Announces Up to $65 million Equity Investment by Affiliates of
Columbus Nova
NEW YORK -- (Business Wire)
Ameritrans Capital Corporation (NASDAQ: AMTC, AMTCP), a business
development company, today announced that an affiliate of Columbus Nova,
LLC, Renova US Holdings, Ltd. (“Renova”), has agreed to purchase a
majority stake in Ameritrans Capital Corporation (“Ameritrans” or the
“Company”) as part of a $65 million equity investment plan to enable the
Company to grow its business of lending to middle-market companies.
Pursuant to the definitive stock purchase agreement relating to the
equity investment, Renova will initially purchase $25 million of shares
of common stock of Ameritrans for the greater of $1.80 per share and the
then-prevailing per share net asset value of Ameritrans. Following the
closing of the initial equity investment, Renova will own approximately
80.3% of the Company's common equity on a pro forma basis. It is
anticipated that subsequent to the investment the Company will effect a
reverse stock split of approximately 10 shares to one new share. (All
amounts in this press release have not been adjusted for any potential
reverse stock split.)
Renova is also committed to purchase up to an aggregate of $40 million
of additional common stock in equal quarterly amounts over the two year
period subsequent to the initial closing. The per share purchase price
for such additional purchases will be the greater of $1.80 and the
then-prevailing per share net asset value of Ameritrans. The gross
additional amount of common stock that Renova has committed to purchase
will be subject to reduction to the extent the purchases are made prior
to their scheduled quarterly dates and would equal $35 million if the
full amount were funded on the initial closing date. Pro forma for the
issuance of the additional shares of common stock, Renova will own
approximately 91.4% of the Company's common equity following the
purchase of all additional shares (assuming the full $40 million of
shares are acquired and no additional shares are issued prior to such
issuances other than pursuant to the transaction).
The Company will promptly apply the proceeds of the initial closing,
after repayment of the $1.5 million Senior Secured Note issued by the
Company in January 2011 and payment of transaction-related expenses, to
an investment by the Company in its SBIC subsidiary, Elk Associates
Funding Corporation. This amount is intended to be invested by the
Company together with expected future borrowings in an expanded middle
market lending program.
Under the terms of the stock purchase agreement and subject to approval
by the Company's stockholders, Ameritrans Capital Management LLC an
affiliate of Columbus Nova, will replace Velocity Capital Advisors as
the Company's external investment advisor. The Company believes that the
terms and conditions of the investment advisory and management agreement
with Ameritrans Capital Management LLC, are fair to the Company and
consistent with fees charged by other investment advisors for similar
services.
It is currently anticipated that after Renova makes this investment, the
Company's Chief Executive Officer, Chief Financial Officer and Executive
Vice President, will continue in their current positions. Columbus
Nova’s investment professionals will supplement Ameritrans’ own
investment capabilities in the management of the Company’s corporate
lending program.
Upon the initial closing, the Company's Board of Directors will be
expanded from nine to eleven members, five of which will be individuals
currently serving on the Board and six of which will be individuals
designated by Renova. The Company anticipates that it will continue to
maintain a presence in both New York City and Jericho, NY.
"Since the 2009 calendar year, Company management and our Board have
performed a lengthy review of numerous strategic and financing options
for addressing the Company’s capital needs while maximizing stockholder
value. We believe that this transaction positions Ameritrans to pursue
its middle market lending strategy and provides a strong capital base to
pursue growth" said Michael Feinsod, Chairman and Chief Executive
Officer of Ameritrans Capital Corporation.
Andrew Intrater, Chief Executive Officer of Columbus Nova, said, "This
new partnership not only cures the existing capital issues for
Ameritrans, but it will also put the Company on a trajectory for growth
and profitability. The Company can now get back to the business of
lending to companies poised to grow as the economy recovers."
In addition to customary closing conditions, the closing of the initial
equity investment and related transactions is subject to regulatory
approval and the approval of the Ameritrans Capital Corporation
shareholders.
Certain affiliates of Ameritrans Capital Corporation have entered into a
voting and support agreement with Columbus Nova and have agreed, subject
to the terms and conditions set forth in such agreement, to vote a
minimum of approximately 41% of the outstanding voting stock of
Ameritrans Capital Corporation common stock in favor of the transactions
contemplated by the stock purchase agreement.
The Company intends to hold a special stockholder meeting as soon as
practicable to secure stockholder approval of the transaction.
A more in-depth discussion of the transaction can be found in the
Company's Current Report on Form 8-K filed in connection with the
execution of the stock purchase agreement and will be found in the
Company's proxy statement to be filed with the Securities and Exchange
Commission.
Daroth Capital Advisors originated the transaction and served as
financial advisor to Ameritrans Capital Corporation in connection with
the transaction. Duff and Phelps LLC has issued a fairness opinion
letter to the Board of Directors of the Company. Katten Muchin Rosenman
LLP served as Ameritrans’ legal counsel in connection with the
transaction, and Richards, Layton & Finger, P.A. served as Ameritrans'
legal counsel on Delaware law matters.
Latham & Watkins LLP served as Columbus Nova's legal counsel in
connection with the transaction.
About Ameritrans Capital Corporation
Ameritrans Capital Corporation is an internally managed, closed-end
investment company that has elected to be regulated as a business
development company (BDC) under the Investment Company Act of 1940, as
amended. Ameritrans originates, structures and manages a portfolio of
secured business loans and selected equity securities. Ameritrans'
wholly owned subsidiary Elk Associates Funding Corporation was licensed
by the United States Small Business Administration as a Small Business
Investment Company (SBIC) in 1980.
About Columbus Nova
Columbus Nova is a privately held investment management firm
headquartered in New York and manages over $10 billion in assets through
its direct funds and controlled entities. The firm has a broad
investment mandate which allows Columbus Nova to invest through its
managed vehicles across all levels of the capital structure, from senior
secured debt to common equity. The company takes a value-oriented,
long-term view to investing and seeks consistent returns with an
emphasis on capital preservation. Bounty Investments, LLC, a Delaware
company, and Renova, a Bahamian company, are both managed by Columbus
Nova.
Forward Looking Statements
This press release may contain certain forward-looking statements,
including statements with regard to the proposed common stock purchase
and debt financing transactions and other actions described in this
press release, including the potential reverse stock split. Words such
as "intends," "believes," "expects," "projects," and "future" or similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are subject to risks and uncertainties,
including the satisfaction of the conditions of the proposed
transactions on the proposed timeframe or at all, and other factors
enumerated in the filings Ameritrans Capital Corporation makes with the
SEC. Ameritrans Capital Corporation undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
Additional Information and Where to Find It
In connection with the proposed transactions and actions described in
this press release and required stockholder approval, Ameritrans Capital
Corporation will file with the SEC a preliminary proxy statement and a
definitive proxy statement. The proxy statement will be mailed to the
stockholders of Ameritrans Capital Corporation. Ameritrans Capital
Corporation's stockholders are urged to read the proxy statement and
other relevant materials when they become available because they will
contain important information about the proposed transactions and
actions. Investors and security holders may obtain free copies of these
documents (when they are available) and other documents filed with the
SEC at its web site at www.sec.gov.
Contacts:
Ameritrans Capital Corporation
Michael Feinsod, 212-355-2449
Source: Ameritrans Capital Corporation