SSIC - Silver Spike Investment Corp. Announces Agreement to Acquire Loan Portfolio From Chicago Atlantic | Benzinga
NEW YORK, Feb. 20, 2024 (GLOBE NEWSWIRE) -- Silver Spike Investment Corp. (the "Company") (NASDAQ:SSIC), a specialty finance company that has elected to be treated as a business development company, today announced that it entered into a definitive agreement with Chicago Atlantic Loan Portfolio, LLC ("CALP") for the purchase (the "Loan Portfolio Acquisition") from CALP of a sizeable portfolio of loans (the "CALP Loan Portfolio"). The Company will acquire the CALP Loan Portfolio in exchange for newly issued shares of the Company's common stock with a net asset value equal to the value of the CALP Loan Portfolio, each determined shortly before closing. The Loan Portfolio Acquisition is consistent with the Company's new, broadened investment strategy, separately announced today.
The closing of the Loan Portfolio Acquisition is subject to certain customary closing conditions. Assuming satisfaction of the conditions to the transaction, the Loan Portfolio Acquisition is expected to close in mid-2024.
As of January 1, 2024, the CALP Loan Portfolio comprised 24 loans with an aggregate value of approximately $130 million. CALP has agreed to use reasonable best efforts to add 4 loans with an aggregate value of approximately $43 million to the CALP Loan Portfolio prior to the closing of the Loan Portfolio Acquisition. The Company and CALP may also agree to the addition of other loans to the CALP Loan Portfolio prior to the closing of the Loan Portfolio Acquisition. The addition of certain loans to the CALP Loan Portfolio requires third-party consents, and/or such loans may need to be acquired by CALP, and there can be no assurance that any additional loans will be added to the CALP Loan Portfolio prior to the closing of the Loan Portfolio Acquisition. Certain loans may also be removed from the CALP Loan Portfolio upon the agreement of the Company and CALP, or upon the repayment of the loans. The pro-forma information presented herein is based on data of the Company data as of September 30, 2023 and CALP Loan Portfolio data as of January 1, 2024.
Based on CALP Loan Portfolio data as of January 1, 2024, following the closing of the Loan Portfolio Acquisition, the Company is expected to have approximately $213 million in net assets, and investments in approximately 27 portfolio companies. As of the closing of the Loan Portfolio Acquisition, CALP is expected to own the majority of the Company's common stock.
The Loan Portfolio Acquisition was unanimously approved by the board of directors of the Company (the "Board"), upon the recommendation of its special committee consisting solely of independent directors, which separately approved the transaction.
The Company's present officers will continue to be a part of the Company's management team following the Loan Portfolio Acquisition.
Scott Gordon, Chairman and Chief Executive Officer of the Company, said, "We are very excited to announce the agreement for the Loan Portfolio Acquisition. We believe that the Loan Portfolio Acquisition is a compelling transaction that will enhance value for our stockholders, and we view the Loan Portfolio Acquisition as an important step on our path to achieving greater scale, trading liquidity and access to capital markets for the Company."
Key Transactional Highlights
The Company believes that the Loan Portfolio Acquisition is compelling for stockholders for several reasons:
- Increased scale and liquidity. The Loan Portfolio Acquisition would increase the Company's scale meaningfully, with its net assets expected to increase from less than $100 million to approximately $213 million. The increased market capitalization of the Company following the Loan Portfolio Acquisition is anticipated to result in broader equity research coverage, greater trading liquidity, and the potential for increased institutional ownership of the Company.
- Enhanced portfolio diversification. The Loan Portfolio Acquisition would reduce the sector concentration of the Company's investment portfolio, as the Company would acquire loans to both cannabis and non-cannabis companies consistent with its broadened investment strategy. The Loan Portfolio Acquisition would reduce the Company's investments in cannabis companies from 100% to approximately 71% of the net assets of the Company's investment portfolio (excluding cash and cash equivalents). The Loan Portfolio Acquisition would also diversify the Company's investment portfolio by increasing the number of portfolio companies from 6 to approximately 27, and reducing the average position size from approximately 17% to approximately 3% of the net assets of the Company's investment portfolio (excluding cash and cash equivalents).
- Improved access to debt and equity capital markets. The Loan Portfolio Acquisition is expected to provide the Company with improved access to more sources of debt capital, and better opportunities for future equity raises.
- Accretive to Net Investment Income ...