Business Context and Reporting Period
This Form 8-K, filed on June 18, 2026, reports on events occurring on June 17, 2026. Chicago Atlantic BDC, Inc. ("LIEN") entered into a definitive Agreement and Plan of Merger with Chicago Atlantic Real Estate Finance, Inc. ("REFI"). Under the agreement, REFI will merge with and into LIEN, with LIEN surviving as a regulated investment company (RIC). Prior to the merger, REFI will elect to be taxed as a business development company (BDC).
Key Financial Metrics and Transaction Terms
The filing details the structure of the merger rather than standard operating financial metrics for a specific reporting period.
- Merger Consideration: REFI shareholders will receive LIEN common stock based on an "Exchange Ratio." This ratio is calculated as the net asset value (NAV) per share of REFI divided by the NAV per share of LIEN, determined no earlier than 48 hours prior to the closing.
- Fractional Shares: Shareholders entitled to fractional shares will receive cash based on the volume-weighted average trading price of LIEN stock over five trading days preceding the closing.
- Transaction Costs: Fees and expenses (excluding printing and SEC filing fees) are split 50/50 between LIEN and REFI. REFI Manager will pay $2,000,000 of REFI's share. Printing and SEC filing fees are shared with LIEN paying the first $200,000, REFI the next $150,000, and the remainder split evenly.
- Share Repurchase Program: The LIEN Board agreed to consider a share repurchase program of up to $25 million to be implemented post-closing.
- Support Agreements: Key stockholders have agreed to vote in favor of the transaction, covering approximately 12.9% of LIEN's outstanding shares and 4.8% of REFI's outstanding shares.
Material Changes and Strategic Shifts
The primary material change is the proposed consolidation of two related entities under a single BDC structure.
- Structural Change: REFI will transition from a Real Estate Investment Trust (REIT) to a BDC prior to the merger.
- Management Alignment: REFI's management agreement with its external manager will terminate upon the BDC election. A new investment advisory agreement with LIEN's adviser will be adopted for REFI until the merger closes.
- Tax Dividends: REFI is required to declare and pay "Tax Dividends" prior to the BDC election to eliminate accumulated earnings and profits and reduce taxable income to zero for its final REIT year.
- Board Composition: The surviving company's board will include three independent directors from REFI and two from LIEN.
Guidance, Outlook, and Risks
The filing outlines the conditions required for the transaction to close and highlights significant risks associated with the merger.
- Conditions to Closing: The merger requires stockholder approval from both companies (including specific "Requisite Votes" excluding affiliated shares), SEC effectiveness of the registration statement, Nasdaq listing authorization, and a tax opinion confirming the transaction qualifies as a tax-free reorganization.
- Timeline: The agreement may be terminated if the merger is not consummated by June 30, 2027.
- Key Risks:
- Failure to obtain regulatory approvals or stockholder votes.
- Integration challenges and potential loss of key personnel.
- Tax risks, including the possibility that the merger does not qualify as a tax-free reorganization or that REFI fails to maintain REIT status through closing.
- Liquidity risks regarding the payment of required Tax Dividends by REFI.
- Changes in the Exchange Ratio due to fluctuations in NAV between signing and closing.
Investor Verification Checklist
- Verify the final Exchange Ratio once the Closing NAVs are calculated and certified.
- Confirm the outcome of the stockholder votes for both LIEN and REFI, specifically ensuring the "Requisite Vote" thresholds are met.
- Monitor the effectiveness of the Form N-14 Registration Statement and the Form N-54A BDC Election.
- Review the Joint Proxy Statement/Prospectus for detailed financial data on both entities and the specific terms of the Tax Dividends.
- Assess the likelihood of the $25 million share repurchase program being adopted and its terms.