Sierra Income Corporation, Medley Capital Corporation, and Medley Management Inc. today announced that they have entered into definitive amended agreements under which MCC will merge with and into Sierra and Sierra will simultaneously acquire MDLY and its existing asset management business, which will operate as a wholly owned subsidiary of the Company. Following the closing of the transactions, in which Sierra will be the surviving entity, the Company will be operated as an internally managed business development company ("BDC").  Based upon the recommendation of each of their respective special committees of independent directors, the Boards of Directors of Sierra, MCC and MDLY unanimously approved the transactions.

Transaction Highlights:

• The Combined Company1 will have approximately $4.7 billion of assets under management, including $1.8 billion of internally managed assets;2
• Upon closing, the Combined Company will have enhanced scale and is expected to be the third largest internally managed BDC and the 13th largest publicly traded BDC by assets; 
• The transaction is expected to be accretive to net investment income ("NII") per share for both Sierra and MCC; and 
• The transaction is expected to increase share trading liquidity for stockholders of Sierra, MCC and MDLY.

Upon closing, the Combined Company will be led by MDLY's senior leadership team and the investment management team will remain in place. The Combined Company Board will initially consist of four independent directors and one interested director.  The four independent directors will consist of the three current independent directors of Sierra and one independent director from MCC to be chosen prior to closing by Sierra's special committee.3

"We believe the amended proposed mergers are in the best interests of the stockholders of each entity," said Brook Taube, CEO of Medley.  "The Combined Company will have a broadened BDC platform, increased operational efficiencies, a stronger balance sheet and improved portfolio diversification. In addition, MDLY's asset management business is expected to add to Sierra's NII and net asset value over time."

Terms of the Transactions

MCC stockholders will receive 0.66x to 0.68x shares of Sierra Common Stock for each share of MCC Common Stock; the actual exchange ratio will be determined prior to closing and will be subject to adjustment for certain potential costs associated with the transactions. In addition, upon closing, the eligible class members will participate pro rata in a settlement fund consisting of $17 million of cash and $30 million of Sierra common stock.4

MDLY Class A stockholders, other than Medley LLC Unitholders, will receive 0.2668 shares of Sierra Common Stock for each Medley Class A share and $2.96 per share of cash consideration.

Medley LLC Unitholders have agreed to convert their units into MDLY Class A Common Stock immediately prior to closing, and will receive 0.2072 shares of Sierra Common Stock for each MDLY Class A share and $2.66 per share of cash consideration. 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. Additionally, Medley LLC Unitholders will roll over 100% of their after-tax equity value into the Combined Company, which will be subject to a 12-month lock-up period, further aligning management's interests with stockholders.

At close, current Sierra stockholders 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 the Tel Aviv Stock Exchange.5  There are no expected changes to the current distribution policies of the respective entities prior to the closing of the transactions.  It is anticipated that the Combined Company will continue with Sierra's current distribution policy after the close of the transactions.

The mergers are subject to approval by Sierra, MCC and MDLY stockholders, regulatory approval, other customary closing conditions and third party consents. The Sierra-MCC merger requires court approval of the stipulation of settlement. The transactions are expected to close in the fourth quarter of 2019.

The Sierra-MCC merger agreement provides for a 60-day "go-shop" period, during which MCC's special committee and advisors may actively solicit alternative proposals and enter into negotiations with other parties. During this period, MCC will have the right to terminate the merger agreement to enter into a superior proposal. There can be no assurance this 60-day "go-shop" period will result in a superior proposal.

Sierra is a non-traded BDC that invests primarily in first lien senior secured debt, second lien secured debt and, to a lesser extent, subordinated debt of middle market companies in a broad range of industries with annual revenue between $50 million and $1 billion. Sierra's investment objective is to generate current income, and to a lesser extent, long-term capital appreciation. Sierra is externally managed by SIC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended.

MCC is a closed-end, externally managed BDC that trades on the New York Stock Exchange (MCC) and the Tel Aviv Stock Exchange (MCC). MCC's investment objective is to generate current income and capital appreciation by lending to privately-held middle market companies, primarily through directly originated transactions, to help these companies expand their businesses, refinance and make acquisitions. MCC's portfolio generally consists of senior secured first lien loans and senior secured second lien loans. MCC is externally managed by MCC Advisors LLC, which is an investment adviser registered under the Investment Advisers Act of 1940, as amended.

Medley is an alternative asset management firm offering yield solutions to retail and institutional investors. Medley's national direct origination franchise is a premier provider of capital to the middle market in the U.S. Medley has $4.7 billion of assets under management in two BDCs, MCC (MCC) (MCC) and Sierra, a credit interval fund, Sierra Total Return Fund (SRNTX), and several private investment vehicles. Over the past 17 years, Medley has provided capital to over 400 companies across 35 industries in North America.