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FS Investment Corp and Corporate Capital Trust to Merge

July 23, 2018

FS Investment Corp and Corporate Capital Trust to Merge

July 23, 2018 | Luke Schmidt | Blue Vault

On July 23, 2018, it was announced that FS Investment Corporation (NYSE: FSIC) and Corporate Capital Trust, Inc. (NYSE: CCT) entered into a definitive agreement under which FSIC and CCT will merge.  The combined company will have over $8 billion in assets invested in 221 portfolio companies across 23 industries based on data as of March 31, 2018.  The Boards of Directors of both FSIC and CCT have approved the transaction.  The transaction is subject to approval by FSIC and CCT shareholders and other customary closing conditions.  FSIC and CCT expect to close the transaction in the fourth quarter of 2018.

Under the terms of the agreement, CCT shareholders will receive a number of FSIC shares with a net asset value equal to the net asset value of the CCT shares they hold, as determined shortly before closing, subject to the payment of cash in lieu of fractional shares.  The combined company will trade under the ticker symbol “FSIC” on the New York Stock Exchange and will remain externally managed by FS/KKR Advisor, LLC.

The proposed merger is expected to provide a range of near-term and long-term benefits focused on driving shareholder returns through reduced operating expenses, enhanced portfolio diversification, lower financing costs and improved secondary market liquidity.

“Since we announced our partnership with KKR last December, we have made consistent progress across a number of initiatives designed to fully leverage the benefits of our combined platform,” said Michael Forman, Chief Executive Officer of FSIC and CCT. “Today’s announcement, which comes ahead of our initial timeline expectation, is an important first step in optimizing the platform and positions us to deliver strong, consistent performance for investors.”

Todd Builione, President of FSIC and CCT, said, “We are excited to have entered into this mutually beneficial merger, and are confident in our ability to maximize long-term value for FSIC and CCT shareholders.  We expect the combined company to have a more diversified portfolio with a more flexible capital structure that will position it well to deliver strong investment performance.”

FSIC and CCT were the first nontraded BDCs to list on public exchanges.  FSIC was the first nontraded BDC in existence, beginning operations in 2009 and listing on the NYSE in April 2014, closing at $10.25 on its first day of trading.  The price of FSIC closed at $7.90 on July 20, 2018, representing a discount of 13.8% compared to its most recently announced NAV of $9.16 as of March 31, 2018.  CCT began operations in 2011 and listed on the NYSE in November 2017, closing at $17.60 on its first day of trading.  The price of CCT closed at $16.73 on July 20, 2018, representing a 15.2% discount compared to its most recently announced NAV of $19.72 as of March 31, 2018.

Sources:  FS/KKR Advisor Press Release, Blue Vault

 

Learn more about FS Investments and CNL Financial Group on the Blue Vault Sponsor Focus pages

 

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Gil Armour, CFP
February 3, 2016

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