Completion of Acquisition or Disposition of Assets.
Completion of Sale of U.S. Gas & Electric
As previously disclosed in the Current Report on Form 8-K filed with the Securities and Exchange Commission by MVC Capital, Inc. (“MVC”) on June 1, 2017, U.S. Gas & Electric, Inc. (“USG&E”), MVC and James B. Wiser entered into a merger agreement with the Crius Energy Trust (“Crius”), Crius Solar Fulfillment LLC, Verengo, Inc. and Mace Merger Sub., Inc. (the “Merger Agreement”) on May 30, 2017. On July 5, 2017, pursuant to the terms and conditions of the Merger Agreement, Mace Merger Sub., Inc. was merged with and into USG&E (the “Merger”) with USG&E surviving as a wholly owned indirect subsidiary of Crius.
In connection with the Merger, MVC received gross consideration for its investment in USG&E valued at $128.1 million, including $11.0 million for the repayment of its two outstanding loans from MVC. The fair value of the consideration received by MVC for its equity investment in USG&E is $116.4 million (excluding any illiquidity discount for the securities received)
in comparison to the last publicly reported fair value of $89.4 million, as of April 30, 2017.
As a result of the gross consideration received, MVC anticipates a realized gain of $115.9 million, excluding all fees and distributions received since its initial investment in 2007.
is comprised of: (i) cash of approximately
9.5% second-lien callable notes due in July 2025
with a face amount of
$40.5 million (before certain post-closing and indemnification adjustments, if any)
; and (iii) 3,282,982 Crius trust units (
currently yielding 7.5%)
valued at approximately
The foregoing description of the Merger Agreement and transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, a copy of which is incorporated by reference to Exhibit 2.1 to MVC’s Current Report on Form 8-K filed on June 1, 2017.
The Merger Agreement has been incorporated by reference to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about MVC, USG&E, Crius or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement: (a) were made by the parties thereto only for purposes of that agreement and as of specific dates; (b) were made solely for the benefit of the parties to the Merger Agreement; (c) may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Merger Agreement (such disclosures include information that has been included in public disclosures, as well as additional non-public information); (d) may have been made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts; and (e) may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of MVC, USG&E, Crius or any of their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions and other terms of the Merger Agreement may be subject to waiver or modification. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in MVC’s public disclosures. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information regarding MVC that is or will be contained in, or incorporated by reference into, the Forms 10-K, Forms 10-Q and other documents that are filed with the Securities and Exchange Commission.
Based upon the closing price for Crius trust units on July 5, 2017 and the prevailing currency exchange rate on such date.