Skip to content

AR Capital’s BDCA to be Acquired by Benefit Street

Business Development Corporation of America, a publicly registered non-traded business development company sponsored by AR Global Investments – the successor business to AR Capital, is proposing a strategic transaction with a subsidiary of Benefit Street Partners.

Benefit Street is the credit investment arm of Providence Equity Partners and has more than $12 billion in assets under management. The firm co-sponsored the Griffin-Benefit Street Partners BDC, which closed earlier this year. Providence Equity Partners is a global private equity and credit investment firm with $45 billion in assets under management.

Although specific terms of the potential sale have yet to be disclosed, American Realty Capital II Advisors LLC entered into a membership interest purchase agreement with Benefit Street subsidiary, BSP Acquisition I LLC to sell 100 percent of the issued and outstanding membership interests in the company’s investment adviser, BDCA Adviser LLC.

A special committee of independent directors is currently evaluating the proposed transaction, which is still subject to stockholder approval.

If the transaction is consummated, Benefit Street will recommend four additional independent directors to expand the company’s board, which currently has three independent directors. In addition, they are seeking to replace existing insider directors with Thomas Gahan and/or Richard Byrne, chief executive officer and president of Benefit Street, respectively.

Benefit Street also proposed to maintain the terms of the company’s existing advisory agreement, and to commit to an investment in the company at current net asset value.

BDCA was the focus of a proxy fraud scandal late last year. Its then-sponsor, AR Capital, and dealer manager, Realty Capital Securities, were also involved in a series of scandals which led to the termination of all AR Capital-sponsored investment programs and an agreement by RCS to terminate its business.

BDCA invests primarily in first and second lien senior secured loans and mezzanine debt issued by middle market companies. The company’s portfolio is comprised of $2.3 billion in directly-owned investments, since the last quarterly filing with the Securities and Exchange Commission. The company commenced its initial public offering in January 2011 and raised $1.9 billion before closing the offering in April 2015. The annualized yield for distributions was 7.78 percent based on its then public offering price of $11.15 per share.

Click here to visit The DI Wire directory page.