The Firm is representing BC Partners Advisors L.P. (“BC Partners”) in connection with the conversion of KCAP Financial, Inc., a publicly traded business development company (NASDAQ: KCAP) (“KCAP”), from an “internally-managed” business development company to an “externally-managed” business development company.
Pursuant to a stock purchase and transaction agreement, an affiliate of BC Partners will become the external manager of KCAP. Under the terms of the agreement, KCAP stockholders will receive a direct cash payment from an affiliate of BC Partners of $25 million, or approximately $0.67 per share. In addition, BC Partners has agreed to contribute up to 100% of incentive fees earned, to the extent necessary, to target net investment income for KCAP of $0.40 per share for a one year period after the closing and to use up to $10 million of incentive fees earned to purchase newly issued shares of KCAP common stock over the two year period after the closing.
The transaction is subject KCAP stockholder approval of the new investment advisory agreement and other customary closing conditions, and is expected to close in the first quarter of 2019.
The Simpson Thacher team includes Rajib Chanda, Nicholas Ridley and Katherine O’Neil (Registered Funds); Jonathan Corsico, Benjamin Bodurian and Hilary Albrecht (M&A); Andrew Blau, Alisa Tschorke and Caitlin Grimes (Executive Compensation and Employee Benefits); Jonathan Goldstein (Tax); Lori Lesser and Melanie Jolson (Intellectual Property); Christopher Brown and Mark Haddox (Banking and Credit); and Dennis Loiacono (Real Estate).