Benefit Street Partners’ $980 Million Acquisition of Triangle Capital Investment Portfolio


Houlihan Lokey Capital Inc. served as financial adviser and Eversheds Sutherland (US) LLP served as legal counsel to Triangle. Ropes & Gray LLP acted as legal counsel to BSP. Wells Fargo Securities LLC served as financial adviser and Dechert LLP served as legal counsel to Barings.

Triangle Capital Corporation (NYSE:TCAP) has entered into an asset purchase agreement with an affiliate of Benefit Street Partners L.L.C. under which the Company will sell its December 31, 2017 investment portfolio to funds advised by BSP for $981.2 million in cash. Simultaneously therewith, the Company entered into a stock purchase and transaction agreement with Barings LLC, through which Barings will become the investment adviser to the Company in exchange for a payment by Barings of $85.0 million, or $1.78 per share, directly to the Company’s shareholders. In addition, Barings will make an investment of $100.0 million in newly issued shares of the Company’s common stock at net asset value at closing. Furthermore, Barings has committed to purchase up to $50.0 million of shares of the Company’s common stock in the open market at a price up to and including the then-current net asset value for a period of two years post-closing, after which Barings has agreed to use any funds remaining to purchase shares from the Company at the greater of the then current net asset value and market price. Barings’ total financial commitment to the transaction is $235.0 million. Immediately following the closing of these transactions, the Company will launch a $50.0 million issuer tender to purchase shares of its common stock at prices up to and including net asset value per share.

The sale of the December 31, 2017 investment portfolio to BSP and the $85.0 million shareholder payment by Barings represent total cash consideration to the Company and to Triangle shareholders, net of the repayment of outstanding debt, of $691.2 million, or approximately $14.48 per share as of December 31, 2017, and 1.08x Triangle’s December 31, 2017 net asset value per share. Net of estimated transaction expenses, other one-time charges and the repayment of outstanding debt, the sale of the Company’s December 31, 2017 investment portfolio and the $85.0 million shareholder payment represents total cash consideration to the Company and to Triangle shareholders of $658.6 million, or approximately $13.80 per share as of December 31, 2017, and 1.03x Triangle’s December 31, 2017 net asset value. The $13.80 per share total cash consideration to the Company and to Triangle shareholders represents a 26% premium to the April 3, 2018 closing market price of the Company’s common stock.

Triangle’s Board of Directors has unanimously approved the asset purchase agreement, the stock purchase and transaction agreement and the transactions contemplated thereby, including the investment advisory agreement pursuant to which Barings will act as the Company’s investment adviser, and, subject to certain conditions, will recommend that Triangle’s shareholders approve the same, along with certain other elements of the transactions. Triangle intends to hold a special meeting of shareholders as soon as practicable to obtain the requisite shareholder approvals. The transactions are also subject to certain other closing conditions.

In conjunction with the closing of the proposed transactions, Triangle will announce the redemption of the Company’s 6.375% Notes due December 15, 2022 (NYSE:TCCA) with an aggregate principal amount outstanding of $80.5 million and the Company’s 6.375% Notes due March 15, 2022 (NYSE:TCCB) with an aggregate principal amount outstanding of $86.25 million. Both series of Notes will be redeemed, following at least 30 days’ notice prior to the date determined for redemption, at a price equal to the outstanding principal amount of the Notes plus accrued interest to the date of redemption.

Based on the terms of the asset purchase agreement under which BSP is deemed to have acquired the economics of Triangle’s investment portfolio at the signing thereof, the Company expects to discontinue paying a quarterly dividend starting with the second quarter of 2018. The transactions are expected to close in June or July of 2018, at which time shareholders will receive the payment of $1.78 per share as part of the Barings externalization transaction.

Benefit Street Partners L.L.C. is a privately owned investment manager. The Firm, led by Thomas James Gahan and Richard Jan Byrne is based in New York.

Triangle Capital Corporation operates as a private equity firm. The company, led by Edward Ashton Poole, Steven C Lilly and Douglas A Vaughn in 2017 recorded $123 Million Revenues.

The Ropes & Gray advised Benefit Street Partners, with Paul Van Houten (Picture), securities & public companies partner Christopher Comeau, investment management partner Michael Doherty, finance partner Patricia Lynch and private equity associate Adam Leamon.

Involved fees earner: Paul Van Houten – Ropes & Gray; Adam Leamon – Ropes & Gray; Christopher Comeau – Ropes & Gray; Michael Doherty – Ropes & Gray; Patricia Lynch – Ropes & Gray;

Law Firms: Ropes & Gray;

Clients: Benefit Street Partners LLC;

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Author: Ambrogio Visconti