Ameritrans Capital Corporation (NASDAQ: AMTC, AMTCP), a business
development company, today announced that an affiliate of Columbus
Nova, LLC, Renova US Holdings, Ltd. (“Renova”), has agreed to
purchase a majority stake in Ameritrans Capital Corporation
(“Ameritrans” or the “Company”) as part of a $65 million equity
investment plan to enable the Company to grow its business of
lending to middle-market companies.
Pursuant to the definitive stock purchase agreement relating to
the equity investment, Renova will initially purchase $25 million
of shares of common stock of Ameritrans for the greater of $1.80
per share and the then-prevailing per share net asset value of
Ameritrans. Following the closing of the initial equity investment,
Renova will own approximately 80.3% of the Company's common equity
on a pro forma basis. It is anticipated that subsequent to the
investment the Company will effect a reverse stock split of
approximately 10 shares to one new share. (All amounts in this
press release have not been adjusted for any potential reverse
stock split.)
Renova is also committed to purchase up to an aggregate of $40
million of additional common stock in equal quarterly amounts over
the two year period subsequent to the initial closing. The per
share purchase price for such additional purchases will be the
greater of $1.80 and the then-prevailing per share net asset value
of Ameritrans. The gross additional amount of common stock that
Renova has committed to purchase will be subject to reduction to
the extent the purchases are made prior to their scheduled
quarterly dates and would equal $35 million if the full amount were
funded on the initial closing date. Pro forma for the issuance of
the additional shares of common stock, Renova will own
approximately 91.4% of the Company's common equity following the
purchase of all additional shares (assuming the full $40 million of
shares are acquired and no additional shares are issued prior to
such issuances other than pursuant to the transaction).
The Company will promptly apply the proceeds of the initial
closing, after repayment of the $1.5 million Senior Secured Note
issued by the Company in January 2011 and payment of
transaction-related expenses, to an investment by the Company in
its SBIC subsidiary, Elk Associates Funding Corporation. This
amount is intended to be invested by the Company together with
expected future borrowings in an expanded middle market lending
program.
Under the terms of the stock purchase agreement and subject to
approval by the Company's stockholders, Ameritrans Capital
Management LLC an affiliate of Columbus Nova, will replace Velocity
Capital Advisors as the Company's external investment advisor. The
Company believes that the terms and conditions of the investment
advisory and management agreement with Ameritrans Capital
Management LLC, are fair to the Company and consistent with fees
charged by other investment advisors for similar services.
It is currently anticipated that after Renova makes this
investment, the Company's Chief Executive Officer, Chief Financial
Officer and Executive Vice President, will continue in their
current positions. Columbus Nova’s investment professionals will
supplement Ameritrans’ own investment capabilities in the
management of the Company’s corporate lending program.
Upon the initial closing, the Company's Board of Directors will
be expanded from nine to eleven members, five of which will be
individuals currently serving on the Board and six of which will be
individuals designated by Renova. The Company anticipates that it
will continue to maintain a presence in both New York City and
Jericho, NY.
"Since the 2009 calendar year, Company management and our Board
have performed a lengthy review of numerous strategic and financing
options for addressing the Company’s capital needs while maximizing
stockholder value. We believe that this transaction positions
Ameritrans to pursue its middle market lending strategy and
provides a strong capital base to pursue growth" said Michael
Feinsod, Chairman and Chief Executive Officer of Ameritrans Capital
Corporation.
Andrew Intrater, Chief Executive Officer of Columbus Nova, said,
"This new partnership not only cures the existing capital issues
for Ameritrans, but it will also put the Company on a trajectory
for growth and profitability. The Company can now get back to the
business of lending to companies poised to grow as the economy
recovers."
In addition to customary closing conditions, the closing of the
initial equity investment and related transactions is subject to
regulatory approval and the approval of the Ameritrans Capital
Corporation shareholders.
Certain affiliates of Ameritrans Capital Corporation have
entered into a voting and support agreement with Columbus Nova and
have agreed, subject to the terms and conditions set forth in such
agreement, to vote a minimum of approximately 41% of the
outstanding voting stock of Ameritrans Capital Corporation common
stock in favor of the transactions contemplated by the stock
purchase agreement.
The Company intends to hold a special stockholder meeting as
soon as practicable to secure stockholder approval of the
transaction.
A more in-depth discussion of the transaction can be found in
the Company's Current Report on Form 8-K filed in connection with
the execution of the stock purchase agreement and will be found in
the Company's proxy statement to be filed with the Securities and
Exchange Commission.
Daroth Capital Advisors originated the transaction and served as
financial advisor to Ameritrans Capital Corporation in connection
with the transaction. Duff and Phelps LLC has issued a fairness
opinion letter to the Board of Directors of the Company. Katten
Muchin Rosenman LLP served as Ameritrans’ legal counsel in
connection with the transaction, and Richards, Layton & Finger,
P.A. served as Ameritrans' legal counsel on Delaware law
matters.
Latham & Watkins LLP served as Columbus Nova's legal counsel
in connection with the transaction.
About Ameritrans Capital
Corporation
Ameritrans Capital Corporation is an internally managed,
closed-end investment company that has elected to be regulated as a
business development company (BDC) under the Investment Company Act
of 1940, as amended. Ameritrans originates, structures and manages
a portfolio of secured business loans and selected equity
securities. Ameritrans' wholly owned subsidiary Elk Associates
Funding Corporation was licensed by the United States Small
Business Administration as a Small Business Investment Company
(SBIC) in 1980.
About Columbus Nova
Columbus Nova is a privately held investment management firm
headquartered in New York and manages over $10 billion in assets
through its direct funds and controlled entities. The firm has a
broad investment mandate which allows Columbus Nova to invest
through its managed vehicles across all levels of the capital
structure, from senior secured debt to common equity. The company
takes a value-oriented, long-term view to investing and seeks
consistent returns with an emphasis on capital preservation. Bounty
Investments, LLC, a Delaware company, and Renova, a Bahamian
company, are both managed by Columbus Nova.
Forward Looking Statements
This press release may contain certain forward-looking
statements, including statements with regard to the proposed common
stock purchase and debt financing transactions and other actions
described in this press release, including the potential reverse
stock split. Words such as "intends," "believes," "expects,"
"projects," and "future" or similar expressions are intended to
identify forward-looking statements. These forward-looking
statements are subject to risks and uncertainties, including the
satisfaction of the conditions of the proposed transactions on the
proposed timeframe or at all, and other factors enumerated in the
filings Ameritrans Capital Corporation makes with the SEC.
Ameritrans Capital Corporation undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
Additional Information and Where to Find
It
In connection with the proposed transactions and actions
described in this press release and required stockholder approval,
Ameritrans Capital Corporation will file with the SEC a preliminary
proxy statement and a definitive proxy statement. The proxy
statement will be mailed to the stockholders of Ameritrans Capital
Corporation. Ameritrans Capital Corporation's stockholders are
urged to read the proxy statement and other relevant materials when
they become available because they will contain important
information about the proposed transactions and actions. Investors
and security holders may obtain free copies of these documents
(when they are available) and other documents filed with the SEC at
its web site at www.sec.gov.
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