By GlobeNewswire, October 04, 2013, 08:50:00 AM EDT
Transaction Subject to Buyer Financing and Other Closing Conditions
PURCHASE, N.Y., Oct. 4, 2013 (GLOBE NEWSWIRE) -- MVC Capital, Inc. (NYSE:MVC) (the "Fund"), a publicly traded business development company that makes private debt and equity investments, announced today that an agreement has been reached to sell U.S. Gas & Electric, Inc. ("USG&E" or the "Company"), MVC's largest portfolio holding, to United States Gas & Electric Holdings, Inc. ("US Holdings"), a holding company primarily owned by Mr. Louis Beck, Mr. Lance T. Shaner and members of the management of USG&E.
The transaction, which is subject to regulatory approvals and various other closing conditions, including US Holdings successfully obtaining significant third-party financing, is expected to close by October 31, 2013. Upon satisfaction of the closing conditions, including establishment of an escrow, MVC expects to receive gross proceeds of approximately $97.2 million for its equity investment, resulting in a realized gain of approximately $96.7 million1 based upon a $500,000 equity investment made in August 2007. As of July 31, 2013, MVC's equity investment in the Company was valued at $92.7 million. In addition to the equity proceeds and upon closing, USG&E will also retire an approximate $10.2 million second lien loan previously provided by MVC. Since October 2012, MVC has received distributions from USG&E of approximately $10 million.
Upon completion of the transaction, equity proceeds are expected to be paid to MVC in three installments over a 13-month period, secured by a standby letter of credit. The first installment payment is anticipated to be made by October 31, 2013. Assuming the transaction closes, MVC anticipates that its quarterly dividends, subject to Board approval, could materially increase.
"We are pleased to announce this agreement which potentially represents a significant step in the implementation of our yield-focused strategy and will work diligently to close the transaction on the given timetable," said Michael Tokarz, Chairman and Portfolio Manager of MVC Capital.
About U.S. Gas & Electric
U.S. Gas & Electric, its subsidiaries and family of companies ("USG&E") is a leading retail energy supplier to commercial and residential customers in Connecticut, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, and Pennsylvania. USG&E provides energy to customers with wide ranges of energy usage patterns and requirements and gives them the benefit of being a part of a large wholesale buying pool.
About MVC Capital, Inc.
MVC Capital, Inc. is a business development company traded on the New York Stock Exchange that provides long-term debt and equity investment capital to fund growth, acquisitions and recapitalizations of companies in a variety of industries.
The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, including: the ability to obtain governmental approvals of the USG&E transaction or to satisfy other closing conditions to the transaction on the proposed terms and timeframe; MVC Capital's ability to execute its investment strategy; the performance of MVC Capital's investments; and changes in economic or financial market conditions and other factors that are enumerated in the company's periodic filings with the Securities and Exchange Commission. MVC Capital disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release.
There can be no assurance that future MVC dividend payments will match or exceed historic ones, or that they will be made at all. The ability of MVC to pay dividends in any period, and their timing and amount, will depend upon factors including applicable provisions of law and the final determination by the Board of Directors. There is also no assurance as to the specific tax characterization of any dividend distribution to be made by the Fund.
1 The anticipated $96.7 million equity gain assumes the full receipt of all proceeds scheduled to be released after 13 months from the closing of the transaction, including all amounts deposited in escrow established pursuant to the agreement.
CONTACT: For MVC Capital, Inc.
Jackie RothchildMVC Capital
Jeffrey Goldberger / Garth RussellKCSA Strategic Communications
212-896-1249 / 212-896-1250
Nathaniel Garnick / Patrick ScanlanSard Verbinnen & Co
For U.S. Gas & Electric, Inc.Doug Marcille
President & CEO
Source: MVC Capital