DEFA14A: MidCap Financial Investment Corporation Receives Stockholder Approval for Mergers with Apollo Senior Floating Rate Fund and Apollo Tactical Income Fund

MidCap Financial Investment Corporation (MFIC) has secured stockholder approval for its proposed mergers with Apollo Senior Floating Rate Fund Inc. (AFT) and Apollo Tactical Income Fund Inc. (AIF), while AFT and AIF have adjourned their special meetings to June 21, 2024, to allow additional voting time.

Summary

• MidCap Financial Investment Corporation (MFIC) announced that its stockholders approved the proposal related to the proposed mergers with Apollo Senior Floating Rate Fund Inc. (AFT) and Apollo Tactical Income Fund Inc. (AIF).
• AFT and AIF have adjourned their respective special meetings from May 28, 2024, to June 21, 2024, to provide stockholders with more time to vote on the merger proposals.
• At the time of adjournment, approximately 47.08% of AFT's common shares outstanding had voted in favor of the merger, requiring an additional 2.92% for approval.
• For AIF, approximately 46.02% of common shares outstanding had voted in favor, needing an additional 3.98% for approval.
• Both Institutional Shareholder Services (ISS) and Glass Lewis & CO (Glass Lewis) recommend that AFT and AIF stockholders vote FOR the merger proposals.
• The Boards of Directors of AFT and AIF unanimously recommend that stockholders vote FOR the AFT Merger Proposal.
• The record date for determining stockholders entitled to vote remains March 28, 2024.
• AFT and AIF will continue to solicit votes during the adjournment period through Broadridge Financial Solutions.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. MFIC received stockholder approval, which is good news. However, the adjournment of AFT and AIF meetings introduces uncertainty and suggests the merger is not yet assured.

Positives

• MFIC has received stockholder approval for the proposed mergers.
• Both ISS and Glass Lewis recommend voting in favor of the mergers, indicating external validation.
• The Boards of Directors of AFT and AIF unanimously recommend that stockholders vote FOR the AFT Merger Proposal.

Negatives

• AFT and AIF have had to adjourn their special meetings due to insufficient votes in favor of the mergers.
• Additional solicitation costs may be incurred due to the adjournment and continued efforts to secure votes.

Risks

• The mergers may not be completed if AFT and AIF do not receive the required stockholder approval.
• There is a risk of additional meeting adjournments and increased solicitation costs.
• Uncertainties exist regarding the ability to realize the anticipated benefits of the mergers.
• Stockholder litigation in connection with one or both of the Mergers may result in significant costs of defense and liability.

Future Outlook

The document discusses the future operating results of MFIC, AFT and AIF, and distribution projections, business prospects of MFIC, AFT and AIF, and the prospects of their portfolio companies, if applicable; and the impact of the investments that MFIC, AFT and AIF expect to make.

Management Comments

• The Board of Directors of AFT unanimously recommends that stockholders vote FOR the AFT Merger Proposal.
• The Board of Directors of AIF unanimously recommends that stockholders vote FOR the AIF Merger Proposal.
• AFT and AIF encourage any stockholder that has not yet voted to contact their broker, bank or Broadridge at 1-855-200-8397.
• The Boards of Directors of AFT and AIF respectively request stockholders vote their proxies as soon as possible to ensure that the Special Meetings can occur without further delay.

Industry Context

This announcement reflects a trend of consolidation within the investment management industry, particularly among closed-end funds seeking to enhance scale and efficiency.

Comparison to Industry Standards

• BlackRock's acquisition of Credit Suisse's ETF business is a comparable example of consolidation in the investment management space.
• Similar mergers among BDCs and closed-end funds often aim to reduce operating expenses and improve access to capital.
• The proxy advisory firms ISS and Glass Lewis recommendations are industry benchmarks for shareholder voting decisions.

Stakeholder Impact

• Shareholders of MFIC have approved the merger, potentially leading to changes in the investment portfolio and future returns.
• Shareholders of AFT and AIF will need to vote on the merger, which could impact the value and structure of their investments.
• Employees of MFIC, AFT, and AIF may experience changes in their roles and responsibilities following the merger.

Next Steps

• AFT and AIF will reconvene their special meetings on June 21, 2024.
• AFT and AIF will continue to solicit votes from stockholders during the adjournment period.
• Stockholders of AFT and AIF need to vote on the merger proposals.

Key Dates

Keywords

merger, MidCap Financial Investment Corporation, Apollo Senior Floating Rate Fund, Apollo Tactical Income Fund, stockholder vote, adjournment, proxy solicitation, investment company, BDC