This communication relates to a proposed business combination involving Barings BDC, Inc. (“Barings BDC” or “BBDC”) and MVC Capital, Inc. (“MVC”), along with related proposals for which stockholder approval is being sought (collectively, the “Proposals”). 

 

On December 18, 2020, MVC filed the below disclosure with the Securities and Exchange Commission (the “SEC”) under cover of a current report on Form 8-K (the “MVC Form 8-K”), which supplements and updates the joint proxy statement, dated November 24, 2020 (the “Joint Proxy Statement”), provided to Barings BDC stockholders and MVC stockholders entitled to vote on the Proposals in connection with a multi-step merger whereby Barings BDC will acquire MVC pursuant to that certain Agreement and Plan of Merger, dated as of August 10, 2020 (the “Merger Agreement”).

 

Except as described in the MVC Form 8-K, the information in this document does not otherwise modify or update any other disclosure presented in the Joint Proxy Statement. To the extent that information in the MVC Form 8-K differs from, updates or conflicts with information contained in the Joint Proxy Statement, the information in the MVC Form 8-K is more current. This is the case even if such section of the Joint Proxy Statement is not specifically referenced in the MVC Form 8-K.

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On August 10, 2020, MVC Capital, Inc. (“MVC”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) among Barings BDC, Inc., a Maryland corporation (“Barings BDC” or “BBDC”), Mustang Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of BBDC (“Acquisition Sub”), and Barings LLC, a Delaware limited liability company and investment adviser to BBDC (“Barings”). The Merger Agreement provides that, on the terms and subject to the conditions set forth in the Merger Agreement, Acquisition Sub will merge with and into MVC, with MVC continuing as the surviving company and as a wholly-owned subsidiary of BBDC and, immediately thereafter, MVC will merge with and into BBDC, with BBDC continuing as the surviving company (such transactions, the “Merger”).

The following disclosure supplements the subsection captioned “MVC Financial Analyses  - Selected Companies Analysis” beginning on page 80 of the Proxy Statement.

The range of discount rates of 14.5% to 16.5% used in this analysis was selected taking into account a capital asset pricing model implied cost of equity calculation.

The following disclosure supplements the subsection captioned “MVC Financial Analyses  - Premiums Paid Analysis” beginning on page 82 of the Proxy Statement.

The low one-day, one-week and one-month premiums paid in the selected acquisitions in the premiums paid analysis of MVC were 0.5%, 0.6% and 5.2%, respectively. The high one-day, one-week and one-month premiums paid in the selected acquisitions were 90.4%, 73.8% and 83.2%, respectively.

The following disclosure supplements the subsection captioned “Barings BDC Financial Analyses  - Selected Public Companies Comparable Data” beginning on page 82 of the Proxy Statement.

The low and high stock NAV per share multiples of the selected companies were 0.44x and 1.31x, respectively. The low and high dividend yields of the selected companies (excluding the impact of the dividend yield for one of the selected companies which was considered not meaningful because the dividend yield was greater than 25%) were 8.8% and 14.3%, respectively.

The following disclosure is added after the second sentence of the paragraph in the subsection captioned “Barings BDC Financial Analyses  - Dividend Discount Analysis” beginning on page 83 of the Proxy Statement.

The range of discount rates of 14.0% to 16.0% used in this analysis was selected taking into account a capital asset pricing model implied cost of equity calculation.

The following disclosure amends and supplements the subsection captioned “Miscellaneous” beginning on page 83 of the Proxy Statement by replacing the first paragraph of the subsection with the following:

Miscellaneous. Under the terms of JMP’s engagement, MVC has agreed to pay JMP for its financial advisory services in connection with the Merger an aggregate fee of $750,000, portions of which became payable upon JMP’s engagement and upon delivery of JMP’s opinion and $200,000 of which will become payable only if the proposed Merger is consummated. In addition, MVC has agreed to indemnify JMP against certain claims and liabilities related to or arising out of its engagement. JMP may seek to provide investment banking and other financial services to MVC, Barings BDC, Barings or their respective affiliates in the future, for which JMP would expect to receive compensation. JMP and its affiliates in the past provided investment banking and other financial services to MVC and received and may receive compensation for the rendering of these services, including, among other things, acting as agent for share repurchases by MVC. In connection with acting as agent for share repurchases by MVC, JMP received aggregate fees of approximately $25,000 in the two years preceding the date of JMP’s opinion.  During the two years preceding the date of JMP’s opinion, JMP did not provide investment banking services to Barings BDC or Barings for which it received any fees. In the ordinary course of business, JMP and its affiliates may actively trade or hold the securities of MVC and Barings BDC for their own account or for the account of their customers and, accordingly, may at any time hold a long or short position in those securities.