TSLX Mails Letter to TICC Stockholders Urging Them to Vote AGAINST
the Management Proposals on the GOLD Proxy Card
TSLX to Ensure TICC Stockholders Can Make Informed Decision about the
Company’s Future
TPG Specialty Lending, Inc. (“TSLX”; NYSE: TSLX), a specialty finance
company focused on lending to middle-market companies, today announced
that it has filed definitive proxy materials with the U.S. Securities
and Exchange Commission ("SEC") in connection with the TICC Capital
Corp. (“TICC”; Nasdaq: TICC) special meeting of stockholders to be held
on October 27, 2015.
The proxy materials are available through the SEC’s website and at www.changeTICCnow.com.
TSLX intends to begin mailing definitive proxy materials to all TICC
stockholders immediately.
In addition, TSLX today sent a letter to TICC stockholders urging them
to vote the GOLD proxy card AGAINST the management proposals.
Josh Easterly, Chairman and Co-Chief Executive Officer of TSLX,
commented on the letter: “TICC stockholders have an important
opportunity on October 27 to determine the future of their company.
We’re confident that TICC stockholders recognize the superior value
presented by our proposal. Only our proposal offers TICC stockholders an
upfront premium and the potential for long-term value creation with an
industry-leading platform. We urge TICC stockholders to vote the Gold
proxy card against management proposals. By doing so, TICC stockholders
can halt a value-destroying transaction with Benefit Street Partners and
send a clear message to the TICC Board that TICC stockholders prefer the
TSLX proposal.”
A copy of the letter follows:
Dear Fellow TICC Stockholders:
PROTECT YOUR INVESTMENT AND VOTE THE GOLD
PROXY CARD TODAY! – VISIT WWW.CHANGETICCNOW.COM
TO LEARN HOW TO VOTE
On behalf of TPG Specialty Lending, Inc. (“TSLX”), a publicly traded
specialty finance company focused on lending to middle-market companies
and a fellow stockholder of TICC Capital Corp. (“TICC”), we are writing
today to urge you to vote against a value-destroying transaction with
Benefit Street Partners, LLC (“BSP”) that rewards an external manager
that has consistently underperformed for TICC stockholders. TICC has
refused to engage substantively with TSLX on its proposal that offers
TICC stockholders an upfront premium and the potential for long-term
value creation behind an industry-leading platform.
Vote the GOLD proxy card today to
send a clear message to the TICC Board to engage with TSLX.
UNLIKE MANAGEMENT’S PROPOSALS, TSLX WOULD PROVIDE TICC STOCKHOLDERS A
SUBSTANTIAL UPFRONT PREMIUM TO THE MARKET VALUE OF THEIR SHARES
We have presented a proposal that would offer you shares of TSLX stock
with a market value of $7.50 for each of your existing shares of TICC. Our
offer represents a 20% premium to TICC’s closing price on the day
before we made our proposal public.
The TICC Board is proposing a transaction with BSP
that does not offer you, the stockholder, any upfront consideration at
all, only the prospect of paying reduced fees going forward.
THE TSLX PROPOSAL WOULD ENABLE TICC STOCKHOLDERS TO PARTICIPATE IN A
LEADING PLATFORM THAT HAS CONSISTENTLY OUTPERFORMED THE SECTOR
TSLX is one of the industry’s leading platforms. But we do not expect
you to rely only on our opinion. We urge you to consider what
independent analysts have stated about TSLX. One of the leading
securities analyst in this sector said: “TSLX is one of our favorite
names rising from weakness across the BDC space at large – we see the
name at a premium to the group for all the right reasons, including
portfolio asset quality, strong returns / dividend coverage and a
shareholder-oriented management team.”1
Consider for a moment that a stockholder who invested a dollar with TICC
three years before we announced our proposal on September 15, 2015,
would have realized a total return of NEGATIVE 13.9% while the exact
same dollar invested with TSLX would have realized a total return of
51.6%.
UNLIKE TICC, TSLX HAS A DEMONSTRATED CAPACITY FOR PAYING A
SUSTAINABLE DIVIDEND
We believe the current TICC dividend is unsustainable. At least five
equity analysts have indicated that the dividend
will be cut and neither TICC nor BSP has refuted these reports.2
TICC even felt it necessary to re-issue its first letter to stockholders
with amended statements to clarify that a portion of TICC’s 2015
dividend distribution is a return of capital. Paying a dividend by
returning investors’ capital is clearly unsustainable and erodes its
investment base.
At TSLX, we only pay dividends we can afford. This helps protect
stockholder investment over the long-term by maintaining assets
available to generate earnings. The simple truth is that, if TICC
followed this policy, it would have to cut its dividend. Otherwise all
TICC is doing is returning investors’ money and calling it a
distribution.
THE TSLX PROPOSAL WOULD STOP A PAYMENT TO THE UNDERPERFORMING TICC
EXTERNAL MANAGER THAT HAS DESTROYED THE VALUE OF YOUR INVESTMENT
TSLX is proposing to provide TICC stockholders with a substantial
upfront premium to the market value of their shares. Our proposal would not
compensate the current TICC manager – one that has significantly
underperformed for you, the stockholders. Since
TICC’s IPO, the TICC external manager has collected $127.7 million in
fees from stockholders’ investments while underperforming the BDC
Composite by 154%.3
Under management’s transaction with BSP, TICC stockholders will not
receive any upfront compensation, only the prospect of paying reduced
fees in the future. At the same time it is estimated the current
underperforming manager, which includes members of the TICC Board, will
receive $60 million.4 We
do not believe a manager of a fund that has traded below net asset value
every day this year deserves a payout at all. Further, we do not
understand why TICC’s board didn't simply terminate the contract with
the existing adviser.
LEADING INDEPENDENT INVESTMENT PROFESSIONALS AGREE THAT TSLX OFFERS
TICC STOCKHOLDERS SUPERIOR VALUE
We feel strongly that the value of our proposal is in the best interest
of you, the stockholders. We were excited to see the 9.6% rise in the
price of TICC stock on the day our offer was announced5 as
well as the support of fellow investors and analysts who immediately
recognized the value of our proposal. We urge stockholders to consider
the below comments from leading equity analysts and fellow TICC
stockholders:
-
“TSLX trumped BSP’s offer, in our view, by presenting TICC’s board
with a proposal that would provide a 20% premium to shareholders.” -
Cantor Fitzgerald, September 16, 2015
-
“I find TPG's offer the most compelling, given that it provides an
opportunity for TICC Capital investors to exit with an immediate
return.” - Mercer Capital Advisers Inc., September 16, 2015
-
“We believe that TSLX management has performed well for shareholders
and their offer represents an attractive premium to TICC shareholders
in the immediate future.” - PM at large investment manager in NYC
cited in Wells Fargo report, September 17, 2015
-
“TSLX has done the industry a favor by forcing this choice and
presenting a visible example of how shareholders can seek to unlock
value.” - Analyst/PM at a large NYC based investment manager, cited in
Wells Fargo report, September 17, 2015
-
“The TSLX offer presents shareholders a strong premium stock price.” –
Wells Fargo analyst, September 17, 2015
DON’T BE FOOLED BY TICC’S MISLEADING STATEMENTS
TICC is trying to obscure the premium of our offer
by switching the discussion to net asset value. TICC notes the
TSLX offer is a 12.8% discount to TICC’s net asset value as of June 30,
2015 but stockholders know full well that they cannot realize net asset
value for their shares — they can only realize the trading price for
their shares. TICC has focused on the wrong metric – and glosses over
the fact that TICC shares have traded at a discount to net asset value
every trading day of 2015 and were trading at a 27.1% discount to June
30 net asset value when we publicly announced our proposal.
TICC HAS CONSISTENTLY PRIORITIZED THE EXTERNAL MANAGER AHEAD OF
STOCKHOLDERS – DENYING STOCKHOLDERS THE OPPORTUNITY TO SUPPORT TSLX’S
OFFER IS ANOTHER EXAMPLE
We believe TICC’s actions speak for themselves – TICC
has failed to utilize meaningful stockholder buybacks to support net
asset value per share. We view this as a sign of continued
prioritization of its external manager (who earns less fee income
with a return of capital) over stockholders
(who would see the value of their investment increase under such a
program).
VOTE THE GOLD PROXY CARD TO UNLOCK VALUE
FOR TICC STOCKHOLDERS!
Your vote will stop TICC from pursuing a value destructive transaction.
And although voting against one or all of the TICC proposals is not
equivalent to voting in favor of the TSLX Proposal, and defeat of the
TICC proposals alone will not require TICC to pursue a transaction with
TSLX, voting the GOLD proxy card
will send a clear message to the TICC board that
you prefer the TSLX proposal.
VOTE THE GOLD PROXY CARD. Visit www.changeTICCnow.com
for more information about TSLX’s offer and the deficiencies of the BSP
transaction.
Sincerely,
Joshua Easterly
Chairman, Board of Directors
Co-Chief
Executive Officer
Michael Fishman
Co-Chief Executive Officer
About TPG Specialty Lending
TPG Specialty Lending, Inc. (“TSLX”, or the “Company”) is a specialty
finance company focused on lending to middle-market companies. The
Company seeks to generate current income primarily in U.S.-domiciled
middle-market companies through direct originations of senior secured
loans and, to a lesser extent, originations of mezzanine loans and
investments in corporate bonds and equity securities. The Company has
elected to be regulated as a business development company, or a BDC,
under the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder. TSLX is externally managed by TSL Advisers, LLC,
a Securities and Exchange Commission (“SEC”) registered investment
adviser. TSLX leverages the deep investment, sector, and operating
resources of TPG Special Situations Partners, the dedicated special
situations and credit platform of TPG, with over $12 billion of assets
under management, and the broader TPG platform, a global private
investment firm with over $74 billion of assets under management. For
more information, visit the Company’s website at www.tpgspecialtylending.com.
Forward-Looking Statements
Information set forth herein includes forward-looking statements. These
forward-looking statements include, but are not limited to, statements
regarding TSLX proposed business combination transaction with TICC
Capital Corp. (“TICC”) (including any financing required in connection
with the proposed transaction and the benefits, results, effects and
timing of a transaction), all statements regarding TPG Specialty
Lending, Inc.’s (“TSLX”, or the “Company”) (and TSLX and TICC’s
combined) expected future financial position, results of operations,
cash flows, dividends, financing plans, business strategy, budgets,
capital expenditures, competitive positions, growth opportunities, plans
and objectives of management, and statements containing the words such
as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,”
“project,” “could,” “would,” “should,” “will,” “intend,” “may,”
“potential,” “upside,” and other similar expressions. Statements set
forth herein concerning the business outlook or future economic
performance, anticipated profitability, revenues, expenses, dividends or
other financial items, and product or services line growth of TSLX (and
the combined businesses of TSLX and TICC), together with other
statements that are not historical facts, are forward-looking statements
that are estimates reflecting the best judgment of TSLX based upon
currently available information.
Such forward-looking statements are inherently uncertain, and
stockholders and other potential investors must recognize that actual
results may differ materially from TSLX’s expectations as a result of a
variety of factors, including, without limitation, those discussed
below. Such forward-looking statements are based upon management’s
current expectations and include known and unknown risks, uncertainties
and other factors, many of which TSLX is unable to predict or control,
that may cause TSLX’s plans with respect to TICC, actual results or
performance to differ materially from any plans, future results or
performance expressed or implied by such forward-looking statements.
These statements involve risks, uncertainties and other factors
discussed below and detailed from time to time in TSLX’s filings with
the Securities and Exchange Commission (“SEC”).
Risks and uncertainties related to the proposed transaction include,
among others, uncertainty as to whether TSLX will further pursue, enter
into or consummate the transaction on the terms set forth in the
proposal or on other terms, potential adverse reactions or changes to
business relationships resulting from the announcement or completion of
the transaction, uncertainties as to the timing of the transaction,
adverse effects on TSLX’s stock price resulting from the announcement or
consummation of the transaction or any failure to complete the
transaction, competitive responses to the announcement or consummation
of the transaction, the risk that regulatory or other approvals and any
financing required in connection with the consummation of the
transaction are not obtained or are obtained subject to terms and
conditions that are not anticipated, costs and difficulties related to
the integration of TICC’s businesses and operations with TSLX’s
businesses and operations, the inability to obtain, or delays in
obtaining, cost savings and synergies from the transaction, unexpected
costs, liabilities, charges or expenses resulting from the transaction,
litigation relating to the transaction, the inability to retain key
personnel, and any changes in general economic and/or industry specific
conditions.
In addition to these factors, other factors that may affect TSLX’s
plans, results or stock price are set forth in TSLX’s Annual Report on
Form 10-K and in its reports on Forms 10-Q and 8-K.
Many of these factors are beyond TSLX’s control. TSLX cautions investors
that any forward-looking statements made by TSLX are not guarantees of
future performance. TSLX disclaims any obligation to update any such
factors or to announce publicly the results of any revisions to any of
the forward-looking statements to reflect future events or developments.
Third Party-Sourced Statements and Information
Certain statements and information included herein have been sourced
from third parties. TSLX does not make any representations regarding the
accuracy, completeness or timeliness of such third party statements or
information. Except as expressly set forth herein, permission to cite
such statements or information has neither been sought nor obtained from
such third parties. Any such statements or information should not be
viewed as an indication of support from such third parties for the views
expressed herein. All information in this communication regarding TICC,
including its businesses, operations and financial results, was obtained
from public sources. While TSLX has no knowledge that any such
information is inaccurate or incomplete, TSLX has not verified any of
that information. TSLX reserves the right to change any of its opinions
expressed herein at any time as it deems appropriate. TSLX disclaims any
obligation to update the data, information or opinions contained herein.
Proxy Solicitation Information
The information set forth herein is provided for informational purposes
only and does not constitute an offer to purchase or the solicitation of
an offer to sell any securities. TSLX has filed with the SEC and
commenced mailing to TICC stockholders a definitive proxy statement and
accompanying GOLD proxy card to be used to solicit votes at a special
meeting of stockholders of TICC scheduled to be held on October 27, 2015
against (a) approval of the new advisory agreement between TICC and TICC
Management, LLC (the “Adviser”), to take effect upon a change of control
of the Adviser in connection with the entrance of the Adviser into a
purchase agreement with an affiliate of Benefit Street Partners L.L.C.
(“BSP”), pursuant to which BSP will acquire control of the Adviser, (b)
the election of six directors nominated by TICC’s board of directors,
and (c) the proposal to adjourn the meeting if necessary or appropriate
to solicit additional votes.
TSLX STRONGLY ADVISES ALL STOCKHOLDERS OF TICC TO READ THE TSLX PROXY
STATEMENT AND ITS OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE
THEY CONTAIN IMPORTANT INFORMATION. SUCH TSLX PROXY MATERIALS ARE AND
WILL BECOME AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV
AND AT TSLX’S WEBSITE AT HTTP://WWW.TPGSPECIALTYLENDING.COM.
IN ADDITION, TSLX WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT
CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO TSLX’S
PROXY SOLICITOR AT TPG@MACKENZIEPARTNERS.COM.
The participant in the solicitation is TSLX and certain of its directors
and executive officers may also be deemed to be participants in the
solicitation. As of the date hereof, TSLX directly beneficially owned
1,633,660 shares of common stock of TICC.
Security holders may obtain information regarding the names,
affiliations and interests of TSLX’s directors and executive officers in
TSLX’s Annual Report on Form 10-K for the year ended December 31, 2014,
which was filed with the SEC on February 24, 2015, its proxy statement
for the 2015 Annual Meeting, which was filed with the SEC on April 10,
2015 and certain of its Current Reports on Form 8-K. These documents can
be obtained free of charge from the sources indicated above. Additional
information regarding the interests of these participants in the proxy
solicitation and a description of their direct and indirect interests,
by security holdings or otherwise, will also be included in any proxy
statement and other relevant materials to be filed with the SEC when
they become available.
1 TSLX: A Best In Class BDC (***Thud***As The Microphone
Drops), Wells Fargo, August 5, 2015
2 TICC Reiterates Rejection Of TSLX's offer, Wells Fargo,
September 22, 2015 and TICC: Writes Letter To Shareholders Urging Them
To Vote For BSP, Wells Fargo, September 24, 2015; Board Making a Poor
Deal? Should Shareholders Reject the Current Proposal?, Keefe, Bruyette
& Woods, September 16, 2015; Brouhaha with TICC Could Spread to Other
Out-of-Favor BDCs, Cantor Fitzgerald, September 16, 2015; TICC Capital
Corp.: Takeover Heats Up – Maintain Neutral, Ladenburg Thalmann,
September 16, 2015; BDC Update: Observations from the TICC rejection of
the TSLX proposal, Gilford Securities Inc., September 21, 2015
3 Market data as of September 15, 2015; Source: Bloomberg;
BDC Composite comprised of ACAS, AINV, ARCC, BKCC, FSC, GBDC, HTGC,
MAIN, MCC, NMFC, PNNT, PSEC, SLRC, TCAP and TCRD
4 The 9/18 Friday Bocks'd Lunch, Wells Fargo, September 17,
2015
5 Represents the percentage change in the TICC share price
from the close on September 15th to the close on September 16th
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