Houlihan Lokey Advises Alcentra Capital Corporation

Houlihan Lokey is pleased to announce that Alcentra Capital Corporation (formerly NASDAQ:ABDC), a middle-market business development company (BDC) managed by Alcentra NY, LLC, has merged with Crescent Capital BDC, Inc. (NASDAQ:CCAP). The transaction was previously announced on August 13, 2019, with a transaction value of approximately $141.9 million, representing 1.03x Alcentra Capital's tangible net asset value per share as of June 30, 2019, and a 36% premium to the closing price of Alcentra Capital's common stock on August 12, 2019. The transaction resulted from Alcentra Capital's previously announced review of strategic alternatives led by an independent director committee (the Committee of Independent Directors) of its board of directors. The transaction closed on January 31, 2020.

Under the terms of the transaction, in exchange for approximately 12.9 million shares of Alcentra Capital common stock, Alcentra Capital’s stockholders received (i) 5.2 million shares of Crescent BDC common stock, or 0.4041 shares of Crescent BDC common stock per share, (ii) $19.3 million in cash, or $1.50 per share, from Crescent BDC (reduced by $10.3 million or $0.80 per share in final dividends paid by Alcentra Capital on January 31, 2020), and (iii) $21.6 million in cash, or $1.68 per share, in transaction support provided by Crescent Cap Advisors, LLC, Crescent BDC’s investment advisor.

The combined company is estimated to have more than $550 million of net assets and a portfolio of over $900 million at close. In addition, Crescent BDC will have a new fee structure with a permanent reduction in annual base management fee rate to 1.25%, an increased hurdle rate from 6% to 7% (while maintaining a 17.5% income-based incentive fee), waivers of the base management and income incentive fees for 18 months following listing, and a $20 million stock repurchase authorization commencing March 2, 2020, any time the shares are trading below 90% of Crescent BDC’s most recently disclosed net asset value. As of the close of the transaction, Crescent BDC and Alcentra Capital stockholders own approximately 82% and 18%, respectively, of the combined company. Crescent BDC began trading on Nasdaq under the ticker symbol “CCAP” upon closing.

Alcentra Capital provided customized debt and equity financing solutions to middle-market companies, with EBITDA between $15 million and $75 million, and partnered with business owners, management teams, and financial sponsors by providing customized financing for change of ownership transactions, recapitalizations, strategic acquisitions, business expansion, and other growth initiatives.

Crescent BDC seeks to provide capital solutions to middle-market companies with sound business fundamentals and strong growth prospects. Crescent BDC utilizes the extensive experience, origination capabilities, and disciplined investment process of Crescent Capital Group LP. Crescent BDC is externally managed by Crescent Cap Advisors, a subsidiary of Crescent Capital Group.

Houlihan Lokey served as exclusive financial advisor to Alcentra Capital.


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