Item 1.01 Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On
The Merger Agreement provides that (i) Acquisition Sub will merge with and into HCAP (the "First Merger"), with HCAP continuing as the surviving corporation and as a wholly-owned subsidiary of PTMN, and (ii) immediately after the effectiveness of the First Merger, HCAP will merge with and into PTMN (the "Second Merger" and, together with the First Merger, the "Mergers"), with PTMN continuing as the surviving corporation.
The board of directors of HCAP (other than directors affiliated with
Merger Consideration
At the closing of the First Merger (the "Closing"), PTMN shall issue, in respect
of all of the issued and outstanding shares of common stock, par value
Each person who as of the date and time when the First Merger becomes effective (the "Effective Time") is a record holder of shares of HCAP Common Stock shall be entitled, with respect to all or any portion of such shares, to make an election to receive payment for their shares of HCAP Common Stock in cash (an "Election"), subject to the conditions and limitations set forth in the Merger Agreement. Any record holder of shares of HCAP Common Stock at the record date who does not make an Election shall be deemed to have elected to receive payment for their shares of HCAP Common Stock in the form of PTMN Common Stock. For the purpose of making Elections, a record holder of HCAP Common Stock that is a registered clearing agency and whose legal title on behalf of multiple ultimate beneficial owners shall be entitled to submit elections as if each ultimate beneficial owner were a record holder of HCAP Common Stock.
Each share of HCAP Common Stock (other than a Cancelled Share) with respect to which an Election has been made (an "Electing Share") shall be entitled to receive the number of shares of PTMN Common Stock (the "Per Share Stock Amount") with a value equal to the Per Share Cash Price (as defined below), subject to certain adjustments as described below.
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The "Per Share Cash Price" will be the quotient of (i) the sum of (a) the product of Total Stock Consideration multiplied by the average of the volume weighted average price per share of PTMN Common Stock on NASDAQ (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by PTMN and HCAP) on each of the ten (10) consecutive trading days ending with the Determination Date (such value the "Total Stock Consideration Value") and (b) the Aggregate Cash Consideration (such sum, the "Total Consideration Value"), divided by (ii) the number of shares of HCAP Common Stock issued and outstanding immediately prior to the Closing.
Each share of HCAP Common Stock with respect to which an Election has not been made (a "Non-Electing Share") shall be converted into the right to receive a number of validly issued, fully paid and non-assessable shares of PTMN Common Stock, equal to the Per Share Stock Amount (the "Proposed Stock Issuance Amount"), subject to certain adjustments as described below. The amount of PTMN Common Stock to be issued for each Non-Electing Share as ultimately determined pursuant to the foregoing sentence shall be referred to as the "Per Share Stock Consideration."
If the Proposed Aggregate Stock Issuance Amount (as defined below) is greater than the Total Stock Consideration, then the number of Non-Electing Shares shall be reduced by converting Non-Electing Shares into Electing Shares, until the Total Stock Consideration is equal to the Proposed Aggregate Stock Issuance Amount (determined on a whole-share basis). Any such reduction in the number of Non-Electing Shares shall be applied among all stockholders who hold Non-Electing Shares, pro rata based on the aggregate number of Non-Electing Shares held by each such stockholder. The term "Proposed Aggregate Stock Issuance Amount" shall mean the product of (x) the Proposed Stock Issuance Amount multiplied by (y) the aggregate number of Non-Electing Shares.
If the Proposed Cash Consideration (as defined below) is an amount greater than the Aggregate Cash Consideration, then the number of Electing Shares shall be reduced by converting Electing Shares into Non-Electing Shares, until the Aggregate Cash Consideration is equal to the Proposed Cash Consideration (determined on a whole-share basis). Any such reduction in the number of Electing Shares shall be applied among all stockholders who hold Electing Shares, pro rata based on the aggregate number of Electing Shares held by each such stockholder. The term "Proposed Cash Consideration" shall mean the product of (i) the number of Electing Shares, multiplied by (ii) the Per Share Cash Price.
HCAP shall prepare and mail a form of election (each, a "Form of Election"),
with the proxy statement relating to the HCAP Stockholders Meeting (as defined
below) (the "Proxy Statement"), to record holders of HCAP Common Stock as of the
record date for the HCAP Stockholders Meeting, which shall be used by each
holder of HCAP Common Stock who wishes to elect to receive the Per Share Cash
Price for any or all shares of HCAP Common Stock held by such holder. In
addition, HCAP shall use its best efforts to make the Form of Election and the
Proxy Statement available to all persons who become holders of HCAP Common Stock
during the period between such record date and the HCAP Stockholders Meeting.
Any such holder's election to receive the Per Share Cash Price will be properly
made only if the exchange agent has received at its designated office, by
Any Form of Election may be revoked by the holder of HCAP Common Stock
submitting such Form of Election to the exchange agent only by written notice
received by the exchange agent (i) prior to
Item 7.01. Regulation FD Disclosure.
On
The information in Item 7.01 and Exhibit 99.1 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Forward-Looking Statements
This document contains forward-looking statements that involve substantial risks
and uncertainties, including statements regarding the completion of the
transaction between HCAP and PTMN. The use of words such as "anticipates,"
"believes," "intends," "plans," "expects," "projects," "estimates," "will,"
"should," "may" and similar expressions identify any such forward-looking
statements. These forward-looking statements are not guarantees of future
performance and are subject to various risks and uncertainties. Certain factors
could cause actual results and conditions to differ materially from those
projected, including the uncertainties associated with (i) the timing or
likelihood of the transaction closing, (ii) the expected synergies and savings
associated with the transaction, (iii) the expected elimination of certain
expenses and costs due to the transaction, (iv) the percentage of HCAP
stockholders voting in favor of the transaction, (v) the possibility that
competing offers or acquisition proposals for HCAP will be made, (vi) the
possibility that any or all of the various conditions to the consummation of the
merger may not be satisfied or waived, including the failure to obtain the HCAP
Stockholder Approval, (vii) risks related to diverting the respective
management's attention from HCAP's and PTMN's ongoing business operations,
(viii) the risk that stockholder litigation in connection with the transactions
contemplated by the merger agreement may result in significant costs of defense
and liability, (ix) the future operating results of HCAP's or PTMN's portfolio
companies or of the combined company, (x) regulatory factors, (xi) changes in
regional or national economic conditions, including but not limited to the
impact of the COVID-19 pandemic, and their impact on the industries in which
HCAP and PTMN invest, and (xii) other changes in the conditions of the
industries in which HCAP and PTMN invest and other factors enumerated in HCAP's
and PTMN's respective filings with the
Additional Information and Where to Find It
In connection with the proposed transaction, including seeking to obtain the
HCAP Stockholder Approval, PTMN plans to file with the
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Participants in the Solicitation
HCAP, its directors, certain of its executive officers and certain employees and
officers of
No Offer or Solicitation
This Current Report is not, and under no circumstances is it to be construed as, a prospectus or an advertisement and the communication of this Current Report is not, and under no circumstances is it to be construed as, an offer to sell or a solicitation of an offer to purchase any securities in PTMN, HCAP or in any fund or other investment vehicle.
Item 9.01 Financial Statements and Exhibits.
(d) The following exhibits are filed with this report:
Exhibit No. Description 2.1 Agreement and Plan of Merger, dated as ofDecember 23, 2020 by and among Portman Ridge Finance Corporation,Rye Acquisition Sub Inc. ,Harvest Capital Credit Corporation andSierra Crest Investment Management LLC . 10.1 Letter Agreement, dated as ofDecember 23, 2020 by and amongHarvest Capital Credit Corporation andJoseph A. Jolson . 99.1 Press Release datedDecember 23, 2020 . 6
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