On February 1, Prospect (Nasdaq: PSEC) filed with the SEC a preliminary proxy statement in opposition to the proposed merger between Allied and Ares. (For who these entities are, see my Wednesday entry).
They note on the basis of Allied's own filings that as of January 15, 2010, Allied had on hand approximately $185 million of cash, money market and similar securities. This represents the result of significant debt paydowns, and cash and equivalents on hand, and reduces the degree to whicht he entity that would result from a Prospect-Allied tramsaction would start its life in debt. It reduced, in more SEC-atuned terms, "the pro forma leverage of a Prospect-Allied combination."
Also, Allied is associated with a portfolio company, Callidus, and Prospect anticipates that it could further improve its post-merger cash situation by selling Callidus' assets.
Your conclusion then, John Barry? "We believe our pending increased merger proposal, if consummated, will deliver significant benefits to both Prospect and Allied shareholders, including potential upside through Allied’s equity positions in a strengthening economy, increased diversification across more than 130 portfolio companies, and amortization of certain fixed costs across a greater asset base.”
Showing posts with label Prospect Capital. Show all posts
Showing posts with label Prospect Capital. Show all posts
Sunday, February 7, 2010
Wednesday, February 3, 2010
Prospect Capital, Part One
Allied Capital Corp. plans to merge with Ares Capital Corp., and an interloper, Prospect Capital, has shown up at the wedding trying to disrupt the proceedings, like Benjamin at the end of The Graduate.
Said Prospect in a preliminary proxy statement filed January 26, 2010: "We believe that our increased merger proposal should not only provide superior value to Allied shareholders, when compared to the Ares proposal, but also should provide significant value to Prospect shareholders. In our view, the credit markets have improved significantly since October when Allied agreed to merge with Ares. We believe the significant improvement in the credit markets likely increases the value of the Allied portfolio since October and makes Allied asset sales and debt repayments more feasible. The strong GDP numbers released on January 29 further support our belief that there may be smoother sailing ahead for Allied's portfolio companies."
So what's this all about? Ares is a closed-end, non-diversified specialty finance company that is regulated as a Business Development Company, or a BDC, under the Investment Company Act of 1940. The company is publicly traded on the NASDAQ Global Select Market under ticker symbol “ARCC.” Ares Capital became a public company in October 2004 through an initial public offering, which raised approximately $160 million in net proceeds.
Allied Capital (Elaine, in my movie-driven analogy) is also a BDC -- one that manages private funds with total assets under management of $3.3 billion.
Allied had had a special meeting of stockholders scheduled for November 18, 2009, but it was cancelled in light of their deal with Ares. Allied will scheduled a new meeting "in connection with the proposed business combination" sometime within the first quarter of this year, we're told.
Prospect Capital, our Benjamin, is yet another BDC. It says that its "investment objective is to generate both current income and long-term capital appreciation through debt and equity investments." So it obviously distinguishes itself from all those companies with a business objective of losing money.
Now that I've gotten the participants straight, let me see if I can figure out for the next entry, on Sunday, what the dispute is.
Said Prospect in a preliminary proxy statement filed January 26, 2010: "We believe that our increased merger proposal should not only provide superior value to Allied shareholders, when compared to the Ares proposal, but also should provide significant value to Prospect shareholders. In our view, the credit markets have improved significantly since October when Allied agreed to merge with Ares. We believe the significant improvement in the credit markets likely increases the value of the Allied portfolio since October and makes Allied asset sales and debt repayments more feasible. The strong GDP numbers released on January 29 further support our belief that there may be smoother sailing ahead for Allied's portfolio companies."
So what's this all about? Ares is a closed-end, non-diversified specialty finance company that is regulated as a Business Development Company, or a BDC, under the Investment Company Act of 1940. The company is publicly traded on the NASDAQ Global Select Market under ticker symbol “ARCC.” Ares Capital became a public company in October 2004 through an initial public offering, which raised approximately $160 million in net proceeds.
Allied Capital (Elaine, in my movie-driven analogy) is also a BDC -- one that manages private funds with total assets under management of $3.3 billion.
Allied had had a special meeting of stockholders scheduled for November 18, 2009, but it was cancelled in light of their deal with Ares. Allied will scheduled a new meeting "in connection with the proposed business combination" sometime within the first quarter of this year, we're told.
Prospect Capital, our Benjamin, is yet another BDC. It says that its "investment objective is to generate both current income and long-term capital appreciation through debt and equity investments." So it obviously distinguishes itself from all those companies with a business objective of losing money.
Now that I've gotten the participants straight, let me see if I can figure out for the next entry, on Sunday, what the dispute is.
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