Carlyle Secured Lending(US:CGBD)2024-08-05 10:04Merger Agreement Details - The merger agreement involves Carlyle Secured Lending III, Carlyle Secured Lending, Inc., and Blue Fox Merger Sub, Inc., with an effective date of August 2, 2024[5]. - The agreement outlines the conversion of capital stock and beneficial interest as part of the merger process[1]. - CSL III Advisor and Carlyle Global Credit Investment Management L.L.C. are included as advisors for specific sections of the agreement[5]. - The merger will include conditions precedent that must be satisfied for the first merger to take effect[4]. - There are provisions for termination and amendment of the agreement, including a termination fee[4]. - The agreement specifies the obligations of each party to effectuate the merger, including compliance with applicable laws[3]. - The agreement includes provisions for regulatory matters and stockholder approval[3]. - The merger is structured to ensure no dilution of interests for existing stakeholders[3]. - The agreement emphasizes the importance of maintaining compliance with governmental consents and permits[3]. - CSL III and CSL will undergo a two-step merger process, with CSL III merging into Merger Sub first, followed by CSL III merging into CSL[6]. - The Board of Trustees of CSL III unanimously determined that the merger is advisable and in the best interests of CSL III and its shareholders, ensuring no dilution of existing shareholders[6]. - The First Merger will result in CSL III continuing as a statutory trust under Delaware law, with Merger Sub ceasing to exist[8]. - At the Effective Time, each share of Merger Sub will convert into one share of the Surviving Company, while CSL III Common Shares owned by CSL will be cancelled[11]. - The Exchange Ratio for CSL III Common Shares will be adjusted if there are changes in the number of shares due to stock splits or similar transactions prior to the Effective Time[14]. - CSL Preferred Stock will be exchanged for CSL Common Stock based on the aggregate liquidation preference divided by the Closing CSL Net Asset Value[17]. - The Second Merger will see the Surviving Company merge into CSL, with CSL continuing as the surviving entity under Maryland law[19]. - The charter and bylaws of CSL will remain in effect post-merger until amended according to applicable laws[21]. - The directors and officers of Merger Sub will become the trustees and officers of the Surviving Company after the First Merger[23]. - CSL will appoint a Paying and Exchange Agent to manage the exchange of shares and cash for fractional shares post-merger[25]. Financial Statements and Compliance - The consolidated financial statements of CSL III and the SPV fairly present the consolidated results of operations and financial position as of December 31, 2023, in accordance with GAAP[50]. - As of December 31, 2023, CSL III has no liabilities that would need to be reflected in the balance sheet, except for those disclosed in SEC reports[51]. - CSL III's internal controls over financial reporting were assessed as effective as of December 31, 2023, in compliance with the Sarbanes-Oxley Act[54]. - The fair value of CSL III's investments as of June 30, 2024, was determined in accordance with ASC Topic 820, reflecting a reasonable estimate[57]. - CSL III has not received any material non-compliance notifications from governmental entities that would adversely affect its operations[60]. - There have been no material changes or adverse effects on CSL III's business since December 31, 2023[59]. - CSL III has maintained compliance with its investment policies and restrictions as set forth in its registration statement[61]. - No material compliance matters have been reported for CSL III that would reasonably be expected to have a material adverse effect[62]. - CSL III has timely filed all required SEC reports since January 1, 2022, with no material adverse effects expected[47]. - CSL III has declared and paid a Tax Dividend for all taxable years ended prior to the Effective Time[68]. - CSL III has good title to all securities and financial instruments owned, with qualifying investments exceeding 70% of total assets[82]. - There are no material liens for Taxes on CSL III or SPV's assets, and no claims have been made by taxing authorities regarding taxation in jurisdictions where they do not file Tax Returns[73][70]. - CSL III has not utilized any brokers or incurred liabilities for broker's fees in connection with the mergers or transactions, except for KBW[58]. - CSL III has timely filed all material Tax Returns and paid all material Taxes due, with no material disputes pending with the IRS[67]. - CSL III has qualified as a regulated investment company (RIC) since the beginning of its taxable year ended December 31, 2022, and expects to maintain this status[68]. Corporate Governance and Board Decisions - The CSL III Board has unanimously approved the Agreement and determined it to be in the best interests of CSL III and its shareholders[43]. - CSL's Board has unanimously approved the merger agreement, determining it to be in the best interests of the company and its stockholders[94]. - CSL's independent public accountant has not resigned or been dismissed due to disagreements on accounting principles or practices[102]. - The principal executive and financial officers of CSL have made all required certifications under the Sarbanes-Oxley Act, confirming compliance[107]. - CSL has designed and maintained a system of disclosure controls to ensure timely and accurate reporting of financial information[108]. - There have been no material changes in CSL's business operations since December 31, 2023, indicating stability[111]. - CSL's board has approved the CSL Matters and will submit them to stockholders for approval, including the issuance of shares as Merger Consideration[181]. Tax and Regulatory Matters - No governmental consents are necessary for the consummation of the First Merger and other Transactions, except for specific SEC filings[45]. - CSL has complied with all applicable laws and regulations, including the Investment Company Act and the Securities Act, without any material non-compliance issues reported[113]. - CSL has filed all material tax returns accurately and timely, with no material disputes pending regarding taxes[120]. - CSL has not been a member of any consolidated tax group other than those where CSL is the common parent[128]. - There are no material liens for taxes on CSL's assets, and all material insurance policies are in full force and effect[128][132]. Advisor and Financial Considerations - The financial advisor has opined that the Exchange Ratio in the First Merger is fair from a financial perspective to CSL III Common Shareholders[85]. - The CSL Special Committee received a fair opinion from Raymond James regarding the Exchange Ratio in the agreement[139]. - The Advisor believes that participation in the Mergers is in the best interests of CSL III and CSL, with no dilution expected for existing shareholders[154]. - The Advisor has the necessary financial resources to fulfill its obligations as outlined in the Registration Statement and Proxy Statement[154]. - CSL III and CSL have made representations and warranties that are true and correct in all material respects, except as previously disclosed[155]. Operational Restrictions and Commitments - CSL III will conduct its business in the ordinary course and maintain existing business relationships until the Effective Time[156]. - CSL III will not issue new shares or make significant changes to its capital structure without prior written consent from the CSL Special Committee[157]. - CSL III is prohibited from acquiring assets or making new capital expenditures outside of ordinary business operations[159]. - CSL will maintain its qualification as a RIC and avoid actions that could jeopardize this status during the agreement period[168]. - CSL will not incur any new indebtedness for borrowed money except for previously disclosed financing arrangements and permitted indebtedness[170]. - CSL will not enter into any new line of business that is not consistent with past practices or ordinary course of business[171]. - CSL will not settle any proceedings exceeding $1,000,000 in the aggregate unless settled in the ordinary course of business[173]. Takeover Proposals and Confidentiality - CSL III and CSL are required to cease any discussions regarding Takeover Proposals and return all confidential information related to such proposals[188]. - CSL must notify CSL III within 24 hours of receiving any Takeover Proposal, including the material terms and identity of the proposing party[189]. - If CSL receives a bona fide unsolicited Takeover Proposal, it may engage in negotiations after providing CSL III with a two-day notice[191]. - The CSL Special Committee must determine that a Takeover Proposal is a CSL Superior Proposal before CSL can consider it[194]. - CSL is obligated to provide CSL III with a written notice detailing any CSL Superior Proposal within 24 hours of such determination[194]. - Any changes to the CSL Recommendation must be communicated to CSL III, and no adverse changes can occur without prior notice[195]. - CSL must allow reasonable access to its properties and records for CSL III during the period prior to the Effective Time[200]. - Confidentiality obligations may restrict the disclosure of certain information during the negotiation process[200].