Maryland
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814-00733
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06-1798488
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(State or Other Jurisdiction
of Incorporation) |
(Commission
File Number) |
(IRS Employer
Identification No.) |
300 South Tryon Street, Suite 2500
Charlotte, North Carolina
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28202
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(Address of Principal Executive Offices)
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(Zip Code)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.001 per share
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BBDC
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The New York Stock Exchange
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(d)
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Exhibits |
Exhibit
No.
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Description
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Agreement and Plan of Merger, by and among Barings BDC, Inc., Mercury Acquisition Sub, Inc., Sierra Income Corporation and Barings LLC, dated as of September 21, 2021.
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Joint press
release of Barings BDC, Inc. and Sierra Income Corporation, dated September 21, 2021.
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Investor presentation, dated September 21, 2021.
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Barings BDC, Inc.
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Date: September 22, 2021
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By:
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/s/ Jonathan Bock
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Jonathan Bock
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Chief Financial Officer
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Appendix A
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Definitions
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Exhibit A
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Articles of Incorporation of the Surviving Corporation
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Exhibit B
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Terms of Credit Support Agreement
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Exhibit C
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Second Amended and Restated Parent Advisory Agreement
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BARINGS BDC, INC.
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By:
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/s/ Jonathan Bock
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Name:
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Jonathan Bock
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Title:
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Chief Financial Officer
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SIERRA INCOME CORPORATION
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By:
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/s/ Dean Crowe
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Name:
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Dean Crowe
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Title:
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Chief Executive Officer and President
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BARINGS LLC
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By:
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/s/ Eric Lloyd
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Name:
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Eric Lloyd
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Title:
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Managing Director
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MERCURY ACQUISITION SUB, INC.
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By:
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/s/ Jonathan Landsberg
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Name:
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Jonathan Landsberg
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Title:
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President
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ATTEST:
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SIERRA INCOME CORPORATION
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By:
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[___________], Secretary
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[__________], President
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Issuer
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Barings LLC
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Policy holder
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Barings BDC, Inc.
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Maximum obligation
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$100,000,000
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Upfront fee
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None
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Effective date
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Date of transaction close between Barings BDC, Inc. and Sierra Income Corporation (the “Transaction”)
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Designated Settlement / Payment Date
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The earlier of [ , 203[2]]1 or the time at which the entire Reference Portfolio has been realized or written off
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Reference portfolio
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• Investments acquired by Barings BDC, Inc. in the Transaction (“Reference Portfolio”)
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○ [#] of Non-control/Non-affiliated investments
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○ [#] of Affiliate investments
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○ [#] of Control investments
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○ See schedule in [Appendix]2
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• Investments that are restructured, amended, extended or otherwise modified (including to new securities) will continue to be included in the Reference Portfolio until such time as these investments are realized or written off
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Reference portfolio value
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Aggregate purchase price of Reference Portfolio of $[ ]
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Obligation basis
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Change in the market value of the Reference Portfolio
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Calculation of obligation
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• Aggregate realized and unrealized losses on the Reference Portfolio less the aggregate realized and unrealized gains on the Reference Portfolio, in each case from the Effective Date to the Designated Settlement/Payment Date (“Covered Losses”)
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• In the event the Covered Losses are $0.00 or less, no obligation will exist
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• As defined above, the maximum obligation shall be $100,000,000
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○ For the avoidance of doubt, if the Covered Losses are greater than $100,000,000, any losses in excess of this amount shall be borne by the Policy Holder
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Settlement mechanics
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On the Designated Settlement/Payment Date, following the final calculation of the Covered Losses, the Issuer will (1) waive the Incentive Fee (as defined in Barings BDC, Inc.’s then-current investment advisory agreement) and, in the event that Covered Losses exceed such Incentive Fee, the Base Management Fee (as defined in Barings BDC, Inc.’s then-current investment advisory agreement) during the four quarterly measurement periods immediately following the quarter in which the Designated Settlement/Payment Date occurs (such period, the “Waiver Period”) until an aggregate amount of the Incentive Fee (including any Incentive Fee calculated on an annual basis during the Waiver Period) and Base Management Fee has been waived equal to the Covered Losses. If the Covered Losses exceed the aggregate amount of Base Management Fee and Incentive Fee waived by Barings LLC during the Waiver Period, then, on the date on which the last Incentive Fee or Base Management Fee payment would otherwise be due during the Waiver Period, Barings LLC shall make a cash payment to Barings BDC, Inc. equal to the positive difference between the Covered Losses and the aggregate amount of Incentive Fee and Base Management Fee previously waived by Barings LLC during the Waiver Period.
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1
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NTD: 10 years from the date of closing of the merger.
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2
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NTD: To include a detailed list of the loan/equity details for each portfolio company.
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BARINGS BDC, INC.,
a Maryland corporation
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By:
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Name: Eric Lloyd
Title: Chief Executive Officer
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BARINGS LLC,
a Delaware limited liability company
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By:
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Name: Eric Lloyd
Title: Managing Director
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•
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NII and NAV Accretion: Barings BDC estimates net investment income per share to be $0.24 in the first full quarter post-closing compared to $0.22 per share during the second quarter of
2021. This would represent a net investment income yield of 8.25% on pro forma NAV. Barings BDC further estimates short-term NAV accretion of approximately 4% and additional long-term accretion to NAV as assets acquired are realized and
repositioned into Barings BDC’s directly originated investments;
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•
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Barings BDC Share Liquidity: Barings BDC’s pro forma trading liquidity profile after closing as implied by the public BDC peer set suggests an approximate 80% increase in Barings BDC’s
current 3-month average daily trading volume;
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•
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Diversification: The combined portfolio will have 245 portfolio companies with top 10 companies representing approximately 17% of the portfolio on a pro forma basis;
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Business Resilience and Financial Flexibility: The combined entity will achieve greater business resilience and financial flexibility through increased access to the institutional,
index-eligible investment grade debt capital markets at a lower cost of capital;
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Cost Synergy: Approximately $8.1 million of identified expense synergies associated with the combination driven by redundant general & administrative expenses across two platforms;
and
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Best-in-Class Shareholder Alignment: Through an increased incentive fee hurdle rate from 8.0% to 8.25%, a $100 million credit support agreement, and up to $30 million in share
repurchases.
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