Proposed Merger WIth Chicago Atlantic BDC, Inc. |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Business Combination [Line Items] | |
| Proposed Merger WIth Chicago Atlantic BDC, Inc. | 16. PROPOSED MERGER WITH CHICAGO ATLANTIC BDC, INC.
On June 17, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with LIEN, Chicago Atlantic BDC Advisers, LLC, a Delaware limited liability company, the investment adviser to LIEN (the “LIEN Adviser”), and the Manager (together with LIEN Adviser, the “Advisers”). Pursuant to the terms of the Merger Agreement, the Company will merge with and into LIEN (the “Merger”), with LIEN continuing as the surviving company (the “Surviving Company”). Following the Merger, the Surviving Company intends to continue to be treated as a regulated investment company (a “RIC”) under Sections 851 and 852 of the Internal Revenue Code of 1986, as amended (the “Code”). The parties intend the Merger to be treated as a “reorganization” within the meaning of Section 368(a) of the Code. Prior to the Merger, the Company, which has previously elected to be taxed as a REIT, will elect to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”), by filing a Form N-54A with the United States Securities and Exchange Commission (the “SEC”) (the “BDC Election” and the time of such filing, the “BDC Election Time”). Prior to the BDC Election, the Company will adopt, subject to approval by its stockholders, a new investment advisory agreement (the “New BDC Advisory Agreement”) with the LIEN Adviser, which will remain in effect until the Merger Effective Time (defined herein). The Company’s current management agreement with the Manager will terminate automatically upon the BDC Election Time, and the New BDC Advisory Agreement will terminate automatically upon the Merger Effective Time, in each case without termination notice or termination payment. All capitalized terms not defined in this section have the meaning set forth in the Merger Agreement filed with the SEC on Form 8-K on June 18, 2026.
At the Merger Effective Time, each share of common stock, par value $0.01 per share, of the Company (“Company Common Stock”) issued and outstanding immediately prior to the Merger Effective Time (other than shares owned by LIEN or any of its consolidated subsidiaries, which will be cancelled for no consideration) will be converted into the right to receive a number of shares of common stock, par value $0.01 per share, of LIEN (“LIEN Common Stock”) equal to the Exchange Ratio (defined herein) (the “Merger Consideration”).
The “Exchange Ratio” is the ratio of the net asset value per share of Company Common Stock (the “Closing Company Net Asset Value”) to the net asset value per share of LIEN Common Stock (the “LIEN Closing Net Asset Value”), each of which will be calculated in good faith as of a date no earlier than 48 hours (excluding Sundays and holidays) prior to the Merger Effective Time, based on the valuation principles, assumptions and methodologies set forth in Exhibit A to the Merger Agreement, and subject to customary approval and certification procedures.
The Merger Agreement was approved by the Company’s Board of Directors upon the unanimous recommendation of a special committee comprised solely of independent directors, which received a fairness opinion from Oppenheimer and Co, Inc. Consummation of the Merger is subject to customary closing conditions, including, without limitation, approval by the Company’s and LIEN’s stockholders, the approvals required under Rule 17a-8 of the 1940 Act, effectiveness of a registration statement on Form N-14 (which will contain a joint proxy statement/prospectus), Nasdaq listing authorization for the shares to be issued, receipt of required regulatory approvals, and completion of the closing net asset value determinations. Concurrently with the Merger Agreement, certain stockholders of the Company and LIEN entered into support agreements covering approximately 4.8% of the Company’s outstanding common stock and approximately 12.9% of LIEN’s outstanding common stock.
The Merger Agreement may be terminated under specified circumstances, including if the Merger has not been consummated by June 30, 2027, and does not provide for a termination fee. Except for specified SEC and printing and mailing costs, fees and expenses incurred in connection with the Merger generally will be shared equally between the Company and LIEN, with our Manager paying $2.0 million of the Company's share. The Merger Agreement also provides that, prior to the effective time, the Board will consider in good faith the adoption of a share repurchase program of up to $25.0 million to be implemented following closing. The Merger had not closed as of June 30, 2026 and accordingly, no amounts related to the Merger are reflected in the accompanying financial statements. There can be no assurance that the Merger will be completed on the contemplated terms or at all. |