Item 8.01. Other Events.
On December 23, 2020, Harvest Capital Credit Corporation, a Delaware corporation
("HCAP"), entered into an Agreement and Plan of Merger (the "Merger Agreement")
with Portman Ridge Finance Corporation, a Delaware corporation ("PTMN"), Rye
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, subject to the
conditions set forth therein, (i) Acquisition Sub will merge with and into HCAP
(the "First Merger"), with HCAP continuing as the surviving corporation and as a
wholly-owned subsidiary of PTMN, and (ii) immediately after the effectiveness of
the First Merger, HCAP will merge with and into PTMN (the "Second Merger" and,
together with the First Merger, the "Mergers"), with PTMN continuing as the
surviving corporation.
In February and March of 2021, four purported HCAP stockholders filed complaints
against HCAP, certain officers and directors of HCAP's Board of Directors (the
"HCAP Board"), and/or certain affiliates of HCAP, among others, in the Court of
Chancery in the State of Delaware ("Chancery Court"), the Supreme Court of the
State of New York and the United States District Court for the Eastern District
of New York (collectively, the "Merger Complaints"). The complaints filed in
Chancery Court were filed as putative class action complaints. The Merger
Complaints allege, among other things, that the registration statement on Form
N-14 first filed by PTMN with the SEC on January 27, 2021 (which includes the
preliminary proxy statement of HCAP) (the "Preliminary Proxy
Statement/Prospectus") contains materially misleading and incomplete
disclosures. The complaints seek, among other things, that HCAP make
supplemental disclosures to address the alleged materially misleading and
incomplete disclosures and to enjoin the closing of the Mergers.
On March 30, 2021 and April 19, 2021, PTMN filed with the SEC amendments to the
Preliminary Proxy Statement/Prospectus, and on April 21, 2021, HCAP filed the
definitive merger proxy statement (the "Proxy Statement").
HCAP and the individual defendants believe that HCAP has previously disclosed
all information required to be disclosed to ensure that its stockholders can
make an informed vote at the Special Meeting (as defined below) and that the
additional disclosures requested by the plaintiffs are not required by the
federal securities laws or Delaware law, and are otherwise immaterial.
Accordingly, HCAP and the individual defendants believe the claims asserted in
the Merger Complaints are without merit. However, in order to reduce the costs,
risks and uncertainties inherent in litigation, HCAP has determined voluntarily
to supplement the Proxy Statement as described in this Current Report on Form
8-K (the "Report"). Nothing in this Report shall be deemed an admission of the
legal necessity or materiality under applicable laws of any of the disclosures
set forth herein. To the contrary, HCAP and the HCAP Board specifically deny all
allegations in the Merger Complaints that any additional disclosure was or is
required.
ON THE UNANIMOUS RECOMMENDATION OF A SPECIAL COMMITTEE OF THE HCAP BOARD
COMPRISED SOLELY OF THE INDEPENDENT DIRECTORS OF THE HCAP BOARD, THE HCAP BOARD
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE MERGERS, AND RECOMMENDS THAT HCAP STOCKHOLDERS VOTE "FOR" THE
MERGER PROPOSAL AND, IF NECESSARY OR APPROPRIATE, "FOR" THE HCAP ADJOURNMENT
PROPOSAL, EACH AS DESCRIBED IN THE PROXY STATEMENT.
These supplemental disclosures will not affect the merger consideration to be
issued by PTMN in connection with the Mergers or the timing of HCAP's Special
Meeting of Stockholders scheduled for June 7, 2021 at 11:00 a.m., Eastern Time,
which will be held at the following website:
www.virtualshareholdermeeting.com/HCAP2021SM (the "Special Meeting").
If you are an HCAP stockholder, you can contact HCAP with any questions
regarding the Special Meeting by calling HCAP collect at (212) 906-3589, by
sending an email to HCAP at balvarez@harvestcaps.com, or by writing to HCAP
at 450 Park Avenue, 5th Floor, New York, NY 10022, Attention: Corporate
Secretary, or by visiting HCAP's website at www.harvestcapitalcredit.com.
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Supplemental Disclosures.
The following disclosures supplement the disclosures contained in the Proxy
Statement and should be read in conjunction with the disclosures contained in
the Proxy Statement, which should be read in its entirety. To the extent that
the information set forth herein differs from or updates information contained
in the Proxy Statement, the information set forth herein shall supersede or
supplement the information in the Proxy Statement. All page references are to
pages in the Proxy Statement, and terms used below, unless otherwise defined in
this Report, have the meanings set forth in the Proxy Statement. For clarity,
new text within restated disclosure from the Proxy Statement is presented in
bold text.
The following disclosure is added as a new paragraph immediately following the
last paragraph on page 53 of the Proxy Statement under the heading "Background
of the Mergers":
The members of HCAP's management who attended all or a portion of the virtual
meetings of the HCAP Special Committee on October 15, 2020, October 26, 2020,
November 5, 2020, November 13, 2020, November 20, 2020, December 3, 2020,
December 7, 2020, December 21, 2020, and December 22, 2020, at the invitation of
the HCAP Special Committee, included Messrs. Jolson and Buckanavage.
The following disclosure appears on page 39 of the Proxy Statement under the
heading "Background of the Mergers" and is supplemented as follows:
The form of confidentiality agreement included customary "standstill" and
related provisions (including the "don't ask/don't waive" provisions) designed
to protect the strategic alternatives review process and increase the likelihood
that each participant would put forth its best offer through the bid
solicitation process and not through other avenues, along with a provision that
would allow bidders confidentially to request a waiver of the standstill
provisions once a strategic transaction had been publicly announced, which would
allow the HCAP Board to receive and consider competing proposals. None of the
confidentiality agreements that HCAP ultimately entered into in connection with
the Initial Strategic Evaluation Process or the Formal Strategic Evaluation
Process prevented any bidder, after the public announcement of HCAP's entry into
the Merger Agreement, from seeking a waiver from HCAP on a confidential basis to
make a proposal to HCAP for an alternative transaction.
The following disclosure appears on page 70 of the Proxy Statement under heading
"The Mergers-Certain Prospective Financial Information Provided by HCAP" and is
supplemented as follows:
HCAP provided the HCAP Special Committee and KBW with certain prospective
financial information indicating, among other things, that projected dividends
of HCAP were zero. In connection with the projection of no future dividends,
HCAP provided the HCAP Special Committee and KBW with the following additional
information, which was relied on by KBW in performing its discounted cash flow
analysis of HCAP in connection with its opinion, as described below in section
entitled "-Opinion of the Financial Advisor to the HCAP Special Committee."
? Projected net investment income of $1.2 million for the second to fourth
quarters of HCAP's 2021 fiscal year and a projected net investment loss of $1.4
million for HCAP's 2022 fiscal year.
? Projected HCAP net assets of $61.9 million as of December 31, 2021 and $60.5
million as of December 31, 2022.
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The following disclosure appears on page 69 of the Proxy Statement under the
heading "The Mergers-Opinion of the Financial Advisor to the HCAP Special
Committee-Liquidation Analysis of HCAP" and is supplemented as follows:
KBW reviewed a liquidation analysis of HCAP that was provided by
HCAP management. The liquidation analysis was based on projections of net
proceeds that could be generated in a hypothetical liquidation and wind-down of
HCAP that were prepared by HCAP management. The liquidation analysis indicated
an estimated liquidation value per share of HCAP Common Stock of approximately
$6.23, which was below the implied transaction value for the proposed
transaction of $7.71 per outstanding share of HCAP Common Stock.
The results of a liquidation analysis are highly dependent on the assumptions
that must be made, including projected net proceeds from asset sales and the
costs and expenses associated with winding down HCAP's business and operations.
The analysis did not purport to be indicative of the actual values or expected
values in a liquidation and wind down of HCAP. KBW assumed no responsibility for
the analysis or the assumptions or bases therefor and did not independently
verify the accuracy or completeness thereof.
The following disclosure appears on page 70 of the Proxy Statement under the
heading "The Mergers-Opinion of the Financial Advisor to the HCAP Special
Committee-Miscellaneous" and is supplemented as follows:
In addition, as of the date of its opinion, an affiliate of KBW was engaged by
PTMN to act as its agent to repurchase shares of PTMN Common Stock pursuant to a
Rule 10b5-1 stock trading plan, and during the two years preceding the date of
KBW's opinion, received fees totaling less than $15,000 in connection with such
engagement.
The following disclosure appears on page 70 of the Proxy Statement under the
heading "The Mergers-Opinion of the Financial Advisor to the HCAP Special
Committee-Miscellaneous" and is supplemented as follows:
As HCAP's special committee was previously informed by KBW in advance of the
delivery of KBW's opinion, a senior member of the KBW advisory team providing
services to HCAP in connection with the proposed Mergers owns a nominal amount
of shares of PTMN Common Stock, valued at less than $10,000.
* * *
Forward-Looking Statements
This communication contains forward-looking statements that involve substantial
risks and uncertainties, including statements regarding the completion of the
transaction between Harvest Capital Credit Corporation ("HCAP") and Portman
Ridge Finance Corporation ("PTMN"). The use of words such as "anticipates,"
"believes," "intends," "plans," "expects," "projects," "estimates," "will,"
"should," "may" and similar expressions identify any such forward-looking
statements. These forward-looking statements are not guarantees of future
performance and are subject to various risks and uncertainties. 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 HCAP
stockholders voting in favor of the transaction, (v) the possibility that
competing offers or acquisition proposals for HCAP will be made, (vi) the
possibility that any or all of the various conditions to the consummation of the
merger may not be satisfied or waived, including the failure to obtain HCAP
stockholder approval, (vii) risks related to diverting the respective
management's attention from HCAP's and PTMN's ongoing business operations,
(viii) the risk that stockholder litigation in connection with the transactions
contemplated by the merger agreement may result in significant costs of defense
and liability, (ix) the future operating results of HCAP's or PTMN's portfolio
companies or of the combined company, (x) regulatory factors, (xi) 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
HCAP and PTMN invest, and (xii) other changes in the conditions of the
industries in which HCAP and PTMN invest and other factors enumerated in HCAP's
and PTMN's respective filings with the U.S. Securities and Exchange Commission
(the "SEC"), including PTMN's registration statement on Form N-14, as amended,
which includes a proxy statement/prospectus (as amended, the "Registration
Statement"), which was declared effective by the SEC on April 20, 2021, PTMN's
prospectus, which was filed by PTMN with the SEC on April 20, 2021 (the
"Prospectus"), and HCAP's definitive proxy statement, which was filed by HCAP
with the SEC on April 21, 2021 (the "Proxy Statement" and, together with the
Prospectus, the "Proxy Statement/Prospectus"). You should not place undue
reliance on such forward-looking statements, which speak only as of the date of
this communication. PTMN and HCAP undertake no obligation to update any
forward-looking statements made herein, unless required by law. You should,
therefore, not rely on these forward-looking statements as representing the
views of HCAP or PTMN as of any date subsequent to the date of this
communication. You should read this communication and the documents referenced
in this communication completely and with the understanding that actual future
events and results may be materially different from expectations. PTMN and HCAP
qualify all forward-looking statements by these cautionary statements.
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Additional Information and Where to Find It
In connection with the proposed transaction, including seeking to obtain HCAP
stockholder approval in connection therewith, PTMN and HCAP have filed certain
materials with the SEC, including, among other materials, the Registration
Statement and the Proxy Statement/Prospectus. The Registration Statement was
declared effective by the SEC on April 20, 2021, and the Proxy
Statement/Prospectus was first mailed to HCAP's stockholders on or around April
22, 2021 to seek approval of the proposed transaction. The Registration
Statement and the Proxy Statement/Prospectus each contain important information
about HCAP, PTMN, the proposed transaction and related matters. This
communication is not a substitute for the Proxy Statement/Prospectus or the
Registration Statement to which it pertains or for any other document that HCAP
or PTMN may file with the SEC and send to HCAP's stockholders in connection with
the proposed transaction. This communication is for informational purposes only
and does not constitute an offer to sell or the solicitation of an offer to buy
any securities or a solicitation of any vote or approval. 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. STOCKHOLDERS OF HCAP ARE
URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND REGISTRATION STATEMENT, AS WELL
AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, AND OTHER DOCUMENTS FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY CONTAIN/WILL CONTAIN IMPORTANT INFORMATION ABOUT HCAP, PTMN, THE PROPOSED
TRANSACTION AND RELATED MATTERS. Investors and security holders are able to
obtain the documents filed with the SEC free of charge at the SEC's website,
http://www.sec.gov, or for documents filed by HCAP, from HCAP's website at
http://www.harvestcapitalcredit.com and for documents filed by PTMN, from PTMN's
website at www.portmanridge.com.
Participants in the Solicitation
HCAP, its directors, certain of its executive officers and certain employees and
officers of HCAP Advisors, LLC and its affiliates may be deemed to be
participants in the solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive officers of HCAP is
set forth in the Proxy Statement/Prospectus. PTMN, its directors, certain of its
executive officers and certain employees and officers of Sierra Crest Investment
Management LLC and its affiliates may be deemed to be participants in the
solicitation of proxies in connection with the proposed transaction. Information
about the directors and executive officers of PTMN is set forth in the Proxy
Statement/Prospectus. Additional information regarding the interests of
participants in the solicitation of proxies in connection with the proposed
transaction can also be found in the Registration Statement and the Proxy
Statement/Prospectus. These documents may be obtained free of charge from the
sources indicated above.
No Offer or Solicitation
This communication is not, and under no circumstances is it to be construed as,
a prospectus or an advertisement and the communication of this communication 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 PTMN, HCAP or in any fund
or other investment vehicle.
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