Equus and MVC Capital Complete Share Exchange
May 15 2014 - 8:00AM
Marketwired
Equus and MVC Capital Complete Share Exchange
Share Exchange Marks the First Step in Equus' Intent to Effect a
Transformative Reorganization
HOUSTON, TX--(Marketwired - May 15, 2014) - Equus Total Return,
Inc. (NYSE: EQS) ("Equus" or the "Fund") today announced that it
intends to effect a transformational reorganization under the
Investment Company Act of 1940 (the "1940 Act") in an effort to
maximize shareholder value. The reorganization, approved by
the Equus Board of Directors, involves, amongst other matters, the
acquisition by MVC Capital, Inc. (NYSE: MVC) ("MVC") of a
substantial equity stake in Equus.
Under the terms of the reorganization, Equus intends to pursue a
merger or consolidation with MVC, or a subsidiary of MVC, or one or
more of MVC's portfolio companies (the
"Consolidation"). Absent Equus merging or consolidating
with/into MVC, the current intention is for Equus to (i) consummate
the Consolidation, (ii) terminate its election to be classified as
a business development company under the 1940 Act, and (iii) be
restructured as a publicly-traded operating company focused on the
energy and/or financial services sector.
If, as a result of the Consolidation, Equus is transformed into
an operating company, Equus intends to ensure that it satisfies the
continued listing criteria for operating companies pursuant to
applicable rules of the New York Stock Exchange.
Pursuant to the Share Exchange Agreement that was also adopted
as the first step to the reorganization, MVC received 2,112,000
shares of Equus in exchange for Equus receiving 395,839 shares of
MVC. The exchange was calculated based upon each company's
respective net asset value per share.
As part of the reorganization, MVC may also acquire additional
Equus shares from time to time, either through Equus' direct sale
of newly issued shares from treasury stock to MVC (which would
require the approval of a majority of Equus shareholders) or
through the purchase of Equus shares from existing Equus
shareholders. The consummation of the reorganization is
anticipated to occur within one year.
"We are encouraged by the strategic possibilities this
transaction presents," said Bruce W. Shewmaker, Managing Director
of MVC Capital, Inc. "Equus has access to energy and finance
sector expertise and a substantial portion of its assets held in
cash, all of which we will seek to capitalize on through a
potentially creative business combination."
"Today's announcement reflects the culmination of our effort to
chart a transformative strategic direction for Equus," said John
Hardy, the Chief Executive Officer of Equus. "If we can
implement the reorganization in the coming months, we believe Equus
will benefit from a closer relationship with MVC. We expect this to
provide Equus access to a broader range of investment
opportunities, which could unlock the potential for growth and
liquidity for our shareholders. I look forward to working closely
with the MVC team to accomplish these goals."
Both the reorganization and the Exchange are subject to various
conditions, risks, and uncertainties, among which include the
following:
- While the Equus Board of Directors has approved the
reorganization and the share exchange, the reorganization cannot be
fully put into effect unless and until a majority of the holders of
the Fund's outstanding shares approve the Consolidation. While the
Equus Board has not, at this time, either reviewed or approved any
particular transaction that would constitute the Consolidation,
there can be no guarantee that the actual transaction will
ultimately be approved by both the Board and Equus
shareholders.
- The risk that Equus and/or MVC are unable to (i) complete the
transactions contemplated by Equus' reorganization, including the
Consolidation, and (ii) fulfill closing conditions under, or the
execution of customary additional documentation for, agreements
related to the reorganization, including the Share Exchange
Agreement.
- If the Plan is not put into effect within one year of the date
of the share exchange, MVC has the right, to the extent permitted
by law, to rescind the Exchange, recover its shares that have been
issued to Equus, and return to Equus the 2,112,000 shares issued to
it.
These risks should be considered in addition to the items
identified as "Risk Factors" in both the Fund's most recent Annual
Report on Form 10-K filed with the Securities and Exchange
Commission (the "SEC") on March 31, 2014 and MVC's most recent
Annual Report on Form 10-K filed with the SEC on January 13,
2014.
About Equus
The Fund is a business development company that trades as a
closed-end fund on the New York Stock Exchange, under the symbol
"EQS". Additional information on the Fund may be obtained from the
Fund's website at www.equuscap.com.
About MVC Capital, Inc.
MVC is a business development company traded on the New York
Stock Exchange that provides long-term debt and equity investment
capital to fund growth, acquisitions and recapitalizations of
companies in a variety of industries. For additional information
about MVC, please visit the MVC's website at
www.mvccapital.com.
Forward-Looking Statements
This press release contains certain forward-looking statements
regarding possible future circumstances. These forward-looking
statements are based upon the Fund's current expectations and
assumptions and are subject to various risks and uncertainties that
could cause actual results to differ materially from those
contemplated in such forward-looking statements including, in
particular, the performance of the Fund, including our ability to
achieve our expected financial and business objectives, our ability
to execute our reorganization and complete the transactions
contemplated thereby, the performance of our new investment in MVC,
the other risks and uncertainties described herein, as well as
those contained in the Fund's filings with the SEC. Actual results,
events, and performance may differ. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as to the date hereof. The Fund undertakes no obligation
to release publicly any revisions to these forward-looking
statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated
events. The inclusion of any statement in this release does not
constitute an admission by the Fund or any other person that the
events or circumstances described in such statements are
material.
Contacts: Patricia Baronowski Pristine Advisers, LLC
(631) 756-2486
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