Sierra Income Corporation, Medley Capital Corporation, and Medley Management Inc. will merge with and into Sierra, with Sierra as the surviving company. Simultaneously, Sierra will acquire MDLY, and MDLY’s existing asset management business will operate as a wholly-owned subsidiary of Sierra. The Boards of Directors of Sierra, MCC and MDLY unanimously approved the transactions based on recommendations of independently advised special committees of independent directors at each company, respectively.

Transaction Highlights:

The combined company will have over $5 billion of assets under management, including $2 billion of internally managed assets

• Sierra is expected to be the second largest internally managed Business Development Company (“BDC”) and the seventh largest publicly traded BDC
• Expected to be accretive to net investment income per share for both Sierra and MCC
• Expected to increase liquidity for shareholders of Sierra, MCC and MDLY

The transaction is expected to add scale to the BDC platform, increase operational efficiencies, create a stronger balance sheet and improve portfolio diversification. In addition, growth of MDLY’s existing asset management business would add to NII and NAV over time.

The senior leadership and the investment management teams will remain intact as part of this transaction. The board of Sierra following the transaction will consist of the current independent directors from Sierra, one interested director from Sierra and two independent directors from MCC.

MCC shareholders will receive 0.8050 shares of Sierra Common Stock for each share of MCC Common Stock.

MDLY Class A shareholders will receive 0.3836 shares of Sierra Common Stock for each Medley Class A share, $3.44 per share of cash consideration and $0.65 per share of special cash dividends.

Medley LLC Unitholders have agreed to convert their units into MDLY Class A Common Stock, and will receive 0.3836 shares of Sierra Common Stock for each MDLY Class A share, $3.44 per share of cash consideration and a $0.35 per share special cash dividend. As part of the transaction, Medley LLC Unitholders have agreed to forgo all payments that would be due to them under the existing Tax Receivable Agreement with Medley for the benefit of the combined company.

At close, current Sierra shareholders will continue to own shares of Sierra Common Stock. As a condition to closing the transactions, Sierra’s common stock will be listed to trade on the New York Stock Exchange and Sierra will remain a BDC.  There are no expected changes to the current dividend policies of the respective entities prior to the closing of the transaction, except that MCC will be promptly terminating any feature of its dividend reinvestment plan. In addition, Sierra will promptly be suspending any share repurchase program or offers to repurchase. It is anticipated that Sierra will continue with its current dividend policy after the close of the transaction.

“We are excited to bring together these three complementary entities to create a single, large-scale BDC and credit manager,” said Brook Taube, CEO of Medley.

The mergers are cross conditioned upon each other and are subject to approval by Sierra, MCC and MDLY shareholders, regulatory review, other customary closing conditions and third party consents. The transaction is expected to close in the fourth quarter of 2018 or early in 2019.

Transaction Advisors:

• The Special Committee of Sierra Income Corporation’s Board of Directors is served by financial advisor Broadhaven Capital Partners, LLC and legal counsel Sullivan & Worcester LLP
• The Special Committee of Medley Capital Corporation’s Board of Directors is served by financial advisor Sandler O’Neill + Partners, L.P. and legal counsel Kramer Levin Naftalis & Frankel LLP
• The Special Committee of Medley Management Inc.’s Board of Directors is served by financial advisor Barclays Capital Inc. and legal counsel Potter Anderson & Corroon LLP
• Medley Management Inc. is served by financial advisor Goldman Sachs & Co. LLC and legal counsel Eversheds Sutherland (US) LLP