Golub Capital BDC, Inc. · NASDAQ:GBDC
Golub Capital BDC — Merger or Acquisition (November 2018)
16 slides from Golub Capital BDC's merger presentation, November 2018
Slide 1: Overview of Proposed Merger with Golub Capital Investment Corporation
GOLUB CAPITAL BDC, INC. (“GBDC”) Overview of Proposed Merger with Golub Capital Investment Corporation (“GCIC”) CONFIDENTIAL | © 2018 GOLUB CAPITAL LLC C ONF I D E NT I A L | F OR DISC U S S I O N P URP O S E S ONL Y
Slide 2: Disclaimer
Disclaimer Some of the statements in this presentation constitute forward-looking statements, (“SEC”), including annual reports on Form 10-K, registration statements on Form which relate to future events or our future performance or financial condition. The N-2, quarterly reports on Form 10-Q and cu
Slide 3: Process for Evaluating Potential Merger with GCIC
Process for Evaluating Potential Merger with GCIC GBDC’s Board of Directors — along with its financial advisor and legal counsel — has gone through a careful, methodical process to evaluate a potential merger with GCIC and believes that it is: Good for existing stockholders Good for new stockholders
Slide 4: Summary of Transaction Key Terms
Summary of Transaction Key Terms − Stock-for-stock merger with each GCIC stockholder to receive 0.865 shares of GBDC per GCIC share Merger Structure − Combined company to continue to trade under the ticker symbol “GBDC” on the Nasdaq − $3.5 billion of assets1 − Investments in 203 portfolio companies
Slide 5: Transaction Rationale
Transaction Rationale Accretive to Net Asset Value − The contemplated transaction would be approximately 3.6% accretive to GBDC’s NAV per (“NAV”) share1 Value Creation From GBDC NAV − Potential for value creation if post-merger GBDC continues to trade at a premium to book Per Share Accretion value c
Slide 6: GCIC Overview
GCIC Overview − Commenced operations December 31, 2014 − $1.3 billion in commitments1, primarily from institutional investors including marquee pension funds, insurance companies, endowments and foundations − Intent from inception to seek a liquidity event within three to four years and to use comme
Slide 7: The Proposed Merger with GCIC is Accretive to GBDC's NAV Per Share
The Proposed Merger with GCIC is Accretive to GBDC’s NAV Per Share − GBDC is using shares valued at its closing trading price as of November 26, 2018 of $18.57 per share — a 15% premium to NAV — to acquire GCIC at a 7.05% premium to its NAV − Because the exchange ratio was fixed based on GBDC’s shar
Slide 8: GBDC Has Traded Consistently at a Premium to NAV
GBDC Has Traded Consistently at a Premium to NAV Average Price-to-NAV 1.25x GBDC BDC Industry 1 1.15x 1.15x 1.16x 1.15x 1.15x 1.14x 1.15x 1.11x 1.05x 0.96x 0.95x 0.94x 0.91x 0.91x 0.90x 0.90x 0.87x 0.85x 0.75x Current Last 3 Months Last 6 Months Last 1 Year Last 3 Years Last 5 Years Since GBDC IPO 1
Slide 9: The Combination Would Be the Fourth Largest Externally Managed, Publicly Traded BDC
The Combination of GCIC and GBDC Would Be the Fourth Largest Externally Managed, Publicly Traded BDC in the Market Total Assets $ in billions $12 12.3 $10 $8 8.1 $6 6.2 $4 3.5 $2 2.4 2.5 2.0 2.1 1.6 1.7 1.7 1.8 1.2 1.3 1.4 $0 Note: As of September 30, 2018, unless otherwise noted. 1. As of June 30,
Slide 10: Larger BDCs Generally Have Improved Trading Liquidity
Larger BDCs Generally Have Improved Trading Liquidity… 1 Month Avg. Daily Trading Volume Market Cap $ in millions $ in millions $35 $8,000 $7,000 $30 $6,000 $25 $5,000 $20 $4,000 $15 $3,000 $10 $2,000 $5 $1,000 $0 $0 Market Cap Volume 1. Pro forma market capitalization assumes application of GBDC’s
Slide 11: Broader Analyst Coverage and Greater Institutional Investor Ownership
…Broader Analyst Coverage and Greater Institutional Investor Ownership Research Analyst Coverage Institutional Investor Ownership Market Cap # of Analysts Market Cap Inst. Own. # of Inst. BDC ($ millions) Covering BDC BDC ($ millions) ($ millions) Investors Ares Capital Corporation $7,375 17 Ares Ca
Slide 12: Substantial Overlap in Highly Diversified Investment Portfolios
Substantial Overlap in Highly Diversified Investment Portfolios Diversity by Obligor GBDC GCIC Pro Forma Combined SLF Top 10 GCIC SLF SLF & GCIC SLF 4% Investments 3% 3% 20% Top 10 Top 10 Investments Investments 23% 19% Top 25 Investments Top 25 Top 25 Remaining 38% Investments Investments 174 Inves
Slide 13: Pro Forma Portfolio Remains Similar to GBDC Stand-alone
Pro Forma Portfolio Remains Similar to GBDC Stand-alone Asset Mix GBDC GCIC Combined Senior Secured, One Stop 80.2% 82.7% 81.4% 12.8% Senior Secured 13.0% 12.6% 12.8% Other Debt 0.5% 0.0% 0.3% Senior Loan Fund 4.0% 3.0% 3.5% 3.5% Senior Loan Fund Investment Equity Equity 2.3% 1.7% 2.0% One Stop 2.0%
Slide 14: Opportunity for Debt Optimization and Consolidation
Opportunity for Debt Optimization and Consolidation Debt Funding Overview • The two entities have comparable funding structures and available borrowing capacity: Majority funded by securitizations and bank facilities • Larger scale could enhance capacity to use securitizations to potentially reduc
Slide 15: Potential for Operational Synergies
Potential for Operational Synergies Operational Synergies − The merger of GBDC and GCIC offers the potential to create operating synergies due to the elimination of redundant professional services and other corporate expenses Potential Annual Operational Synergies $ in millions $12 0.7 $10 0.6 $8 $6
Slide 16: Conclusion
Conclusion The GBDC Board believes the proposed merger with GCIC creates meaningful value for GBDC stockholders − The contemplated transaction would be approximately 3.6% accretive to GBDC’s NAV per Accretive to Net Asset Value share1 Value Creation From GBDC NAV − Potential for value creation if po
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