Item 8.01. Other Events.
On
On
The Merger Litigation alleges breach of fiduciary duty claims against the Board
of Directors of GARS (the "GARS Board"), and/or violations of sections 14(a) and
20(a) of the Securities Exchange Act of 1934 against GARS, the GARS Board and,
with respect to one lawsuit, PTMN and the Acquisition Sub, in connection with
the solicitation of stockholder approval of the Mergers contemplated by the
Merger Agreement. The Merger Litigation alleges, among other things, that GARS'
definitive proxy statement filed on
The defendants believe that GARS 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 immaterial. Accordingly, defendants believe these claims are without merit and intend to vigorously defend against them. However, in an attempt to reduce the costs, risks and uncertainties inherent in litigation and to maximize GARS' net asset value at the time of the Mergers, GARS has determined to voluntarily 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 of any of these disclosures under applicable law. Rather, GARS and the GARS Board specifically deny all allegations in the Merger Litigation that any additional disclosure was or is required.
ON THE RECOMMENDATION OF A SPECIAL COMMITTEE OF THE GARS BOARD, THE GARS BOARD UNANIMOUSLY RECOMMENDS THAT GARS STOCKHOLDERS VOTE "FOR" THE MERGER PROPOSAL AND, IF NECESSARY OR APPROPRIATE, "FOR" THE GARS ADJOURNMENT PROPOSAL (EACH, AS DEFINED IN THE PROXY STATEMENT).
These supplemental disclosures will not affect the merger consideration to be
paid by PTMN and Sierra Crest to GARS stockholders in connection with the
Mergers or the timing of the special meeting of GARS stockholders scheduled for
--------------------------------------------------------------------------------
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 carefully and in its entirety before authorizing a proxy to vote. All page references are to pages in the Proxy Statement, and terms used below have the meanings set forth in the Proxy Statement.
The following disclosure appears at the end of the second paragraph on page 47:
In connection with the formation of the GARS Special Committee, the engagement
letter with KBW was amended and restated such that, from and after
The following disclosure appears in a new section under the heading "Certain Prospective Financial Information Provided by GARS and PTMN" on page 61 immediately before the section entitled "Opinion of the Financial Advisor to the GARS Special Committee":
Certain Prospective Financial Information Provided by GARS and PTMN
GARS provided KBW with the following forecasts and projections of GARS, which were used by KBW in performing a dividend discount analysis of GARS in connection with KBW's opinion, as more fully described below in the section entitled "-Opinion of the Financial Advisor to the GARS Special Committee":
• Estimated future distributions of GARS of$0.15 per share per quarter throughDecember 31, 2023 . • Estimated net assets of GARS of$106.2 million as ofDecember 31, 2020 and$107.0 million as ofDecember 31, 2021 with a 0% growth rate annually thereafter. • Estimated net investment income of GARS of$2.6 million for the quarter endingDecember 31, 2020 and$10.5 million for the fiscal year endingDecember 31, 2021 with a 0% growth rate annually thereafter.
PTMN provided to and/or discussed with KBW with the following forecasts and projections of PTMN, which were used by KBW in performing a dividend discount analysis of PTMN in connection with KBW's opinion, as more fully described below in the section entitled "-Opinion of the Financial Advisor to the GARS Special Committee":
• Estimated future distributions of PTMN of 100.0% of net investment income. • Analyst consensus, or street, estimates of net assets of PTMN of$114.9 million as ofDecember 31, 2020 and$114.6 million as ofDecember 31, 2021 with a 0% growth rate annually thereafter. • Analyst consensus estimates of net investment income of PTMN of$1.9 million for the quarter endingDecember 31, 2020 and$8.0 million for the fiscal year endingDecember 31, 2021 with a 0% growth rate annually thereafter.
The prospective financial information set forth above was prepared for internal
use and not with a view to public disclosure (except to the extent comprised of
street estimates) and is being included in this supplemental disclosure only
because the prospective financial information was provided to KBW and relied
upon by KBW in performing its financial analysis reviewed with the GARS Special
Committee. The prospective financial information was not prepared with a view to
compliance with the published guidelines of the
3
--------------------------------------------------------------------------------
examined, compiled or otherwise applied procedures to the prospective financial information and accordingly assume no responsibility for such information. The prospective financial information provided by PTMN and GARS, as applicable, was based solely on the information available to their respective management at that time. The inclusion of the prospective financial information in this supplemental disclosure should not be regarded as an indication that the prospective financial information will be necessarily predictive of actual future results, and the forecasts should not be relied upon as such. Neither PTMN or GARS nor any other person makes any representation to any security holders regarding the ultimate performance of PTMN or GARS, as applicable, compared to the prospective financial information set forth above. Although presented with numerical specificity, the prospective financial information is not fact and reflects numerous assumptions and estimates as to future events made by management of PTMN or GARS, as applicable, that were believed to be reasonable at the time the prospective financial information was prepared and other factors such as industry performance and general business, economic, regulatory, market and financial conditions, as well as factors specific to the businesses of PTMN and GARS, all of which are difficult to predict and many of which are beyond the control of PTMN and GARS. Other persons attempting to project the future results of PTMN and GARS will make their own assumptions that could result in projections materially different than those above. In addition, the prospective financial information does not take into account any circumstances or events occurring after the date that they were prepared and, accordingly, does not give effect to the Mergers or any changes to the operations or strategy of PTMN that may be implemented after the consummation of the Mergers. Further, the prospective financial information does not take into account the effect of any failure to occur of the Mergers. Accordingly, there can be no assurance that the prospective financial information will be realized, and actual results could vary significantly from those reflected in the prospective financial information. Neither PTMN nor GARS intends to update or otherwise revise the prospective financial information to reflect circumstances existing after the date when made or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the prospective financial information are shown to be in error. The above projections and prospective financial information are forward-looking statements. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. The summary of the projections and prospective financial information included above is not being included to influence your decision whether to vote for the Merger Proposal but because the projections and prospective financial information were provided to the GARS Special Committee.
The first paragraph and the subsequent table on page 67 are hereby supplemented as follows:
The minimum, 25th percentile, median, average, 75th percentile and maximum
multiples for the selected companies excluded the LTM NII multiple for Medley
Capital Corporation, the calendar year 2020 EPS multiples for BlackRock Capital
Investment Corporation, Monroe Capital Corporation, Oxford Square Capital Corp.,
MVC Capital, Inc.,
The fourth paragraph and the subsequent table on page 68 are hereby supplemented as follows:
The minimum, 25th percentile, median, average, 75th percentile and maximum
multiples for the selected transaction excluded the price-to-LTM NII per share
multiples of Portman Ridge Finance Corp / OHA Investment Corp,
The following disclosure appears as the fourth sentence in the third paragraph on page 69:
The range of discount rates assumed in this analysis was selected taking into account a capital asset pricing model implied cost of capital calculation.
The following disclosure appears as the fourth sentence in the first paragraph on page 70:
The range of discount rates assumed in this analysis was selected taking into account a capital asset pricing model implied cost of capital calculation.
4
--------------------------------------------------------------------------------
The following disclosure appears at the end of the third paragraph on page 70:
The range of discount rates assumed in this analysis was selected taking into account a capital asset pricing model implied cost of capital calculation.
The following disclosure appears as the sixth sentence in the final paragraph on page 71:
In connection with its roles as (i) financing advisor in KCAP's
The following disclosure appears at the end of the fourth paragraph under the heading "Management of GARS" on page 162:
Forward-Looking Statements
This document may contain forward-looking statements that involve substantial
risks and uncertainties, including statements regarding the completion of the
transaction between GARS and PTMN. The use of words such as "anticipates,"
"believes," "intends," "plans," "expects," "projects," "estimates," "will,"
"should," "may" and similar expressions to identify forward-looking statements.
These forward-looking statements 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 GARS
stockholders voting in favor of the transaction, (v) the percentage of PTMN
stockholders voting in favor of the share issuance pursuant to the terms of the
transaction, (vi) the possibility that competing offers or acquisition proposals
for GARS will be made; (vii) the possibility that any or all of the various
conditions to the consummation of the merger may not be satisfied or waived;
(viii) risks related to diverting management's attention from GARS' ongoing
business operations, (ix) the risk that stockholder litigation in connection
with the transactions contemplated by the merger agreement may result in
significant costs of defense and liability, (x) the future operating results of
our portfolio companies or the combined company, (xi) regulatory factors, (xii)
changes in regional or national economic conditions, including the impact of the
COVID-19 pandemic, and their impact on the industries in which we invest, and
(xiii) other changes in the conditions of the industries in which we invest and
other factors enumerated in our filings with the
Additional Information and Where to Find It
This communication relates to a proposed business combination involving PTMN and
GARS, along with related proposals for which stockholder approval will be sought
(collectively, the "Proposals"). In connection with the Proposals, each of PTMN
and GARS has filed relevant materials with the
5
--------------------------------------------------------------------------------
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. STOCKHOLDERS OF GARS AND PTMN ARE
URGED TO READ THE JOINT PROXY STATEMENT AND REGISTRATION STATEMENT, AS WELL AS
ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR
ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT GARS, PTMN, THE
PROPOSED TRANSACTION AND RELATED MATTERS. Investors and security holders can
obtain the documents filed with the
Participants in the Solicitation
GARS, its directors, certain of its executive officers and certain employees and
officers of
No Offer or Solicitation
This Current Report is not, and under no circumstances is it to be construed as, a prospectus or an advertisement and the communication of this Report 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, GARS or in any fund or other investment vehicle.
6
--------------------------------------------------------------------------------
© Edgar Online, source