The boards of Kayne Anderson MLP Investment Co. and Kayne Anderson Energy Development Co. have approved a proposal to merge the two companies.
Under the merger agreement, subject to stockholder approval, Kayne Anderson Energy Development's common stockholders will be issued Kayne Anderson MLP Investment common stock, and Kayne Anderson MLP Investment will acquire substantially all the assets and liabilities of Kayne Anderson Energy Development.
The exchange ratio will be based on the relative net asset values per share of each company immediately prior to the closing of the merger.
The merger is expected to be completed in the fiscal quarter ending in August 2018. The merger is expected to qualify as a tax-free reorganization for federal income tax purposes, so it is not expected to be taxable to stockholders of either company.
The merger is expected to be accretive to Kayne Anderson MLP Investment's net distributable income and result in increased pro forma distribution for Kayne Anderson Energy Development shareholders. The transaction is also projected to generate cost savings through the reduction of duplicative fixed expenses and a reduction in variable expenses, including management fee waivers agreed to by KA Fund Advisors LLC.
Kayne Anderson MLP Investment said it is changing its name to Kayne Anderson MLP/Midstream Investment Co.
The company also announced that it intends to pay a distribution at its current annualized rate of $1.80 per share over the next 12 months and will continue to pay distributions on a quarterly basis until the merger closes and intends to begin paying distributions on a monthly basis shortly thereafter.