Golub Capital BDC, Inc. · NASDAQ:GBDC
Golub Capital BDC — Merger or Acquisition (June 2019)
18 slides from Golub Capital BDC's merger presentation, June 2019
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”) JUNE 2019 CONFIDENTIAL | © 2019 GOLUB CAPITAL LLC CONF I D E NT I A L | F OR DISCU 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, This presentation contains statistics and other data that have been obtained from which relate to future events or our future performance or financial condition. The or compiled from information made availa
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 − $4.2 billion of assets1 − Investments in 215 portfolio companies
Slide 5: Transaction Rationale
Transaction Rationale Accretive to Net Asset Value − The contemplated transaction would be approximately 4.5% accretive to GBDC’s NAV per (“NAV”) share1 Value Creation From GBDC NAV − Potential for additional value creation if post-merger GBDC continues to trade at a Per Share Accretion premium to N
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 The proposed merger with GCIC would increase GBDC’s NAV per share by approximately $0.71, or 4.5%, 1 which is greater than two quarters of historical EPS − In comparison, GBDC’s follow-on offerings have averaged $0.09, or 0.6%, of NA
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 BDC Industry 1 GBDC 1.20x 1.15x 1.16x 1.14x 1.13x 1.10x 1.12x 1.12x 1.12x 1.10x 1.05x 1.00x 0.95x 0.95x 0.92x 0.93x 0.93x 0.90x 0.92x 0.90x 0.90x 0.85x 0.80x 0.75x Current Last 3 Months Last 6 Months Last 1 Year Last 3 Years
Slide 9: GBDC is Trading at a Discount to its Historical Average Premium to Pro Forma NAV
GBDC is Trading at a Discount to its Historical Average Premium to Pro Forma NAV for the Combined Company − GBDC has traded at a price-to-NAV multiple of 1.10x or greater for 96% of trading days in the last 3 years1 − Over the last 3 months, GBDC’s stock price has traded below 1.10x the pro forma NA
Slide 10: Potential for Significant Value Creation Driven By Expected NAV Accretion
Potential for Significant Value Creation Driven By Expected NAV Accretion We believe the current market environment presents a compelling opportunity to purchase GBDC stock at less than 1.10x pro forma NAV,1 a meaningful discount to GBDC’s 3-year average market price of 1.16x NAV2 GBDC Hypothetical
Slide 11: 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 $14 14.0 $12 $10 $8 7.7 $6 5.8 $4 4.2 $2 2.7 2.5 2.2 2.0 2.0 1.8 1.8 1.7 1.5 1.4 1.3 1.2 1.0 $0 ARCC FSK PSEC Pro NMFC AINV CGBD GBDC BCSF TSLX SLRC BKCC OCSL
Slide 12: 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 billions $35 $9 $8 $30 $7 $25 $6 $20 $5 $15 $4 $3 $10 $2 $5 $1 $0 $0 ARCC FSK PSEC Pro TSLX AINV NMFC GBDC BCSF CGBD SLRC BKCC GSBD OCSL BBDC PFLT PNNT forma 1 GBDC Market Cap Volum
Slide 13: Broader Analyst Coverage and Greater Institutional Investor Ownership
…Broader Analyst Coverage and Greater Institutional Investor Ownership Research Analyst Coverage Institutional Investor Ownership Market Cap # of Analysts Market Cap Inst. Own. # of Inst. BDC ($ millions) Covering BDC BDC ($ millions) ($ millions) Investors Ares Capital Corporation $7,682 15 Ares Ca
Slide 14: 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% 19% Top 10 Top 10 Investments Investments 21% 18% Top 25 Investments 37% Top 25 Top 25 Remaining Investments Investments 186 Inves
Slide 15: Pro Forma Portfolio Remains Similar to GBDC Stand-alone
Pro Forma Portfolio Remains Similar to GBDC Stand-alone Asset Mix Pro Forma GBDC GCIC Combined Senior Secured, 12.5% One Stop 80.8% 83.3% 82.1% Senior Secured 12.7% 12.3% 12.5% Senior Loan Fund Other Debt 0.5% 0.0% 0.2% 3.1% Senior Loan Fund Investment 3.7% 2.5% 3.1% Equity One Stop 2.1% Equity 2.3%
Slide 16: 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 17: Potential for Operational Synergies
Potential for 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 10.3 9.4 $4 $2 $0 GBDC
Slide 18: Conclusion
Conclusion The GBDC Board believes the proposed merger with GCIC creates meaningful value for GBDC stockholders Accretive to Net Asset Value − The contemplated transaction would be approximately 4.5% accretive to GBDC’s NAV per (“NAV”) share1 Value Creation From GBDC NAV − Potential for additional v
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