reflected the mid-point of the Standalone Opex Value and Internalized Opex Value as a deduction in the net asset value of MMAC.

Based on the foregoing analysis, TD Securities calculated an indicative net asset value range of MMAC of approximately $138.5 million to $180.9 million. TD Securities divided this range by the number of shares of MMAC common stock outstanding on a fully diluted basis as of March 31, 2021 based on information provided by the Manager. This analysis resulted in the following indicative range, as compared to the per share Merger Consideration:

Precedent Transactions Multiples Analysis

Using publicly available information, TD Securities reviewed certain financial data relating to the 13 completed transactions listed below that were announced between February 26, 2016 and December 7, 2020 involving target companies whose operations, for the purposes of TD Securities’ analysis and based on its experience and professional judgment, TD Securities considered generally relevant in evaluating those of MMAC, based on business sector participation, operational characteristics and financial metrics (such transactions collectively, the “selected transactions”).

TD Securities reviewed, among other information, transaction values of the selected transactions, calculated as the per share purchase price paid for the target companies as multiples of such target companies’ latest reported book value per share. Financial data of the selected transactions were based on public filings and other publicly available information.

TD Securities noted that the low to high latest book value multiples observed for the selected transactions was 0.65x to 1.15x (with a median of 0.89x and an average of 0.90x). Based on the multiples observed for the selected transactions and its professional judgment and experience, TD Securities selected a range of book value multiples of 0.70x to 0.90x derived from the selected transactions. These multiples were applied to: (i) the latest adjusted book value (“Adjusted Book Value”) of MMAC (as of March 31, 2021), a non-GAAP measure disclosed by MMAC in its public financial statements, which represents book value reduced by the carrying value of MMAC’s deferred tax assets; and (ii) an estimated mark-to-market adjusted book value (“Mark-to-Market Adjusted Book Value”) of MMAC, which was based on values for MMAC’s assets and liabilities as determined in the Net Asset Value Analysis set forth above (excluding the impact of Operating Expenses and net operating losses), to which TD Securities then added the value of MMAC’s net operating losses (as determined in the Net Asset Value Analysis), in order to derive the implied equity value per share reference range.

Based on the foregoing, TD Securities calculated the following indicative implied equity value per share reference ranges for MMAC, as compared to the per share Merger Consideration:

No company or transaction used as a comparison in this analysis is identical to MMAC or directly comparable to the proposed Merger in business mix, timing and size or other metrics. Accordingly, an evaluation of the results of the foregoing necessarily involves complex considerations and judgments concerning differences between the proposed Merger and the other transactions, MMAC and other factors. In evaluating the selected transactions, TD Securities made judgments and assumptions with regard to the applicable transactions, size, business mix, governance matters, industry performance, geographic mix, economic, market and financial conditions and other matters, many of which are beyond the control of MMAC. Mathematical analyses (such as determining the average or median) are not in themselves a meaningful method of using comparable data.

Precedent Transaction Premiums Analysis

TD Securities reviewed the premiums or discounts paid by acquirers in the 13 selected transactions, listed in the section above, involving target companies whose operations, for the purposes of TD Securities’ analysis and based on its experience and professional judgment, TD Securities considered generally relevant in evaluating those of MMAC. For each transaction, TD Securities calculated the stated transaction price per share as a percent of the last reported closing price for the applicable target company prior to announcement and the closing price of the applicable target company 30 days prior to announcement. This analysis indicated the following reference data for the selected transactions:

Based on the foregoing review and its professional judgment and experience, TD Securities applied a premium range of 10% to 40% to: (i) the closing price of MMAC common stock on May 21, 2021 of $17.10; and (ii) the volume-weighted average MMAC common stock price during the 30 trading days prior to and including May 21, 2021 of $17.09.

Based on the foregoing, TD Securities calculated the following approximate implied equity value per share reference ranges for MMAC, as compared to the per share Merger Consideration:

No company or transaction used as a comparison in this analysis is identical to MMAC or directly comparable to the proposed Merger in business mix, timing and size or other metrics. Accordingly, an evaluation of the results of the foregoing necessarily involves complex considerations and judgments concerning differences between the proposed Merger and the other transactions, MMAC and other factors. In evaluating the selected transactions, TD Securities made judgments and assumptions with regard to the applicable transactions, size, business mix, governance matters, industry performance, geographic mix, economic, market and financial conditions and other matters, many of which are beyond the control of MMAC. Mathematical analyses (such as determining the average or median) are not in themselves a meaningful method of using comparable data.

Trading Price Discount to Book Value

TD Securities reviewed trading prices of shares of MMAC between January 1, 2020 and May 21, 2021 and calculated the premium or discount to the Company’s book value per share and Adjusted Book Value per share at the time as disclosed in its public filings. This analysis indicated the following discounts to book value and Adjusted Book Value per share:

Based on the foregoing review and its professional judgment and experience, TD Securities applied a discount range of: (i) 40% to 55% to MMAC’s book value per share as of March 31, 2021 of $48.12; and (ii) 25% to 40% to MMAC’s Adjusted Book Value per share as of March 31, 2021 of $37.34.

Based on the foregoing, TD Securities calculated the following approximate implied equity value per share reference ranges for MMAC, as compared to the per share Merger Consideration: