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Monroe Capital Corporation (NASDAQ:MRCC) announced Tuesday the completion of its previously disclosed asset sale to Monroe Capital Income Plus Corporation and subsequent merger with Horizon Technology Finance Corporation (NASDAQ:HRZN). The transactions were finalized the same day, according to a statement based on a filing with the Securities and Exchange Commission.The merger comes as Monroe Capital’s stock has faced significant headwinds, with shares down 26% over the past six months and trading at $5.08, well below its 52-week high of $7.76. The company’s market capitalization stood at approximately $111 million at the time of the transaction.
As part of the asset sale, Monroe Capital sold its investment assets to Monroe Capital Income Plus Corporation for approximately $335.3 million, reflecting the fair value of the assets as of April 11. Monroe Capital Income Plus Corporation also assumed certain related liabilities. Proceeds from the sale were used in part to repay all outstanding amounts under Monroe Capital’s senior secured revolving credit agreement with ING Capital LLC.
Immediately following the asset sale, Monroe Capital merged with a subsidiary of Horizon Technology Finance, and then into Horizon itself. With the completion of the merger, Monroe Capital ceased to exist as a separate entity and withdrew its election to be treated as a business development company.
Under the terms of the merger agreement, each outstanding share of Monroe Capital common stock was converted into the right to receive 0.9402 shares of Horizon Technology Finance common stock. In total, Horizon will issue about 20,370,693 shares to former Monroe Capital shareholders, subject to adjustments for fractional shares.
Following the merger, Monroe Capital notified The Nasdaq Global Select Market of the transaction’s completion and requested the delisting of its common stock. The company also plans to file for deregistration of its shares and suspension of its reporting obligations with the SEC.
Additionally, Monroe Capital terminated several agreements in connection with the transactions, including its investment advisory and management agreement with Monroe Capital BDC Advisors, LLC, and its administration agreement with Monroe Capital Management Advisors, LLC. All officers and directors of Monroe Capital resigned at the effective time of the merger, and the directors and officers of the merger subsidiary assumed those roles.
These developments are detailed in Monroe Capital’s SEC filing issued Tuesday.
In other recent news, Monroe Capital Corporation announced that its stockholders approved two significant proposals during a special meeting. The Asset Sale Proposal and the Merger Proposal received substantial support, with over 11 million votes in favor for each. In line with the merger with Horizon Technology Finance Corporation, Monroe Capital plans to increase its final special distribution to legacy stockholders by $13.0 million, or $0.61 per share. This increase supplements the previously planned pre-merger distribution, bringing the total to approximately $15.9 million, or $0.75 per share.
Additionally, Monroe Capital Corporation has appointed Ronald A. Holinsky to several key roles, including Chief Compliance Officer, Chief Legal Officer, and Corporate Secretary. Holinsky’s appointment extends to Monroe Capital Income Plus Corporation and Monroe Capital Enhanced Corporate Lending Fund, both affiliated entities. Holinsky replaces Kristan Gregory and Lewis W. Solimene, Jr., in their respective roles, with Solimene continuing as Chief Financial Officer and Chief Investment Officer. The company clarified that Holinsky’s appointment was not part of any arrangement with other individuals, and he has no family ties with company executives.
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