Item 1.02. Termination of a Material Definitive Agreement.
On December 24, 2021, the members of the board of directors (the "Board") of
Sierra Income Corporation (the "Company" or "Sierra"), who are not "interested
persons," as that term is defined in the Investment Company Act of 1940, as
amended, of the Company (the "Independent Directors"), approved the termination
of the investment advisory agreement (the "Advisory Agreement') by and between
the Company and SIC Advisors LLC (the "Adviser") and the administration
agreement (the "Administration Agreement") by and between the Company and Medley
Capital LLC (the "Administrator"), each such termination to be effective upon
the later of February 25, 2022 or the effective time of the merger (the
"Merger") of Mercury Acquisition Sub, Inc. ("Acquisition Sub"), a Maryland
corporation and a direct wholly owned subsidiary of Barings BDC, Inc. ("BBDC"),
a Maryland corporation, on the terms and subject to the conditions set forth in
the Agreement and Plan of Merger, by and among the Company; BBDC; Acquisition
Sub; and Barings LLC, BBDC's investment adviser (the "Merger Agreement");
subject to the approval of certain proposals by the stockholders of the Company
and BBDC. As a result of the foregoing, on December 27, 2021, the Company
delivered a written notice of termination of the Advisory Agreement to the
Adviser and a written notice of termination of the Administration Agreement to
the Administrator pursuant to the terms of the respective agreement, copies of
which are filed as Exhibits 1.1 and 1.2, respectively, to this Current Report on
Form 8-K and incorporated by reference herein.
The obligations of BBDC and Acquisition Sub under the Merger Agreement to effect
the Merger are contingent on the satisfaction of certain conditions. Section
7.2(e) of the Merger Agreement requires that the Advisory Agreement and the
Administration Agreement shall have been terminated at or prior to the Effective
Time, as that term is defined in the Merger Agreement, of the Merger.
If for any reason the Merger does not close, including if the Company's
stockholders do not approve the Merger, then the Board of the Company, including
the Independent Directors, would expect to consider alternatives, including the
replacement of the Adviser as the Company's investment adviser, another merger
transaction or the Company's liquidation, in the best interests of the Company's
stockholders, based on, among other things, then-current market circumstances,
the performance of the Company's portfolio and the financial position of the
Company. The Company also might seek a modification to the chapter 11 plan,
which was filed by Medley LLC with the United States Code in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") on
August 13, 2021, and ultimately confirmed by the Bankruptcy Court on October 14,
2021 (the "Final Plan") that would extend the Run-Off End Date, as that term is
defined in the Final Plan, so that the Adviser may continue to serve as the
Company's investment adviser beyond March 31, 2022.
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Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements," which are
statements other than statements of historical facts, are not guarantees of
future performance or results of BBDC, Sierra, or, following the Merger, the
combined company, and involve a number of risks and uncertainties, including
statements regarding the completion of the proposed transactions between BBDC
and Sierra contemplated by the Merger Agreement (the "Transaction"). Such
forward-looking statements may include statements preceded by, followed by or
that otherwise include the words "may," "might," "will," "intend," "should,"
"could," "can," "would," "expect," "believe," "estimate," "anticipate,"
"predict," "potential," "plan" or similar words. Actual results may differ
materially from those in the forward-looking statements as a result of a number
of factors, including those described from time to time in filings made by BBDC
or Sierra with the Securities and Exchange Commission (the "SEC"), including
those contained in the Proxy Statement (as defined below), when such documents
become available. Certain factors could cause actual results and conditions to
differ materially from those projected, including the uncertainties associated
with (i) the timing or likelihood of the Transaction closing; (ii) the expected
synergies and savings associated with the Transaction; (iii) the expected
elimination of certain expenses and costs due to the Transaction; (iv) the
percentage of Sierra's stockholders voting in favor of the Transaction; (v) the
percentage of BBDC's stockholders voting in favor of the relevant Proposals (as
defined below); (vi) the possibility that competing offers or acquisition
proposals for Sierra will be made; (vii) the possibility that any or all of the
various conditions to the consummation of the Transaction may not be satisfied
or waived; (viii) risks related to diverting the attention of BBDC's management
or Sierra's management from ongoing business operations; (ix) the risk that
stockholder litigation in connection with the Transaction may result in
significant costs of defense and liability; (x) the future operating results of
the combined company or BBDC's, Sierra's or the combined company's portfolio
companies; (xi) regulatory approvals and other factors; (xii) changes in
regional or national economic conditions, including but not limited to the
impact of the COVID-19 pandemic, and their impact on the industries in which
BBDC and Sierra invest; (xiii) changes to the form and amounts of Sierra's tax
obligations; (xiv) fluctuations in the market price of BBDC's common stock; (xv)
the Transaction's effect on the relationships of BBDC or Sierra with their
respective investors, portfolio companies, lenders and service providers,
whether or not the Transaction is completed; (xvi) the reduction in BBDC's
stockholders' and Sierra's stockholders' percentage ownership and voting power
in the combined company; (xvii) the challenges and costs presented by the
integration of BBDC and Sierra; (xviii) the uncertainty of third-party
approvals; (xix) the significant Transaction costs; (xx) the restrictions on
BBDC's and Sierra's conduct of business set forth in the Merger Agreement; and
(xxi) other changes in the conditions of the industries in which BBDC and Sierra
invest and other factors enumerated in BBDC's and Sierra's filings with the SEC.
You should not place undue reliance on such forward-looking statements, which
are and will be based upon BBDC management's and Sierra management's respective
then-current views and assumptions regarding future events and operating
performance, and speak only as of the date any such statement is made. Neither
BBDC nor Sierra undertakes any duty to update any forward-looking statement made
herein. All forward-looking statements speak only as of the date of this Current
Report on Form 8-K.
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Additional Information and Where to Find It
This communication relates to a proposed business combination involving BBDC and
Sierra, along with related proposals for which stockholder approval will be
sought (collectively, the "Proposals").
In connection with the proposed Transaction, BBDC and Sierra filed with the SEC
and are mailing to their respective stockholders a joint proxy statement on
Schedule 14A (the "Proxy Statement"), and BBDC filed with the SEC a registration
statement on Form N-14 (the "Registration Statement") that includes the Proxy
Statement and a prospectus of BBDC. The Proxy Statement and the Registration
Statement each contain important information about BBDC, Sierra, the proposed
Transaction and related matters. STOCKHOLDERS OF EACH OF BBDC AND SIERRA ARE
URGED TO READ CAREFULLY AND IN THEIR ENTIRETY ALL RELEVANT DOCUMENTS FILED WITH
THE SEC, INCLUDING THE PROXY STATEMENT AND THE REGISTRATION STATEMENT, AS WELL
AS ANY AMENDMENTS OR SUPPLEMENTS THERETO, BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT BBDC, SIERRA, THE TRANSACTION AND THE PROPOSALS. Investors and
security holders will be able to obtain the documents filed with the SEC free of
charge at the SEC's web site at http://www.sec.govand, for documents filed by
BBDC, from the BBDC website at http://www.baringsbdc.com or for documents filed
by Sierra, from the Sierra website at http://www.sierraincomecorp.com.
Participants in the Solicitation
BBDC and Sierra and their respective directors, executive officers and certain
other members of management and employees of Barings, SIC Advisors LLC and their
respective affiliates, may be deemed to be participants in the solicitation of
proxies from the stockholders of BBDC and Sierra in connection with the
Proposals. Information about the directors and executive officers of BBDC is set
forth in its proxy statement for its 2021 annual meeting of stockholders, which
was filed with the SEC on March 26, 2021. Information about the directors and
executive officers of Sierra is set forth in its proxy statement for its 2021
annual meeting of stockholders, which was filed with the SEC on April 28, 2021.
Information regarding the persons who may, under the rules of the SEC, be
considered participants in the solicitation of BBDC's and Sierra's stockholders
in connection with the Proposals will be contained in the Proxy Statement and
other relevant materials to be filed with the SEC when such documents become
available. Investors should read the Proxy Statement and Registration Statement
carefully and in their entirety when they become available before making any
voting or investment decisions. These documents may be obtained free of charge
from the sources indicated above.
No Offer or Solicitation
This Current Report on Form 8-K is not, and under no circumstances is it to be
construed as, a prospectus or an advertisement and the communication of this
Current Report on Form 8-K is not, and under no circumstances is it to be
construed as, an offer to sell or a solicitation of an offer to purchase any
securities in BBDC, Sierra or in any fund or other investment vehicle. No offer
of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
10.1 Notice of Termination relating the Advisory Agreement
10.2 Notice of Termination relating to the Administration Agreement
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