Prospect Capital, a New York-based closed-end investment company, has entered into a definitive agreement to acquire Patriot Capital Funding, a Connecticut-based closed-end and non-diversified investment company.
Reportedly, Prospect is acquiring Patriot for $197 million, comprised of cash to repay all Patriot debt, anticipated to be $110.5 million, and Prospect shares exchanged at a ratio of approximately 0.3992 Prospect shares for each Patriot share, or 8,616,467 Prospect shares for 21,584,251 Patriot shares.
The expected benefits of the acquisition for Prospect Capital include: attractive price, as it is acquiring Patriot for 63% of asset cost, 75% of asset book value, and 54% of equity book value; doubles its number of portfolio companies to over 60 by adding approximately 30 companies; and considered to be a tax-free reorganization under the Internal Revenue Code.
The company has claimed that the acquisition, approved by both of board of directors, is expected to close in the next 60 days. However, the acquisition is subject to Patriot stockholder approval and other customary closing conditions. It has added that the Patriot’s shareholders will own 15% of Prospect’s outstanding shares pro forma for the acquisition, so Prospect shareholder approval is not required.
Grier Eliasek, president of Prospect, said: We are pursuing other move-the- needle portfolio opportunities similar to Patriot in addition to continuing our work on individual transactions.”
John Barry III, CEO of Prospect, said: We look forward to having Richard Buckanavage and other Patriot professionals join our team.
