Under the exchange ratio, each share of LRFC common stock was converted into the right to receive 1.500 newly issued shares of PTMN common stock, with cash paid in lieu of fractional shares. Based on share counts as of December 31, 2024, PTMN expected to issue approximately 3,983,847 (approximately 4.0 million) shares to LRFC stockholders, resulting in pro forma ownership of approximately 69.8 percent for existing PTMN stockholders and approximately 30.2 percent for existing LRFC stockholders. As of December 31, 2024, PTMN reported actual net asset value of $19.41 per share and LRFC reported $32.04 per share; on a pro forma basis, after giving effect to approximately $5.3 million of combined estimated transaction expenses and a $1.2 million tax dividend paid by LRFC, the surviving company's pro forma NAV per share was calculated at $19.52 (or $20.00 per share excluding those transaction costs and the tax dividend). The joint proxy statement/prospectus (Form 424(b)(3), filed May 13, 2025) does not disclose an aggregate dollar deal value, equity value, or enterprise value, and no EV/EBITDA, P/E or P/TBV multiple was disclosed; because both parties are BDCs regulated under the Investment Company Act of 1940, valuation was negotiated on a relative-contribution and net-investment-income accretion basis rather than a conventional operating-company multiple.
Prior to closing, LRFC was required to pay its stockholders one or more tax distributions to maintain its regulated investment company qualification, estimated at no less than $1.0 million (approximately $0.38 per share, ultimately declared at $0.38 per share on July 14, 2025). Separately, on June 17, 2025, LRFC announced that its investment adviser, Mount Logan Management LLC, agreed to finance an additional, incremental pre-closing cash payment of $0.47 per share to LRFC shareholders of record as of May 6, 2025, contingent on the closing of the merger. LRFC stated that this adviser-funded payment, combined with the $0.38 per share tax distribution and the 1.5x PTMN share exchange ratio, was designed to deliver LRFC shareholders the equivalent of 100 percent of Logan Ridge's net asset value as of March 31, 2025, adjusted for estimated transaction costs.
The joint proxy statement describes the strategic rationale considered by each company's special committee, including increased scale, enhanced portfolio diversification, lower pro forma operating expenses, acquisition of a known portfolio with significant overlap, expected accretion to net investment income per share through operational cost synergies, and potential for additional equity research coverage from a larger combined market capitalization. No specific dollar synergy figure, percentage of cost base, or phase-in timeline for cost savings was disclosed in the filings reviewed. During negotiations, Houlihan Lokey (advising the LRFC Special Committee) and Keefe, Bruyette & Woods (advising the PTMN Special Committee) discussed allocating the value of projected net-investment-income synergies between the two companies' stockholders, with the LRFC Special Committee seeking an exchange ratio that would give LRFC stockholders 35-40 percent of the expected merger benefits, while KBW's analysis for PTMN initially favored an implied exchange ratio of 1.58x-1.59x based on PTMN retaining 60 percent of the benefit; the parties ultimately agreed on a 1.500x exchange ratio. The proxy statement's background section describes that the boards of both companies had periodically discussed a potential LRFC/PTMN combination since at least March 2022, when Simpson Thacher & Bartlett LLP (on behalf of BC Partners) sought informal SEC staff guidance on structuring the deal to comply with Rule 17a-8 of the Investment Company Act of 1940, including the use of special committees and a special termination right tied to stockholder dilution; no third-party or competing bidders are described as having been considered.
The merger agreement did not disclose a termination fee payable by either party; the agreement specifies that, apart from fee-splitting arrangements described under the termination provisions, each party generally bears its own transaction expenses. The agreement contained a customary "fiduciary out" allowing either special committee to change its recommendation or terminate in favor of a superior proposal, as well as a special committee termination right tied to potential stockholder dilution under Rule 17a-8. Closing was conditioned on, among other things, stockholder approval by both companies, effectiveness of a Form N-14 registration statement, Nasdaq listing authorization for the new PTMN shares, required regulatory approvals, and the new PTMN shares being sold at a price at or above net asset value per share.
LRFC shareholders approved the merger at a special meeting held June 20, 2025, with approximately 89.4 percent of voting shareholders in favor; PTMN's special meeting, originally held the same day, was adjourned and reconvened on June 27, 2025 to allow more time for PTMN shareholders to vote on the related share issuance proposal. The merger closed on July 15, 2025, with LRFC merging into PTMN and PTMN continuing as the surviving company. Based on July 11, 2025 financial data, the combined company reported total assets in excess of $600 million. Following the closing, Portman Ridge announced it would rebrand as BCP Investment Corporation and begin trading under the new ticker symbol BCIC, transition its quarterly base distribution to a monthly payment schedule beginning in 2026 while retaining the potential for quarterly supplemental distributions (approximating 50 percent of incremental net investment income above the base), and that the company, its management, its adviser and affiliates intended to purchase up to 20 percent of the company's outstanding common stock over the following 24 months if shares continued trading below 80 percent of NAV. CEO Ted Goldthorpe said at closing, "we look forward to rebranding PTMN as BCP Investment Corporation later this summer, which will better reflect our affiliation with the broader BC Partners Credit Platform," and that the combined company would "leverage the combined company's enhanced scale, further diversified portfolio, cost savings due to lower overall operating expenses, and improved stock trading liquidity to deliver compelling risk-adjusted returns."
On the financial advisory side, Houlihan Lokey served as lead financial advisor to the Special Committee of LRFC, and Keefe, Bruyette & Woods, A Stifel Company, served as lead financial advisor to the Special Committee of PTMN. Each special committee received a fairness opinion, dated January 29, 2025, as to the fairness of the 1.500x exchange ratio from a financial point of view. On the legal side, Simpson Thacher & Bartlett LLP served as counsel to PTMN (and BC Partners) with respect to the overall transaction, Dechert LLP served as counsel to LRFC, Skadden, Arps, Slate, Meagher & Flom LLP served as counsel to the Special Committee of LRFC, and Stradley Ronon Stevens & Young, LLP served as counsel to the Special Committee of PTMN.