Filed by Sierra Income Corporation
pursuant to Rule 425 under the Securities
Act of 1933
and deemed filed under Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Company: Medley Capital Corporation
Commission File No. 814-00818
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): November 20, 2019 (November 19, 2019)
Medley
Capital Corporation
(Exact name of registrant as specified
in its charter)
Delaware
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814-00818
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27-4576073
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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280 Park Avenue, 6th Floor East, New York, NY
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10017
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(Address of principal executive offices)
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(Zip Code)
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(212) 759-0777
(Registrant’s telephone number, including
area code)
Not Applicable
(Former name or former address, if changed
since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.001 per share
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MCC
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The New York Stock Exchange
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6.500% Notes due 2021
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MCX
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The New York Stock Exchange
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6.125% Notes due 2023
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MCV
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The New York Stock Exchange
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Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant
is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging
growth company ¨
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 8.01 Other Events.
On November 19, 2019,
the Court of Chancery of the State of Delaware (the “Court”) approved the settlement of the consolidated stockholder
action captioned In re Medley Capital Corporation Stockholder Litigation, C.A. No. 2019-0100-KSJM (the “MCC Stockholder
Action”) on the terms contemplated by the Stipulation of Settlement dated July 29, 2019 (the “Settlement”)
(as described under “Item 1. Legal Proceedings” in Medley Capital Corporation’s (“MCC”) Quarterly
Report on Form 10-Q for the quarter ended June 30, 2019), and the Stipulation Amending Release of Claims and Certain Exhibits,
dated August 8, 2019.
Approval of the Settlement
by the Court is a condition to the closing of the Merger (as defined below) under the Amended MCC Merger Agreement (as defined
below) and, as described in this Item 8.01, such condition will be satisfied. Any disputes or appeals relating solely to
the amount, payment or allocation of plaintiffs’ attorney fees shall have no effect on finality of the Settlement for purposes
of satisfying this condition.
The Court also awarded
attorney’s fees as follows: (i) an award of $3,000,000 to lead plaintiffs’ counsel and $75,000 to counsel to plaintiff
Stephen Altman (the “Therapeutics Fee Award”) and (ii) an award in an amount equal to 26% of the nominal value
of the settlement fund, grossed up to include the amount of the lead plaintiffs’ counsel’s attorney’s fees, and
excluding the portion of the fees borne by the class under the Amended MCC Merger Agreement (as defined below), as well as an award
of $100,000 relating to the composition of the board of directors of the post-Merger company (the “Contingent Fee Award”
and, together with the Therapeutics Fee Award, the “Fee Awards”). A proposed form of order and final judgment
is being prepared for review and entry by the Court. The Therapeutics Fee Award will be payable within five (5) business days of
the entry of an order and final judgment by the Court. The Contingent Fee Award is contingent upon the closing of the merger (the
“Merger”) contemplated by the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019,
by and between MCC and Sierra Income Corporation (the “Amended MCC Merger Agreement”), and will be due within
five (5) business days of the closing of the Merger. The Fee Awards will be paid by MCC or its successor.
**********
Forward-Looking Statements
This communication contains “forward-looking”
statements, including statements regarding the proposed transactions contemplated by the Amended MCC Merger Agreement. Such forward-looking
statements reflect current views with respect to future events and financial performance, and MCC may make related oral forward-looking
statements on or following the date hereof. Statements that include the words “should,” “would,” “expect,”
“intend,” “plan,” “believe,” “project,” “anticipate,” “seek,”
“will,” and similar statements of a future or forward-looking nature identify forward-looking statements in this material
or similar oral statements for purposes of the U.S. federal securities laws or otherwise. Because forward-looking statements, such
as the possibility that MCC may receive competing proposals and the date that the parties expect the proposed transactions to be
completed, include risks and uncertainties, actual results may differ materially from those expressed or implied and include, but
are not limited to, those discussed in MCC’s filings with the Securities and Exchange Commission (the “SEC”),
and (i) the satisfaction or waiver of closing conditions relating to the proposed transactions described herein, including, but
not limited to, the requisite approvals of the stockholders of each of MCC, Sierra Income Corporation (“Sierra”), and
Medley Management Inc. (“MDLY”), Sierra successfully taking all actions reasonably required with respect to certain
outstanding indebtedness of MCC and MDLY to prevent any material adverse effect relating thereto, certain required approvals
of the SEC (including necessary exemptive relief to consummate the merger transactions), approval by the Court of Chancery
of the State of Delaware of the Settlement Agreement, the necessary consents of certain third-party advisory clients of MDLY, and
any applicable waiting period (and any extension thereof) applicable to transactions under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, shall have expired or been terminated; (ii) the parties’ ability to successfully consummate the
proposed transactions, and the timing thereof; and (iii) the possibility that competing offers or acquisition proposals related
to the proposed transactions will be made and, if made, could be successful. Additional risks and uncertainties specific to MCC
include, but are not limited to, (i) the costs and expenses that MCC has, and may incur, in connection with the proposed transactions
(whether or not they are consummated); (ii) the impact that any litigation relating to the proposed transactions may have on MCC; (iii)
that projections with respect to distributions may prove to be incorrect; (iv) Sierra’s ability to invest its portfolio of
cash in a timely manner following the closing of the proposed transactions; (v) the market performance of the combined portfolio;
(vi) the ability of portfolio companies to pay interest and principal in the future; (vii) the ability of MDLY to grow its fee
earning assets under management; (viii) whether Sierra, as the surviving company, will trade with more volume and perform better
than MCC and MDLY prior to the proposed transactions; and (ix) negative effects of entering into the proposed transactions
on the trading volume and market price of the MCC’s common stock. There can be no assurance of the level of any distributions
to be paid, if any, following consummation of the proposed transactions.
The foregoing review of important factors should
not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the
Joint Proxy Statement/Prospectus (as defined below) relating to the proposed transactions and in the “Risk Factors”
sections of MCC’s most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q. The forward- looking
statements in this communication represent MCC’s views as of the date of hereof. MCC anticipates that subsequent events and
developments will cause its views to change. However, while MCC may elect to update these forward-looking statements at some point
in the future, MCC does not have any current intention of doing so except to the extent required by applicable law. You should,
therefore, not rely on these forward-looking statements as representing MCC’s views as of any date subsequent to the date
of this material.
Additional Information and Where to Find It
In connection with the proposed transactions,
Sierra intends to file with the SEC and mail to its stockholders an amendment to the Registration Statement on Form N-14 that
will include a proxy statement and that also will constitute a prospectus of Sierra, and MCC and MDLY intend to file with the
SEC and mail to their respective stockholders an amendment to the proxy statement on Schedule 14A (the “Joint Proxy Statement/Prospectus”
and, as amended, the “Amended Joint Proxy Statement/Prospectus). INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE JOINT
PROXY STATEMENT/PROSPECTUS, AS WELL AS THE AMENDED JOINT PROXY STATEMENT/PROSPECTUS, WHEN IT BECOMES AVAILABLE, OR ANY SUPPLEMENTS
TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT SIERRA, MCC, AND MDLY, THE
PROPOSED TRANSACTIONS AND RELATED MATTERS. Investors and stockholders can obtain the Joint Proxy Statement/Prospectus
and other documents filed with the SEC by Sierra, MCC, and MDLY, free of charge, from the SEC’s website (www.sec.gov) and
from Sierra’s website (www.sierraincomecorp.com), MCC’s website (www.medleycapitalcorp.com), or MDLY’s website
(www.mdly.com). Investors and stockholders may also obtain free copies of the Joint Proxy Statement/Prospectus, the Amended Joint
Proxy Statement/Prospectus (when available), and other documents filed with the SEC from MCC by using the contact information
provided above.
Participants in the Solicitation
MCC and its directors, executive officers,
other members of its management and certain employees of Medley LLC may be deemed to be participants in the anticipated solicitation
of proxies in connection with the proposed transactions. Information regarding MCC’s directors and executive officers is
available in its definitive proxy statement for its 2019 annual meeting of stockholders filed with the SEC on May 9, 2019 (the
“MCC 2019 Proxy Statement”). To the extent holdings of securities by such directors or executive officers have changed
since the amounts disclosed in the MCC 2019 Proxy Statement, such changes have been or will be reflected on Statements of Change
in Ownership on Form 4 filed by such directors or executive officers, as the case may be, with the SEC. More detailed information
regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, will
be set forth in the Amended Joint Proxy Statement/Prospectus when such documents become available and in other relevant materials
to be filed with the SEC. These documents may be obtained free of charge from the sources indicated above.
No Offer or Solicitation
The information in this press release
is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation
of an offer to buy any securities or the solicitation of any vote or approval in any jurisdiction pursuant to or in connection
with the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction
in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements
of Section 10 of the Securities Act of 1933, as amended.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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MEDLEY CAPITAL CORPORATION
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By:
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/s/ Richard T. Allorto, Jr.
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Name:
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Richard T. Allorto
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Title:
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Chief Financial Officer and Secretary
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Date: November 20, 2019
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