Medley Management Inc · OTC:MDLM
Medley Management — Merger or Acquisition (January 2019)
23 slides from Medley Management's merger presentation, Jan 18, 2019
Slide 1: Stronger Together: Sierra Income Corporation Merger Overview
Stronger Together Sierra Income Corporation Merger Overview January 2019
Slide 2: Forward-Looking Statements
2 This presentation contains “forward - looking” statements, including statements regarding the proposed transactions. Such forward - looking statements reflect current views with respect to future events and financial performance, and each of Sierra Income Corporation (“Sierra”), Medley Capital Cor
Slide 3: Important Information and Where to Find It
3 Important Information and Where to Find It In connection with the proposed transactions, Sierra has filed with the SEC a Registration Statement on Form N - 14 that includes a joint proxy statement ( collectively, the “Joint Proxy Statement/Prospectus”) of Sierra, MCC, and MDLY . The Joint Proxy St
Slide 4: 1. Transaction Summary
4 1. Transaction Summary
Slide 5: Key Transaction Highlights
5 The combination of Sierra Income Corp. (“Sierra”), Medley Capital Corp. (“MCC”) and Medley Management Inc. (“MDLY”) will create a leading, publicly traded internally managed BDC Key Transaction Highlights Source: Management , Joint Proxy Statement/Prospectus, MDLY 10 - Q 1. SNL Financial as of Jan
Slide 6: Transaction Benefits for Sierra Shareholders vs. Status Quo
6 Transaction Benefits for Sierra Shareholders vs. Status Quo Expected Key Benefits of Completing Transaction x Increase in distributions to Sierra shareholders x Accretion to NII and NAV Per Share x Improved corporate governance through internalization of management x Potential upside to future val
Slide 7: Transaction Summary
7 Transaction Summary Source: Joint Proxy Statement/Prospectus 1. Estimates of Sierra’s post - merger financial position are based on the publicly reported financial information of Sierra, MCC and MDLY as of September 30, 2018 in the Joint Proxy Statement/Prospectus. 2. Regulatory Leverage as calcul
Slide 8: Review of Independent Decision Framework
8 Review of Independent Decision Framework x Three Special Committees were formed and consisted solely of independent directors x Three independent financial advisors provided their respective Special Committee with independent advice and a fairness opinion x Three independent law firms with deep in
Slide 9: Independent Special Committees and Advisors
9 Independent Special Committees and Advisors MDLY Sierra MCC Special Committees of Independent Directors • Oliver T. Kane (Chair) • Stephen R. Byers • Valerie Lancaster - Beal • Arthur Ainsberg (Chair) • Karin Hirtler - Garvey • John Mack • Mark Lerdal • Jeffrey Leeds (Chair) • Guy Rounsaville • Ja
Slide 10: Key Corporate Governance Highlights
10 Key Corporate Governance Highlights Source: Management, Joint Proxy Statement/Prospectus The Combined C ompany will feature improved corporate governance and management aligned with shareholders x Board composition consistent with industry best practices - greater independence ( 5 out of 6 direct
Slide 11: 2. Medley Platform
11 2. Medley Platform
Slide 12: Medley Platform Overview
12 Medley Platform Overview Source: Management, MDLY 10 - Q Note: As of September 30, 2018. Structured Credit Tactical Opportunities Direct Lending • Lending solutions for private, middle market companies in the U.S. • National direct origination franchise • Medley leads origination , underwriting a
Slide 13: Results Since 2015
13 • Results have been strong - New origination post 2015 has experienced 0.02% of annualized realized losses 1 - Two non - accruals out of 113 loans originated since the beginning of 2015 2 - Since 2015, Medley has raised over $1.5 billion of capital across the platform from leading global institut
Slide 14: Continued Focus on Senior Lending – Portfolio Shift
14 63% 32% 5% 93% 5% 2% 75% 25% Continued Focus on Senior Lending – Portfolio Shift Sponsored vs. Non - Sponsored 1 Source: Management Note: Past performance is not indicative of future results. For information about past performance prior to 2015 and since inception, see the public filings for Sier
Slide 15: Continued Focus on Senior Lending – Portfolio Performance
15 1.37 % 0.03 % 2014 Vintage and Earlier 2015 Vintage and Later 2.05 % 0.02 % 2014 Vintage and Earlier 2015 Vintage and Later Sierra IRR 1 Combined Company IRR 1 Sierra Annualized Loss Rate 2 Combined Company Annualized Loss Rate 2 Continued Focus on Senior Lending – Portfolio Performance Source: M
Slide 16: Improved Senior Secured Asset Mix and Industry Diversification
16 13% 10% 10% 7% 6% 5% 5% 4% 4% 4% 32% Services: Business High Tech Industries Healthcare & Pharmaceuticals Construction & Building Aerospace & Defense Banking, Finance, Ins & RE Energy: Oil & gas Wholesale Automotive Adv, Printing & Publishing Other (Includes 18 Industries) 75% 11% 4% 10% First Li
Slide 17: 3. Transaction Benefits
17 3. Transaction Benefits
Slide 18: Expected Accretion to Shareholders
18 $ 0.50 $ 0.58 $ 0.64 $ 0.66 Standalone 2019E Sierra NII Per Share PF 2019E Sierra NII Per Share Sierra Sep-2018 Annualized Distribution Per Share Pro Forma Sierra Distribution Per Share 3 .1% Expected Accretion to Shareholders Source: Joint Proxy Statement/Prospectus, Management. Sierra, MCC and
Slide 19: Potential Valuation Uplift from Internally-Managed Structure
19 Potential Valuation Uplift from Internally - Managed Structure Source: Bloomberg, Capital IQ and IBES as of January 2, 2019 1. Historical trading of internally managed BDCs is not necessarily indicative of how the Combined Company will trade. There ca n be no assurances as to how the Combined Com
Slide 20: Transaction Results in Increased Scale
20 Transaction Results in Increased Scale Transaction would create the 2nd largest internally managed and the 9th largest publicly traded BDC Source: SNL Financial, Company Filings, Joint Proxy Statement/Prospectus Note: Market data as of January 2, 2019. Financial data as of September 30, 2018. 201
Slide 21: Offer Opportunity for Enhanced Liquidity
21 $ 0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $ 0 $3 $5 $8 $10 $13 $15 $18 $20 $23 $25 $28 $30 $33 $35 $38 $40 $43 CPTA MCC MRCC TCRD OCSI SUNS TPVG FDUS GAIN BKCC PFLT OCSL GSBD TCPC CGBD SLRC AINV Pro Forma NMFC GBDC HTGC TSLX MAIN PSEC ARCC Market Capitalization 1 Month Avg. Daily Tradi
Slide 22: Combined Company Well-Positioned for a Rising Rate Environment
22 Combined Company is Well - Positioned for a Rising Rate Environment Pro Forma Combined Company NII increases by $6.7 million with every 100 bps increase in the base rate 1 Basis Point Change Pro Forma NII Change ($) (%) 2 + 100 $ 6.7 9.9% + 200 13.4 19.8 + 300 20.1 29.7 + 400 26.8 39.6 + 500 33.5
Slide 23: Key Transaction Highlights
23 The combination of Sierra, MCC and MDLY will create a leading, publicly traded internally managed BDC Key Transaction Highlights Source: Management , Joint Proxy Statement/Prospectus, MDLY 10 - Q 1. SNL Financial as of January 2, 2019. 2. Estimates of Sierra’s post - merger financial position are
Medley Management — Merger or Acquisition (January 2019) on 6ix