US-based business development companies (BDCs) Portman Ridge Finance (PTMN) and Logan Ridge Finance Corporation (LRFC) have agreed to merge their businesses
Both PTMN and LRFC are managed by affiliates of BC Partners Advisors (BC Partners).
Under the terms of the merger agreement, LRFC will merge with and into PTMN, with PTMN as the surviving entity, and will continue as the public company, trading on the Nasdaq.
The shareholders of LRFC will receive 1.50 newly issued shares of PTMN common stock in exchange for each share of common stock of LRFC (Fixed Exchange Ratio).
Based on the Fixed Exchange Ratio, the consideration values LRFC’s shares at $25.02 per share, which is a 4% premium to LRFC’s last closing price of $24 per share.
The boards of Directors of both PTMN and LRFC have unanimously approved the merger.
In addition, the Board of Directors will recommend their respective shareholders to vote in favour of the proposed merger, subject to certain conditions.
The transaction is expected to be completed in the second calendar quarter of 2025, subject to receipt of certain shareholder approvals and satisfaction of other closing conditions.
PTMN and LRFC president and CEO, and BC Partners Credit Platform head Ted Goldthorpe said: “I am incredibly proud to announce the proposed combination of PTMN and LRFC.
“This combination is the culmination of a journey we embarked upon over three and half years ago, when shareholders of Logan Ridge placed their trust and confidence in the management team and the BC Partners Credit Platform by appointing Mount Logan to serve as the investment adviser to Logan Ridge.
“By the time this transaction closes and barring any unexpected repayments, we expect that more than 70% of Logan Ridge’s portfolio at fair value to be in portfolio companies financed by the BC Partners Credit Platform.”
The merger will create a combined company, managed by Sierra Crest Investment Management, with total assets of over $600m, and net asset value (NAV) of around $270m.
It would significantly enhance the size and scale of PTMN, increasing its trading volume and liquidity, reducing operating expenses and enhancing access to diverse sources of financing.
PTMN and LRFC employ the same investment strategy, as BC Partners Credit Platform has been allocating similar investments to both companies.
The transaction will combine two known, complementary portfolios, originated and managed by the BC Partners Credit Platform, which would mitigate potential integration risk.
Houlihan Lokey served as financial advisor, and Skadden, Arps, Slate, Meagher & Flom the legal counsel to the Special Committee of LRFC, on this transaction.
Keefe, Bruyette & Woods, A Stifel Company, served as financial advisor, and Stradley Ronon Stevens & Young as the legal counsel to the Special Committee of PTMN.
Simpson Thacher & Bartlett served as legal counsel to PTMN and LRFC, and Dechert as legal counsel to PTMN and LRFC.
Goldthorpe added: “We believe now is the right time to combine the Companies, as we can finally do so in a manner that is expected to be accretive to both sets of shareholders.
“Looking ahead, we will continue to execute our strategy of targeting inorganic growth opportunities that we believe have the potential to be earnings accretive for shareholders of both PTMN and LRFC.
“I look forward to updating our shareholders on the work management will be doing on this front over the course of 2025.”
