Terra Property Trust Inc. agreed to acquire Terra Income Fund 6 Inc. in a transaction expected to close during the third quarter, according to a May 2 news release.
The combined company will operate under the name Terra Property Trust Inc. It will remain headquartered in New York and managed by Terra REIT Advisors LLC.
The acquisition is subject to approval by the stockholders of Terra Income Fund 6 and other customary closing conditions.
Upon completion of the merger, Terra Property Trust's existing stockholders are expected to own approximately 80.2% of the combined company's common stock, while former Terra Income Fund 6 stockholders are expected to own about 19.8%.
The current executive officers of Terra Property Trust will remain in their current roles. The board of the combined company is expected to be comprised of six directors, consisting of three current directors of Terra Property Trust and three directors designated by Terra Income Fund 6.
Under the terms of the companies' merger agreement, each outstanding share of Terra Income Fund 6's common stock will be automatically canceled and converted into the right to receive 0.595 of a share, subject to adjustment, of Terra Property Trust's newly designated class B common stock and cash in lieu of any fractional class B common shares otherwise issuable.
The class B common shares issued in the transaction will have dividend, distribution and other rights identical to those of the existing Terra Property Trust common shares, except with respect to conversion. The class B common shares will automatically convert into an equal number of shares of Terra Property Trust's newly designated class A common stock on specified dates following any listing of class A common shares for trading on a national securities exchange, subject to certain conditions.
If the merger is terminated under specified circumstances, Terra Income Fund 6 will be required to pay Terra Property Trust a termination fee of approximately $2.6 million, with a lower fee of about $1.1 million to be paid upon termination by Terra Income Fund 6 to enter into a definitive agreement within 60 days of execution of the merger agreement with an entity that submits a qualified acquisition proposal within 30 days of the execution of the merger agreement.
Keefe Bruyette & Woods Inc. rendered a fairness opinion and Alston & Bird LLP is the legal adviser to the special committee that negotiated the merger agreement on behalf of Terra Property Trust. Robert A. Stanger & Co. Inc. is the exclusive financial adviser and Venable LLP is the legal adviser to the special committee that negotiated the merger agreement on behalf of Terra Income Fund 6.
