Hercules Announces Special Meeting of Stockholders to Approve an Investment Advisory Agreement With Hamilton Advisers LLC
May 03 2017 - 4:04PM
Business Wire
Hercules Capital, Inc. (NYSE: HTGC) (“Hercules” or the
“Company”), today announced that it has filed preliminary proxy
materials with the Securities and Exchange Commission for a special
meeting of shareholders to seek approval for a proposed advisory
agreement with Hamilton Advisers LLC ("Hamilton"). Hamilton
has been organized by Manuel A. Henriquez, Hercules' Chairman,
Chief Executive Officer, President and co-founder to act as the
external adviser of Hercules.
“We intend for all of our existing management and personnel of
Hercules to join Hamilton, so shareholders of Hercules will
continue to be served by the same team that has made Hercules the
leading provider of specialty finance to venture growth, pre-IPO
and M&A stage companies," said Mr. Henriquez. "Because of the
continuity of our team, we do not expect Hercules' distribution
rate or investment performance to be adversely impacted by
externalization.”
Henriquez added, “We believe that in addition to providing
continuity of investment management, transforming Hercules into an
externally managed fund will provide important strategic advantages
to Hercules and we have structured the proposed external advisory
relationship with Hamilton to align the interests of the Hercules
shareholders with those of the advisor in a unique way. In addition
to offering the opportunity for future third party expenses to be
spread over a broader universe of investment vehicles, the proposed
base management fee will decrease as the size of Hercules
increases. Importantly, the incentive fee is also tiered so that
the rate at which the advisor would be compensated begins at less
than the 20% commonly used and does not achieve that effective
level until Hercules’ performance reaches an annual return of
22.5%. The proposed fee structure is described in detail in the
preliminary proxy materials filed today.”
Henriquez concluded, “We are seeking to pursue externalization
for strategic reasons. While internal management has served our
shareholders well in the past, we believe that the changing
competitive environment makes externalization important. It will
enable us to offer a greater variety of solutions to financial
sponsors to the benefit of Hercules.”
If the advisory agreement is approved by shareholders at the
special meeting on June 29, 2017, Hercules will become externally
managed—the form of management structure used by substantially all
business development companies and registered investment companies.
Hercules' Board of Directors, including its independent directors,
approved the advisory agreement with Hamilton and recommended that
shareholders approve it for a number of reasons, including:
- Hercules’ external adviser, Hamilton,
will have the ability to broaden the size and categories of assets
under its future management, which would make its family of
investment vehicles a more attractive destination for sponsors
seeking a variety of financial solutions, potentially increasing
the number of transactions available to Hercules;
- if it expands its assets under
management, Hamilton will be able to increase the breadth and depth
of its investment management team, making these increased resources
available to Hercules at no additional cost;
- Hamilton will be able to be more
flexible in its compensation structure than Hercules because of
regulatory restrictions applicable to internally managed business
development companies—so Hamilton can be better armed to attract
and retain talent to the benefit of Hercules' shareholders;
- if Hamilton is successful in expanding
its family of investment vehicles and its assets under management,
the portion of expenses borne by Hercules will decline, although,
initially, there is likely to be a modest increase in these
expenses;
- Hercules and Hamilton have agreed on an
incentive fee structure intended to better align their interests
than the flat base and flat incentive fee structure typical of
business development companies;
- the ability for Hercules to maintain a
more diversified portfolio of non-eligible portfolio company assets
and reduce concentration risk; and
- the fact that all of these potential
advantages could be attained without losing the benefits that
shareholders have realized under Hercules' current management
team.
This communication may be deemed solicitation material in
respect of the proposals set forth in the Company’s preliminary
proxy statement on Schedule 14A, which was filed with the
Securities and Exchange Commission (“SEC”) on May 3, 2017 (the
“transactions”). In connection with the transactions, the Company
has filed, and intends to file, relevant materials with the SEC.
Promptly after filing its definitive proxy statement with the SEC,
the Company will mail the definitive proxy statement and a proxy
card to each stockholder entitled to vote at the stockholder
meeting relating to such matters. STOCKHOLDERS OF THE COMPANY ARE
URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO), AND ANY OTHER RELEVANT DOCUMENTS THAT THE
COMPANY WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE
THESE MATERIALS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
COMPANY AND THE MATTERS DESCRIBED IN THIS REPORT. The preliminary
proxy statement, the definitive proxy statement and other relevant
materials (when they become available), and any other documents
filed by the Company with the SEC, may be obtained free of charge
at the SEC’s website (http://www.sec.gov), at the Company’s website
(http://www.htgc.com), or by writing to Hercules Capital, Inc. c/o
Melanie Grace, Secretary, 400 Hamilton Avenue, Suite 310, Palo
Alto, California 94301 (telephone number 650-289-3060).
The Company and its directors and officers may be deemed to be
participants in the solicitation of proxies from the Company’s
stockholders with respect to the transactions. Information about
the Company’s directors and officers, as well as the identity of
other potential participants, and their respective direct or
indirect interests in such matters, by security holdings or
otherwise, are set forth in the preliminary proxy statement and
will be set forth in the other materials to be filed with SEC.
About Hercules Capital, Inc.
Hercules Capital, Inc. (NYSE: HTGC) (“Hercules”) is the leading
and largest specialty finance company focused on providing senior
secured venture growth loans to high-growth, innovative venture
capital-backed companies in a broad variety of technology, life
sciences and sustainable and renewable technology industries. Since
inception (December 2003), Hercules has committed more than $6.7
billion to over 375 companies and is the lender of choice for
entrepreneurs and venture capital firms seeking growth capital
financing. Companies interested in learning more about financing
opportunities should contact info@htgc.com, or call
650.289.3060.
Hercules’ common stock trades on the New York Stock Exchange
under the ticker symbol "HTGC." In addition, Hercules has one
outstanding bond issuance of 6.25% Unsecured Notes due July 2024
(NYSE: HTGX).
Forward-Looking Statements
This press release may contain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. You should understand that under Section 27A(b)(2)(B) of
the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of
the Securities Exchange Act of 1934, as amended, or the Exchange
Act, the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995 do not apply to forward-looking
statements made in periodic reports we file under the Exchange
Act.
The information disclosed in this press release is made as of
the date hereof and reflects Hercules most current assessment of
its historical financial performance. Actual financial results
filed with the SEC may differ from those contained herein due to
timing delays between the date of this release and confirmation of
final audit results. These forward-looking statements are not
guarantees of future performance and are subject to uncertainties
and other factors that could cause actual results to differ
materially from those expressed in the forward-looking statements
including, without limitation, the risks, uncertainties, including
the uncertainties surrounding the current market volatility, and
other factors the Company identifies from time to time in its
filings with the SEC. Although Hercules believes that the
assumptions on which these forward-looking statements are based are
reasonable, any of those assumptions could prove to be inaccurate
and, as a result, the forward-looking statements based on those
assumptions also could be incorrect. You should not place undue
reliance on these forward-looking statements. The forward-looking
statements contained in this release are made as of the date
hereof, and Hercules assumes no obligation to update the
forward-looking statements for subsequent events.
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Hercules Capital, Inc.Michael Hara, 650-433-5578 HT-HNInvestor
Relations and Corporate Communicationsmhara@htgc.com
Hercules Capital (NYSE:HTGC)
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