TSLX Stands Ready and Willing to Engage with TICC Toward Making the
TSLX Proposal a Reality
TSLX Calls on TICC to Commit to Changes Endorsed by TICC Special
Committee Should BSP Transaction Not Move Forward
NEW YORK -- (Business Wire)
TPG Specialty Lending, Inc. (“TSLX”; NYSE:TSLX), a specialty finance
company focused on lending to middle-market companies, today sent a
letter to the Board of Directors of TICC Capital Corp. (“TICC”; Nasdaq:
TICC) in which TSLX urged TICC to provide an update to stockholders
regarding the status of the proposed transaction with Benefit Street
Partners L.L.C. (“BSP”), the associated special meeting of stockholders
and whether TICC intends to change the status quo at the company should
the BSP transaction not move forward.
A copy of the letter follows:
Board of Directors
TICC Capital Corp.
8 Sound Shore Drive,
Suite 255
Greenwich, CT 06830
Members of the Board,
We are writing both as a stockholder of TICC Capital Corp. (“TICC”) and
in the greater interest of all stockholders to urge you to address the
true owners of TICC and provide an update on the status of our
investment.
Since October 27, 2015, more than a month ago, you have not publicly
discussed:
-
The status of the proposed transaction with Benefit Street Partners
L.L.C. (“BSP”), a Providence Equity Partners L.L.C. affiliate or the
associated Special Meeting,
-
TPG Specialty Lending, Inc.’s (“TSLX”) revised offer for TICC, or
-
Plans to change the status quo at TICC should the BSP transaction fail
to be approved.
We are surprised and disappointed that the members of the Special
Committee continue to ignore our proposal and have failed to acknowledge
or respond to our revised offer, which we publicly announced on November
2, 2015, approximately one month ago.
Your silence has undoubtedly left the impression with your stockholders
that you are negotiating a material transaction as evidenced by the
recent movement in TICC’s stock price from $6.39 per share to $6.93 per
share.1 Knowing we have the only credible proposal on the
table and you are not negotiating with us, we presume your silence means
that the BSP transaction is dead and you wish to return to the status
quo.
Despite your lack of direct engagement, we and our fellow stockholders
remain resolute in making this transaction a reality. As the Special
Committee has made clear, the status quo is simply unacceptable.
Our updated proposal adds certainty for TICC stockholders by indexing
the value of TSLX’s proposal to 90% of TICC’s most recently reported net
asset value at the time of execution of a definitive agreement. Most
importantly, the TSLX proposal delivers immediate and upfront value to
TICC stockholders for their investment. Throughout the last few months,
you have repeatedly outlined four primary reasons as support for the
sale of TICC’s adviser to BSP. These reasons are as follows:
-
Management fees under the BSP transaction would be reduced to 1.5%,
which is lower than the current rate and also below that of most BDCs.23
Under the current terms of the agreement, management fees under the
BSP transaction would be further reduced to 1.25% for twenty-four
months.
-
Under the BSP transaction, the gap between net asset value and market
value would be reduced via a $50 million to $100 million tender offer
or repurchase program for TICC shares. The tender offer would be at a
minimum price of ~90% of TICC net asset value.4
-
BSP would significantly change TICC’s investment strategy to primarily
focus on private debt investments.5
-
The BSP transaction would change TICC’s Board, through the expansion
and addition of four new independent directors.6
As we have made clear many times, our proposal more than adequately
addresses these points and offers many other important benefits for
stockholders. Again, we outline these aspects of our proposal below:
-
Whereas the share repurchase program under the BSP transaction would
result in the acquisition of only $50-$100 million of shares at 90% of
net asset value, representing only a quarter of TICC’s outstanding
shares (based on its October 30, 2015 closing stock price of $6.39 per
share), the TSLX proposal would pay ALL TICC stockholders 90% of net
asset value for their shares.
-
In addition, TSLX has a stockholder-friendly approach to share
buybacks and is committed to repurchasing its stock if the share price
falls below net asset value. We are confident stockholders recognize
the strength and clarity of our approach and value this above TICC’s
long history of never meaningfully executing a buyback program.
-
TSLX has a proven record of delivering superior returns to
stockholders, consistently generating total returns over and above the
BDC Composite.7 TICC stockholders would benefit from TSLX’s
ability to generate industry-leading return on equity for stockholders.
The Board has a fiduciary duty to make the right choice and act in the
best interest of stockholders by engaging in substantive discussions
with us. In the meantime, we think it is imperative that the TICC Board
act now to protect the interests of stockholders by making improvements
in the management and governance of TICC.
In light of this reality, we are astounded by the silence from the
Board. You have clearly acknowledged that the status quo at TICC is
unsustainable and publicly stated your intentions to pursue change at
TICC. It’s time to stand by these words. With the Board’s insistence
that change is a clear priority, stockholders deserve a much more
detailed understanding of the status and future of their investment. The
company’s lack of communication this past month, especially the stunning
refusal to take questions from investors or analysts on your quarterly
earnings call -- breaking years of tradition -- is simply unacceptable.
More than words, however, TICC’s stockholders are entitled to actual
change. First and foremost, there must be an immediate termination of
the existing investment advisory agreement. If the TICC Board is
unwilling to fulfill its fiduciary duty, stockholders will be forced to
consider exercising their rights to take direct action to change the
manager.
TICC’s Special Committee has endorsed the need for change, as outlined
in their argument in support of the BSP transaction, and can make these
changes independent of the transaction. Given the uncertainty around the
future of the BSP transaction, we encourage the Board to confirm the
following actions will be taken even if the BSP transaction does not
proceed:
-
Permanently reduce management fees to 1.5% and further reduce such
fees for the next 24 months to 1.25%;
-
Enter into a 10b5-1 share buyback plan that repurchases $100MM of
stock at a price up to 90% of the most recently reported NAV; and
-
Reconstitute the existing Board in a meaningful fashion.
If the TICC Special Committee does not enact such changes immediately,
it will be clear that such endorsements were not genuine and were only
promised to facilitate a value transfer from stockholders to the other
members of the Board.
To be absolutely clear, we do not think any of these changes will
produce certain value over and above what we have presented to
stockholders through our proposal. We implore you not to stand idly by
while the power to enact meaningful change at TICC rests in your hands.
We believe strongly that you should do what is right for TICC’s
stockholders and pursue a transaction with TSLX. There is no other
proposal currently on the table for TICC stockholders that would deliver
the significant and tangible benefits provided by our superior proposal.
We stand by our proposal and remain confident that, as revised, it is
the most compelling option for TICC stockholders. And, as a current TICC
stockholder owning approximately 3% of TICC’s outstanding common stock,
we have a strong interest in delivering real value to all TICC
stockholders.
At a minimum, with the current future of TICC unclear for stockholders,
this Board must communicate clearly and frequently with its stockholders.
We trust that you will ultimately see the clear and compelling value our
proposal offers and will engage with us to deliver that value to TICC
stockholders who, we believe, are strongly in support of our proposal.
We look forward to hearing from you, and stand ready and willing to
immediately engage in a constructive dialogue and to address any
questions or concerns you may have.
Sincerely,
Joshua Easterly
Chairman, Board of Directors
Co-Chief
Executive Officer
Michael Fishman
Co-Chief Executive Officer
About TPG Specialty Lending
TPG Specialty Lending, Inc. (“TSLX”, or the “Company”) is a specialty
finance company focused on lending to middle-market companies. The
Company seeks to generate current income primarily in U.S.-domiciled
middle-market companies through direct originations of senior secured
loans and, to a lesser extent, originations of mezzanine loans and
investments in corporate bonds and equity securities. The Company has
elected to be regulated as a business development company, or a BDC,
under the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder. TSLX is externally managed by TSL Advisers, LLC,
a Securities and Exchange Commission (“SEC”) registered investment
adviser. TSLX leverages the deep investment, sector, and operating
resources of TPG Special Situations Partners, the dedicated special
situations and credit platform of TPG, with over $12 billion of assets
under management, and the broader TPG platform, a global private
investment firm with over $74 billion of assets under management. For
more information, visit the Company’s website at www.tpgspecialtylending.com.
Forward-Looking Statements
Information set forth herein includes forward-looking statements. These
forward-looking statements include, but are not limited to, statements
regarding TSLX proposed business combination transaction with TICC
Capital Corp. (“TICC”) (including any financing required in connection
with the proposed transaction and the benefits, results, effects and
timing of a transaction), all statements regarding TPG Specialty
Lending, Inc.’s (“TSLX”, or the “Company”) (and TSLX and TICC’s
combined) expected future financial position, results of operations,
cash flows, dividends, financing plans, business strategy, budgets,
capital expenditures, competitive positions, growth opportunities, plans
and objectives of management, and statements containing the words such
as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,”
“project,” “could,” “would,” “should,” “will,” “intend,” “may,”
“potential,” “upside,” and other similar expressions. Statements set
forth herein concerning the business outlook or future economic
performance, anticipated profitability, revenues, expenses, dividends or
other financial items, and product or services line growth of TSLX (and
the combined businesses of TSLX and TICC), together with other
statements that are not historical facts, are forward-looking statements
that are estimates reflecting the best judgment of TSLX based upon
currently available information.
Such forward-looking statements are inherently uncertain, and
stockholders and other potential investors must recognize that actual
results may differ materially from TSLX’s expectations as a result of a
variety of factors, including, without limitation, those discussed
below. Such forward-looking statements are based upon management’s
current expectations and include known and unknown risks, uncertainties
and other factors, many of which TSLX is unable to predict or control,
that may cause TSLX’s plans with respect to TICC, actual results or
performance to differ materially from any plans, future results or
performance expressed or implied by such forward-looking statements.
These statements involve risks, uncertainties and other factors
discussed below and detailed from time to time in TSLX’s filings with
the Securities and Exchange Commission (“SEC”).
Risks and uncertainties related to the proposed transaction include,
among others, uncertainty as to whether TSLX will further pursue, enter
into or consummate the transaction on the terms set forth in the
proposal or on other terms, potential adverse reactions or changes to
business relationships resulting from the announcement or completion of
the transaction, uncertainties as to the timing of the transaction,
adverse effects on TSLX’s stock price resulting from the announcement or
consummation of the transaction or any failure to complete the
transaction, competitive responses to the announcement or consummation
of the transaction, the risk that regulatory or other approvals and any
financing required in connection with the consummation of the
transaction are not obtained or are obtained subject to terms and
conditions that are not anticipated, costs and difficulties related to
the integration of TICC’s businesses and operations with TSLX’s
businesses and operations, the inability to obtain, or delays in
obtaining, cost savings and synergies from the transaction, unexpected
costs, liabilities, charges or expenses resulting from the transaction,
litigation relating to the transaction, the inability to retain key
personnel, and any changes in general economic and/or industry specific
conditions.
In addition to these factors, other factors that may affect TSLX’s
plans, results or stock price are set forth in TSLX’s Annual Report on
Form 10-K and in its reports on Forms 10-Q and 8-K.
Many of these factors are beyond TSLX’s control. TSLX cautions investors
that any forward-looking statements made by TSLX are not guarantees of
future performance. TSLX disclaims any obligation to update any such
factors or to announce publicly the results of any revisions to any of
the forward-looking statements to reflect future events or developments.
Third Party-Sourced Statements and Information
Certain statements and information included herein have been sourced
from third parties. TSLX does not make any representations regarding the
accuracy, completeness or timeliness of such third party statements or
information. Except as expressly set forth herein, permission to cite
such statements or information has neither been sought nor obtained from
such third parties. Any such statements or information should not be
viewed as an indication of support from such third parties for the views
expressed herein. All information in this communication regarding TICC,
including its businesses, operations and financial results, was obtained
from public sources. While TSLX has no knowledge that any such
information is inaccurate or incomplete, TSLX has not verified any of
that information. TSLX reserves the right to change any of its opinions
expressed herein at any time as it deems appropriate. TSLX disclaims any
obligation to update the data, information or opinions contained herein.
Proxy Solicitation Information
The information set forth herein is provided for informational purposes
only and does not constitute an offer to purchase or the solicitation of
an offer to sell any securities. TSLX has filed with the SEC and mailed
to TICC stockholders a definitive proxy statement and accompanying GOLD
proxy card to be used to solicit votes at a special meeting of
stockholders of TICC originally scheduled for October 27, 2015 against
(a) approval of the new advisory agreement between TICC and TICC
Management, LLC (the “Adviser”), to take effect upon a change of control
of the Adviser in connection with the entrance of the Adviser into a
purchase agreement with an affiliate of Benefit Street Partners L.L.C.
(“BSP”), pursuant to which BSP will acquire control of the Adviser, (b)
the election of six directors nominated by TICC’s board of directors,
and (c) the proposal to adjourn the meeting if necessary or appropriate
to solicit additional votes.
TSLX STRONGLY ADVISES ALL STOCKHOLDERS OF TICC TO READ THE TSLX PROXY
STATEMENT AND ITS OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE
THEY CONTAIN IMPORTANT INFORMATION. SUCH TSLX PROXY MATERIALS ARE AND
WILL BECOME AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV AND
AT TSLX’S WEBSITE AT HTTP://WWW.TPGSPECIALTYLENDING.COM.
IN ADDITION, TSLX WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT
CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO TSLX’S
PROXY SOLICITOR AT TPG@MACKENZIEPARTNERS.COM.
The participant in the solicitation is TSLX and certain of its directors
and executive officers may also be deemed to be participants in the
solicitation. As of the date hereof, TSLX directly beneficially owned
1,633,660 shares of common stock of TICC.
Security holders may obtain information regarding the names,
affiliations and interests of TSLX’s directors and executive officers in
TSLX’s Annual Report on Form 10-K for the year ended December 31, 2014,
which was filed with the SEC on February 24, 2015, its proxy statement
for the 2015 Annual Meeting, which was filed with the SEC on April 10,
2015, and certain of its Current Reports on Form 8-K. These documents
can be obtained free of charge from the sources indicated above.
Additional information regarding the interests of these participants in
the proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will also be included in
any proxy statement and other relevant materials to be filed with the
SEC when they become available.
1 Represents closing price on October 30, 2015 (the day
before the revised TSLX offer was publically announced) and November 27,
2015, respectively.
2 TICC Sends Letter to Stockholders Highlighting the Five
Most Important and Undisputed Points in Support of the BSP Agreement,
Oct. 20, 2015.
3 Wells Fargo Securities, LLC report dated Oct. 8, 2015
4 TICC Sends Letter to Stockholders Highlighting the Five
Most Important and Undisputed Points in Support of the BSP Agreement,
Oct. 20, 2015.
5 Benefit Street Partners Issues Open Letter to TICC
Stockholders, Oct. 7, 2015.
6 TICC Capital’s Investment Advisor to Be Acquired by Benefit
Street Partners, Aug. 4, 2015.
7 BDC Composite comprised of ACAS, AINV, ARCC, FSC, GBDC,
HTGC, MAIN, MCC, NMFC, PNNT, PSEC, SLRC, TCAP, TCRD and BKCC.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151129005036/en/
Contacts:
Investors
TPG Specialty Lending
Robert Ollwerther, 212-430-4119
bollwerther@tpg.com
or
TPG
Specialty Lending
Lucy Lu, 212-601-4753
llu@tpg.com
or
MacKenzie
Partners, Inc.
Charlie Koons, 212-929-5708
ckoons@mackenziepartners.com
or
Media
TPG
Specialty Lending
Luke Barrett, 212-601-4752
lbarrett@tpg.com
or
Abernathy
MacGregor
Tom Johnson or Pat Tucker, 212-371-5999
tbj@abmac.com
/ pct@abmac.com
Source: TPG Specialty Lending, Inc.
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