Investcorp Credit Management US LLC (“Investcorp”), a subsidiary of
Investcorp Bank B.S.C., today announced that it has entered into a
definitive interest purchase agreement to acquire a majority
ownership interest in CM Investment Partners LLC (“CMIP”), the
investment adviser to CM Finance Inc (“CM Finance”), through its
purchase of the respective equity positions held by certain funds
managed by Cyrus Capital Partners, L.P. (“Cyrus”) and Stifel
Venture Corp. (“Stifel”), and newly issued interests in CMIP (the
“Transaction”). As a result of the Transaction, Investcorp
will become the majority owner of CMIP and Michael Mauer and
Christopher Jansen, CMIP’s Co-Chief Investment Officers, will
together maintain a minority ownership interest in CMIP.
Notwithstanding the sale of their respective interests in CMIP,
each of Cyrus and Stifel will retain their equity interests in the
Company as of the date of the closing of the Transaction (the
“Closing”), which currently represent a 44.1% interest in the
aggregate.
Simultaneously therewith, CM Finance entered into a definitive
stock purchase and transaction agreement with an affiliate of
Investcorp (the “Stock Purchase Agreement”), through which,
following the Closing and before the second anniversary of the date
of the Closing, Investcorp (or an affiliate thereof) will purchase
(i) newly issued shares of CM Finance’s common stock in an amount
representing 5% of the total outstanding shares of common stock as
of the date of the Stock Purchase Agreement, at the most recently
determined net asset value per share of CM Finance’s common stock
at the time of such purchase, and (ii) shares of CM Finance’s
common stock in open-market transactions in an amount representing
5% of the total outstanding shares of common stock as of the date
of the Stock Purchase Agreement.
The Transaction augments Investcorp’s position as a leading
global credit asset manager and advances its goal of providing
clients with a diverse range of alternative investment products and
solutions to meet their evolving needs, including in the
middle-market lending space.
“We are delighted to announce the acquisition of CMIP, marking
our entry into ‘middle-market’ lending in the U.S.,” said Jeremy
Ghose, Head of Investcorp Credit Management. “We are seeing
significant opportunities in the BDC space and we believe that this
acquisition will enable us to capitalize on these opportunities
going forward. It also allows us to reach a new client segment as
we look to grow our client base by delivering our expertise to a
wider group of shareholders and high-net-worth individuals in the
U.S.”
Michael Mauer, Chairman and Chief Executive Officer of CM
Finance and Co-Chief Investment Officer of CMIP, said, “We believe
being part of the Investcorp platform will significantly benefit
our shareholders. Investcorp, founded in 1982, has its roots in the
middle market. This deep experience will benefit our shareholders
and our efforts to expand our business. The Investcorp credit
platform has a significant presence across the U.S. and Europe with
over $12 billion under management. Working with Investcorp should
greatly expand our capabilities, enhance our sourcing abilities and
help us to further build our middle market business.”
CMIP complements Investcorp’s global credit business with
seasoned investment talent and a strong long-term track record at a
time of increasing client demand for private credit. An important
feature of the Transaction is the continuity of CMIP’s senior
management team, including Co-Chief Investment Officers Michael
Mauer and Christopher Jansen.
The acquisition will allow CMIP’s significant experience in
structuring customized debt solutions for middle-market companies
to complement Investcorp’s global reach, industry experience and
extensive investment capabilities.
Upon the Closing, CMIP is expected to join the Investcorp
platform and, pending the approval of CM Finance’s stockholders,
which is required under the Investment Company Act of 1940 and one
of the pre-conditions to Closing, remain the investment adviser to
CM Finance.
CM Finance’s Board of Directors has unanimously approved the
Stock Purchase Agreement and the transactions contemplated thereby,
including the new investment advisory agreement (the “New Advisory
Agreement”) pursuant to which CMIP will continue to serve as CM
Finance’s investment adviser, and recommends that CM Finance’s
stockholders approve the New Advisory Agreement. CM Finance intends
to hold a special meeting of stockholders as soon as practicable to
obtain the requisite stockholder approval.
The Transaction, which is expected to close in the third quarter
of 2019, is subject to customary regulatory requirements and
closing conditions.
Conference Call Information
A conference call has been scheduled for 1:00 pm (Eastern Time)
on Thursday, June 27, 2019. Representatives from both CM Finance
and Investcorp will participate in the call.
All interested parties may participate in the conference call by
dialing (888) 334-5784 approximately 5-10 minutes prior to the
call; international callers should dial (314) 696-0510.
Participants should reference CM Finance analyst conference call.
For those who are not able to listen to the call, a replay will be
available shortly after the call by visiting our website at
http://cmfn-inc.com/analyst-call-audio.
About CM Finance Inc
CM Finance Inc (“CM Finance”) is an externally-managed,
closed-end, non-diversified management investment company that has
elected to be regulated as a business development company under the
Investment Company Act of 1940. CM Finance’s investment objective
is to maximize the total return to its stockholders in the form of
current income and capital appreciation through debt and related
equity investments by targeting investment opportunities with
favorable risk-adjusted returns. CM Finance seeks to invest
primarily in middle-market companies that have annual revenues of
at least $50mm and earnings before interest, taxes, depreciation
and amortization of at least $15mm. CM Finance’s investment
activities are managed by its investment adviser, CM Investment
Partners LLC. To learn more about CM Finance Inc, please visit
www.cmfn-inc.com.
About CM Investment Partners LLC
CM Investment Partners LLC (“CMIP”) serves as the external
investment adviser to CM Finance Inc (Nasdaq: CMFN), and is
responsible for sourcing investment opportunities, conducting
industry research, performing diligence on potential investments,
structuring investments and monitoring portfolio companies on an
ongoing basis.
About Investcorp
Investcorp is a leading global manager of alternative
investments. Led by a new vision, Investcorp has embarked on an
ambitious, albeit prudent, growth strategy. Investcorp continues to
focus on generating value through a disciplined investment approach
in four lines of business: private equity, real estate, absolute
return investments and credit management.
As at March 31, 2019, Investcorp had US$26.71 billion in total
AUM, including assets managed by third party managers and assets
subject to a non-discretionary advisory mandate where Investcorp
receives fees calculated on the basis of AUM.
Since its inception in 1982, Investcorp has made over 185
Private Equity deals in the U.S., Europe, the Middle East and North
Africa region and Asia, across a range of sectors including retail
and consumer products, technology, business services and
industrials, and more than 600 commercial and residential real
estate investments in the US and Europe, for in excess of US $59
billion in transaction value.
Investcorp employs approximately 400 people across its offices
in Bahrain, New York, London, Abu Dhabi, Riyadh, Doha, Mumbai and
Singapore. For further information, including our most recent
periodic financial statements, which details our assets under
management, please refer to:
Website:
www.investcorp.com
Twitter:
www.twitter.com/InvestcorpLinkedIn:
www.linkedin.com/company/Investcorp
1 AUM includes approximately $2.1 billion of hedge fund
partnerships (including exposure through multi-manager solutions),
managed by third party managers and assets subject to a
non-discretionary advisory mandate, where Investcorp receives fees
calculated on the basis of AUM. Real estate investments are
stated at gross asset value.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains “forward-looking” statements,
including statements regarding the proposed transactions. All
statements, other than historical facts, including but not limited
to statements regarding the expected timing of the closing of the
proposed transactions; the ability of the parties to complete the
proposed transactions considering the various closing conditions;
the expected benefits of the proposed transactions such as improved
operations, enhanced revenues and cash flow, growth potential,
market profile and financial strength; the competitive ability and
position of CM Finance following completion of the proposed
transactions; and any assumptions underlying any of the foregoing,
are forward-looking statements. Forward-looking statements concern
future circumstances and results and other statements that are not
historical facts and are sometimes identified by the words “may,”
“will,” “should,” “potential,” “intend,” “expect,” “endeavor,”
“seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,”
“believe,” “could,” “project,” “predict,” “continue,” “target” or
other similar words or expressions. Forward-looking statements are
based upon current plans, estimates and expectations that are
subject to risks, uncertainties and assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove to be incorrect, actual results may vary
materially from those indicated or anticipated by such
forward-looking statements. The inclusion of such statements should
not be regarded as a representation that such plans, estimates or
expectations will be achieved. Important factors that could cause
actual results to differ materially from such plans, estimates or
expectations include, among others, (1) that one or more
closing conditions to the transaction may not be satisfied or
waived, on a timely basis or otherwise, including that a
governmental entity may prohibit, delay or refuse to grant approval
for the consummation of the proposed transactions, may require
conditions, limitations or restrictions in connection with such
approval or that the required approval by the stockholders of CM
Finance may not be obtained; (2) the risk that the proposed
transactions may not be completed in the time frame expected by
parties, or at all; (3) unexpected costs, charges or expenses
resulting from the proposed transactions; (4) uncertainty of
the expected financial performance of CM Finance following
completion of the proposed transactions; (5) failure to
realize the anticipated benefits of the proposed transactions,
including as a result of delay in completing the proposed
transactions; (6) the ability of CM Finance to implement its
business strategy; (7) the occurrence of any event that could
give rise to termination of the agreements; (8) the risk that
shareholder litigation in connection with the proposed transactions
may affect the timing or occurrence of the contemplated transaction
or result in significant costs of defense, indemnification and
liability; (9) evolving legal, regulatory and tax regimes;
(10) changes in general economic and/or industry specific
conditions; and (11) other risk factors as detailed from time
to time in CM Finance’s reports filed with the Securities and
Exchange Commission (“SEC”), including CM Finance’s annual report
on Form 10-K for the year ended June 30, 2018, periodic
quarterly reports on Form 10-Q, periodic current reports
on Form 8-K and other documents filed with the SEC.
Any forward-looking statements speak only as of
the date of this press release. CM Finance does not undertake any
obligation to update any forward-looking statements, whether as a
result of new information or developments, future events or
otherwise, except as required by law. Readers are cautioned not to
place undue reliance on any of these forward-looking
statements.
Additional Information and Where to Find
It
In connection with the proposed transactions, CM Finance plans
to file with the SEC and mail to its stockholders a proxy statement
on Schedule 14A (the “Proxy Statement”). The Proxy Statement will
contain important information about CM Finance, CM Investment
Partners LLC (“CMIP”), Investcorp Credit Management US LLC
(“Investcorp”), the proposed transactions and related matters.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY
STATEMENT, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS THERETO,
CAREFULLY AND IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE BECAUSE IT
WILL CONTAIN IMPORTANT INFORMATION ABOUT CM FINANCE, CMIP,
INVESTCORP, THE PROPOSED TRANSACTIONS AND RELATED MATTERS.
Investors and security holders will be able to obtain the Proxy
Statement and other documents filed with the SEC by CM Finance,
free of charge, from the SEC’s web site at www.sec.gov and from CM
Finance’s web site at www.cmfn-inc.com. Investors and security
holders may also obtain free copies of the Proxy Statement and
other documents filed with the SEC from CM Finance by calling
Investor Relations at (212) 257-5199.
Participants in the Solicitation
CM Finance and its directors, executive officers and other
persons may be deemed to be participants in the solicitation of
proxies from the stockholders of CM Finance common stock in respect
of the approval of the New Advisory Agreement. Information
regarding CM Finance’s directors and executive officers is
available in its definitive proxy statement for CM Finance’s 2018
annual meeting of stockholders filed with the SEC on September 20,
2018 (the “CM Finance 2018 Proxy Statement”), as modified or
supplemented by any Form 3 or Form 4 filed with the SEC since the
date of the CM Finance 2018 Proxy Statement. Other information
regarding the interests of the participants in the proxy
solicitation will be included in the Proxy Statement if and when it
becomes available. These documents can be obtained, or will be
available, free of charge from the sources indicated above.
Contacts
CM Finance Inc Investor Relations Email:
investorrelations@cmfn-inc.comPhone: 212-257-5199
Investcorp Firas El Amine+973 3998
7838felamine@investcorp.com
Prosek Partners Catherine Johnson+1 212 279
3115cjohnson@prosek.com
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