Business Context and Reporting Period
This Form 8-K, filed on July 23, 2018, reports on events occurring on July 19, 2018, and July 22, 2018, for FS Investment Corporation (FSIC), a Maryland corporation. The filing primarily announces the entry into a definitive merger agreement with Corporate Capital Trust, Inc. (CCT) and the approval of an amendment to FSIC's bylaws.
Key Financial Metrics
This filing is a current report regarding corporate governance and a material definitive agreement; it does not contain periodic financial statements. Consequently, specific values for revenue, profit, cash flow, margins, debt, and liquidity are not provided in this document.
Material Changes and Transaction Details
- Merger Agreement: On July 22, 2018, FSIC entered into an Agreement and Plan of Merger with CCT. The transaction involves a two-step merger where a subsidiary of FSIC merges with CCT, followed by CCT merging into FSIC.
- Exchange Ratio: The exchange ratio will be determined at closing based on the net asset value (NAV) per share of CCT divided by the NAV per share of FSIC, calculated no earlier than two business days prior to closing.
- Termination Fees: The agreement includes a termination fee of approximately $75.2 million payable under certain circumstances, such as a change in recommendation by the boards or failure to close by July 22, 2019.
- Bylaw Amendment: On July 19, 2018, FSIC amended its bylaws to designate the Circuit Court for Baltimore City, Maryland, or the U.S. District Court for the District of Maryland as the exclusive forum for specific corporate governance claims.
Guidance, Outlook, and Risks
Outlook and Timing: The consummation of the merger is currently anticipated to occur during the fourth quarter of 2018. The transaction is intended to be treated as a tax-free reorganization under Section 368(a) of the Internal Revenue Code.
Conditions to Closing: The merger is subject to several conditions, including stockholder approvals from both FSIC and CCT, the absence of legal impediments, effectiveness of the registration statement for FSIC stock, and required regulatory approvals (including the expiration of the Hart-Scott-Rodino waiting period).
Risks and Contingencies: Forward-looking statements in the filing highlight risks such as failure to obtain stockholder approval, failure to consummate the transaction, unexpected costs, and general economic uncertainties. The filing explicitly states that the Merger Agreement is not a complete description of the parties' businesses and includes standard disclaimers regarding representations and warranties.
Investor Verification Checklist
- Verify the final Exchange Ratio once the NAVs are calculated near the closing date.
- Confirm the status of stockholder approvals for both FSIC and CCT.
- Review the full text of the Merger Agreement (Exhibit 2.1) for detailed covenants and termination rights.
- Monitor the Proxy Statement for additional details on the business combination and participant disclosures.
- Check for any regulatory approvals required under the Hart-Scott-Rodino Act.