Garrison Capital Inc. (NASDAQ:GARS) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
Agreement and Plan of Merger
On June 24, 2020, Garrison Capital Inc., a Delaware corporation (GARS), entered into an Agreement and Plan of Merger (the Merger Agreement) with Portman Ridge Finance Corporation, a Delaware corporation (PTMN), Citadel Acquisition Sub Inc., a Delaware corporation and a direct wholly-owned subsidiary of PTMN (Acquisition Sub), and Sierra Crest Investment Management LLC, a Delaware limited liability company and the external investment adviser to PTMN (Sierra Crest).
The Merger Agreement provides that (i) Acquisition Sub will merge with and into GARS (the Merger), with GARS continuing as the surviving corporation and as a wholly owned subsidiary of PTMN, and (ii) immediately after the effectiveness of the Merger, GARS will merge with and into PTMN (the Second Merger and, together with the Merger, the Mergers), with PTMN continuing as the surviving corporation.
The boards of directors of each of PTMN and Acquisition Sub, and the managing member of Sierra Crest, have each unanimously approved the Merger Agreement and the transactions contemplated thereby. The board of directors of GARS, on the unanimous recommendation of a special committee thereof comprised solely of the independent directors of GARS, has unanimously approved the Merger Agreement and the transactions contemplated thereby.
Merger Consideration
At the effective time of the Merger (the Effective Time), each share of common stock, par value $0.001 per share, of GARS (GARS Common Stock) issued and outstanding immediately prior to the Effective Time (other than shares owned by PTMN or GARS or any wholly owned subsidiary of PTMN or GARS (other than shares held in trust accounts, managed accounts and the like, or otherwise held in a fiduciary or agency capacity, that are beneficially owned by third parties) and all treasury shares (collectively, Cancelled Shares)) will be converted into the right to receive (i) an amount in cash equal to (A) $19,100,000 (the Aggregate Cash Consideration) divided by (B) the number of shares of GARS Common Stock issued and outstanding as of the Determination Date (as defined below) (excluding any Cancelled Shares), and (ii) a number of shares of common stock, par value $0.01 per share, of PTMN (PTMN Common Stock) equal to the Exchange Ratio (as defined below), plus any cash in lieu of fractional shares.
Two days prior to the Closing Date (as defined in the Merger Agreement) (such date, the Determination Date), each of GARS and PTMN will deliver to the other a calculation of its estimated net asset value as of 5:00 pm New York City time on the day prior to the Closing Date (such calculation with respect to GARS, the Closing GARS Net Asset Value and such calculation with respect to PTMN, the Closing PTMN Net Asset Value), in each case using a pre-agreed set of assumptions, methodologies and adjustments. GARS and PTMN will update and redeliver the Closing GARS Net Asset Value or the Closing PTMN Net Asset Value, respectively, in the event of a material change to such calculation between the Determination Date and the Closing Date and if needed to ensure that the calculation is determined within two days (excluding Sundays and holidays) prior to the Effective Time. Based on such calculations, the parties will calculate the GARS Per Share NAV, which will be equal to (i) (A) the Closing GARS Net Asset Value minus (B) the Aggregate Cash Consideration divided by (ii) the number of shares of GARS Common Stock issued and outstanding as of the Determination Date (excluding any Cancelled Shares), and the PTMN Per Share NAV, which will be equal to (I) the Closing PTMN Net Asset Value divided by (II) the number of shares of PTMN Common Stock issued and outstanding as of the Determination Date. The Exchange Ratio will be equal to (i) the GARS Per Share NAV divided by (ii) the PTMN Per Share NAV.
Additional Cash Consideration
In connection with the transactions contemplated by the Merger Agreement, as additional consideration to the holders of shares of GARS Common Stock that are issued and outstanding immediately prior to the Effective Time (excluding any Cancelled Shares), Sierra Crest will pay or cause to be paid to such holders an aggregate amount in cash equal to $5,000,000.