BC Partners BDC Absorbs Interval Fund ACIF, Expands Credit Line to $200M
BC Partners Lending Corp., or BCPL, a privately offered business development company managed by BC Partners Advisors L.P., has completed its all-stock acquisition of Alternative Credit Income Fund, or ACIF, an interval fund advised by Sierra Crest Investment Management LLC.
Based on Sept. 26 financial data, the combined company has a net asset value of more than $223 million, the company said. Before the merger, BCPL reported net assets of $98.5 million, or $18.59 per share, as of June 30.
The transaction closed Sept. 29. It was first announced in February, and ACIF shareholders approved it at a Sept. 10 special meeting. About 84.6% of voting shareholders supported the proposal, ACIF said.
The deal was done in two steps. A BCPL subsidiary first merged into ACIF, and ACIF then merged into BCPL, which is the surviving company. BCPL issued 7.07 million shares to former ACIF shareholders. Exchange ratios ranged from 0.4567 BCPL shares per ACIF Class W share to 0.4647 per Class C share. Before closing, ACIF ran a one-time discretionary repurchase offer for up to 15% of its outstanding shares, priced at each class’s NAV as of Sept. 24.
“With the merger now complete, we will seek to leverage the combined company’s enhanced scale, further diversified portfolio, cost savings due to lower overall operating expenses, and improved liquidity to deliver compelling risk-adjusted returns for our shareholders,” said Ted Goldthorpe, BCPL and ACIF president and chief executive officer, who also heads the BC Partners Credit platform.
The merger moves ACIF investors from an interval fund with mandatory periodic repurchases into a BDC that, according to BCPL, has not run a tender offer since it launched. BCPL said it expects to start quarterly tender offers for up to 2.5% of outstanding shares once four full quarters have passed after closing, subject to board approval, but it is under no obligation to conduct them.
The funds also told ACIF shareholders to weigh “risks related to additional leverage, reduced liquidity and higher management fees.” Pro forma projections put the combined company’s base management fee at 1.76% of net assets, compared with 1.85% across ACIF’s share classes. They also put its incentive fee at 1.85%, compared with 0% for ACIF.
Separately, on Sept. 29, BCPL subsidiary Great Lakes BCPL Funding Ltd. amended its revolving credit facility, with Deutsche Bank AG as facility agent. The amendment raises commitments from $125 million to $200 million and allows the facility to grow to as much as $400 million through an accordion feature. It also extends the revolving period to Sept. 29, 2029, and maturity to Sept. 29, 2031.
Keefe, Bruyette & Woods served as financial adviser to BCPL’s special committee, with Skadden, Arps, Slate, Meagher & Flom LLP as legal counsel. Lucid Capital Markets advised ACIF’s special committee, with Thompson Hine LLP as counsel. Simpson Thacher & Bartlett LLP was counsel to both funds.
According to the firm, BCPL invests mainly in debt of private middle-market companies. It sells shares to accredited investors through private offerings that use capital commitments.
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