Bulldog Investors Urges Monroe Capital to Reconsider Merger with Horizon

Bulldog Investors, one of the largest shareholders of Monroe Capital Corporation (MRCC), holding 954,816 shares, announced that it is urging Monroe's Board of Directors to reconsider the proposed merger of Monroe into Horizon Technology Finance Corporation (HRZN). When the proposed merger of Monroe into Horizon on a net asset value for NAV basis was announced seven months ago, shareholders of Monroe were told that they would "realize [an] immediate 33% NAV premium to current trading price," which was $6.21 at that time and a discount to its NAV of $8.29. At that time, Horizon's shares were trading at a premium of about 12% above its NAV. An illustration of the merger benefits indicated to shareholders of Monroe that, assuming no significant changes occurred prior to the merger, they would receive shares of Horizon with a market value of about $8.56 per share (which was higher than both the market price of Monroe and its NAV) and that paid a dividend of 11 cents per month, thereby making the proposed transaction quite compelling. Since then, the value of the merger consideration to Monroe's shareholders has dramatically declined, Bulldog said. The coup de grace was a shocking announcement a few days ago by Horizon that it is slashing its monthly dividend by 45% from 11 cents to 6 cents. Since then, Horizon's share price has fallen by almost 25% (equivalent to almost two years of its new lower dividend) and Monroe's shares have fallen in lockstep by a similar percentage to close yesterday at $4.50. Meanwhile, for the past seven months, investors have been kept in the dark about that massive dividend cut that Horizon's Board should have known about from day one. Phillip Goldstein, a managing partner of Bulldog, stated: "What appeared to be an attractive transaction for Monroe shareholders last August has unraveled just a few days before the special meeting to vote on the merger. Given that Monroe's most recent NAV is $7.68 or 70% above its current market price, we think that, absent improved terms, the merger with Horizon is not in the best interest of Monroe's stockholders. Consequently, we urge the Board to consider restructuring the merger. Alternatively, the Board should consider other measures to maximize shareholder value including letting Monroe gradually wind down and making cash distributions to shareholders."