N-14 8C/A 1 d538303dn148ca.htm N-14 8C/A N-14 8C/A
Table of Contents

As filed with the Securities and Exchange Commission on January 16, 2024

Registration No. 333-275640

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-14

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. 1    

Post-Effective Amendment No. 

(Check appropriate box or boxes)

 

 

MidCap Financial Investment Corporation

(Exact Name of Registrant as Specified in Charter)

 

 

9 West 57th Street,

New York, NY 10019

(Address of Principal Executive Offices)

(212) 515-3450

(Area Code and Telephone Number)

Kristin Hester

Chief Legal Officer

MidCap Financial Investment Corporation

9 West 57th Street

New York, NY 10019

(Name and Address of Agent for Service)

 

 

Copies to:

David W. Blass, Esq.

Jonathan L. Corsico, Esq.

Steven Grigoriou, Esq.

Jonathan Pacheco, Esq.

Simpson Thacher & Bartlett LLP

900 G Street, N.W.

Washington, DC 20001

Telephone: (202) 636-5500

Fax: (202) 636-5502

 

 

Approximate Date of Proposed Public Offering: As soon as practicable after this registration statement becomes effective and upon completion of the transactions described in the enclosed document.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


Table of Contents

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission. MidCap Financial Investment Corporation may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This document is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where such offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED JANUARY 16, 2024

MIDCAP FINANCIAL INVESTMENT CORPORATION

9 West 57th Street

New York, NY 10019

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

[            ], 2024

Dear Stockholder:

You are cordially invited to attend the Special Meeting of Stockholders (the “MFIC Special Meeting”) of MidCap Financial Investment Corporation, a Maryland corporation (“MFIC”), to be held virtually on [            ], 2024, at [    ] a.m., Eastern Time, at the following website: [    ]. Stockholders of record of MFIC (“MFIC Stockholders”) at the close of business on [            ], 2024 are entitled to notice of, and to vote at, the MFIC Special Meeting or any adjournment or postponement thereof.

The notice of special meeting and the joint proxy statement/prospectus accompanying this letter provide an outline of the business to be conducted at the MFIC Special Meeting. At the MFIC Special Meeting, you will be asked to approve the issuance of shares of common stock, par value $0.001 per share, of MFIC (“MFIC Common Stock”) pursuant to the Mergers (as defined below) in accordance with NASDAQ listing rule requirements (“MFIC Share Issuance” and such proposal, the “MFIC Share Issuance Proposal”).

MFIC, Apollo Senior Floating Rate Fund Inc., a Maryland corporation (“AFT”) and Apollo Tactical Income Fund Inc., a Maryland corporation (“AIF”), are proposing a combination of all three companies by mergers and related transactions pursuant to two separate Agreements and Plan of Merger. MFIC is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Each of AFT and AIF are registered under the 1940 Act as diversified, closed-end management investment companies.

The closing of the AFT Mergers (as defined below) (the “AFT Closing”) is contingent upon:

(a) MFIC Stockholder approval of the MFIC Share Issuance Proposal,

(b) approval of the AFT Mergers by holders of shares of common stock, par value $0.001 per share (“AFT Common Stock”), of AFT, and

(c) satisfaction or waiver of certain other closing conditions.

If the AFT Mergers do not close, then MFIC will not issue shares of MFIC Common Stock to holders of AFT Common Stock (“AFT Stockholders”), even if the MFIC Share Issuance Proposal is approved by the MFIC Stockholders.

The closing of the AIF Mergers (as defined below) (the “AIF Closing”) is contingent upon:

(a) MFIC Stockholder approval of the MFIC Share Issuance Proposal,

(b) approval of the AIF Mergers by holders of shares of common stock, par value $0.001 per share (“AIF Common Stock”), of AIF, and

(c) satisfaction or waiver of certain other closing conditions.

If the AIF Mergers do not close, then MFIC will not issue shares of MFIC Common Stock to holders of AIF Common Stock (“AIF Stockholders”), even if the MFIC Share Issuance Proposal is approved by the MFIC Stockholders.

The AFT Closing is not contingent upon the AIF Closing having occurred, and the AIF Closing is not contingent upon the AFT Closing having occurred.


Table of Contents

As of September 30, 2023, the net asset value (“NAV”) of MFIC Common Stock was $15.28 per share. As of September 30, 2023, the NAV of AFT Common Stock was $15.05 per share. As of September 30, 2023, the NAV of AIF Common Stock was $14.63 per share. Based on the NAVs of MFIC, AFT and AIF as of September 30, 2023, (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9849 and 0.9577 shares of MFIC Common Stock for each share of AFT Common Stock and AIF Common Stock outstanding.

AFT Mergers: Pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AFT, AFT Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AFT Merger Sub”), and, for the limited purposes set forth therein, Apollo Investment Management, L.P., a Delaware limited partnership and the investment adviser to MFIC (“MFIC Adviser”) (as may be amended from time to time, the “AFT Merger Agreement”), subject to the terms and conditions set forth in the AFT Merger Agreement, as of the applicable effective time (the “AFT Effective Time”) AFT Merger Sub would merge with and into AFT (the “AFT First Merger”), with AFT continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AFT First Merger, AFT would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AFT First Merger, the “AFT Mergers”).

Subject to the terms and conditions of the AFT Merger Agreement, at the AFT Effective Time, each share of AFT Common Stock issued and outstanding immediately prior to the AFT Effective Time (other than shares owned by MFIC or any of its consolidated subsidiaries, including AFT Merger Sub (the “AFT Cancelled Shares”)) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AFT Exchange Ratio (as defined below) (cash will be paid in lieu of fractional shares). AFT has no preferred stock outstanding, and no preferred stock will be issued by MFIC as a result of the AFT Mergers.

Under the AFT Merger Agreement, as of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time (such date, the “AFT Determination Date”), MFIC and AFT will deliver to the other a calculation of its NAV as of such date (such calculation with respect to AFT, the “Closing AFT Net Asset Value” and such calculation with respect to MFIC, the “Closing AFT Merger MFIC Net Asset Value”), in each case using the same set of assumptions, methodologies and adjustments as has been historically used in preparing such calculation. Based on such calculations, the parties will calculate: (1) the “AFT Per Share NAV,” which will be equal to (i) the Closing AFT Net Asset Value divided by (ii) the number of shares of AFT Common Stock issued and outstanding as of the AFT Determination Date (excluding any AFT Cancelled Shares) and (2) the “AFT Merger MFIC Per Share NAV,” which will be equal to (A) the Closing AFT Merger MFIC Net Asset Value divided by (B) the number of shares of MFIC Common Stock issued and outstanding as of the AFT Determination Date. The “AFT Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the AFT Per Share NAV divided by (ii) the AFT Merger MFIC Per Share NAV.

MFIC and AFT will update and redeliver the Closing AFT Merger Company Net Asset Value or the Closing AFT Net Asset Value, respectively, in the event that the closing of the AFT Mergers is subsequently materially delayed or there is a material change to such calculation between the AFT Determination Date and the closing of the AFT Mergers and as needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time.

Immediately following the AFT Effective Time, MFIC will repay or prepay any amounts outstanding under AFT’s existing credit facility as of the AFT Effective Time, subject to the conditions set forth in MFIC’s senior secured credit facility.

Promptly following closing of the AFT Mergers, MFIC Adviser or one of its affiliates will pay directly to holders of shares of AFT Common Stock that are issued and outstanding immediately prior to the AFT Effective Time a special payment equal to $0.25 per share of AFT Common Stock, subject to deduction for any applicable withholding tax. This payment will not be made by or through AFT. The specific tax characteristics of the $0.25 per share special payment are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”


Table of Contents

The AFT Merger Agreement contains certain termination rights, including if the AFT Mergers are not completed on or before November 7, 2024, or if the requisite approvals of MFIC’s and AFT’s stockholders are not obtained. The AFT Merger Agreement provides that, upon the termination of the AFT Merger Agreement under certain circumstances involving entry into a definitive transaction by AFT with a third party, such third party that enters into the definitive transaction with AFT may be required to pay MFIC a termination fee of $7,029,482. The AFT Merger Agreement also provides that, upon the termination of the AFT Merger Agreement under certain circumstances involving entry into a definitive transaction by MFIC with a third party, such third party that enters into the definitive agreement with MFIC may be required to pay to AFT a termination fee of $29,905,339.

Within thirty days following the closing of the AFT Mergers or the termination of the AFT Merger Agreement pursuant to the terms thereof, as applicable, subject to the closing of the AIF Mergers and applicable law, MFIC shall distribute to the holder of each share of MFIC Common Stock as of a record date to be determined by the MFIC Board an amount in cash equal to $0.20 per share of MFIC Common Stock held by such holder. The specific tax characteristics of the $0.20 per share special distribution are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

AIF Mergers: Pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AIF, AIF Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AIF Merger Sub”), and, for the limited purposes set forth therein, MFIC Adviser (as may be amended from time to time, the “AIF Merger Agreement” and, together with the AFT Merger Agreement, the “Merger Agreements”), subject to the terms and conditions set forth in the AIF Merger Agreement, as of the applicable effective time (the “AIF Effective Time”) AIF Merger Sub would merge with and into AIF (the “AIF First Merger”), with AIF continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AIF First Merger, AIF would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AIF First Merger, the “AIF Mergers” and, together with the AFT Mergers, the “Mergers”).

Subject to the terms and conditions of the AIF Merger Agreement, at the AIF Effective Time, each share of common stock, par value $0.001 per share, of AIF (the “AIF Common Stock”) issued and outstanding immediately prior to the AIF Effective Time (other than shares owned by MFIC or any of its consolidated subsidiaries, including AIF Merger Sub (the “AIF Cancelled Shares”)) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AIF Exchange Ratio (as defined below), plus any cash (without interest) in lieu of fractional shares. AIF has no preferred stock outstanding, and no preferred stock will be issued by MFIC as a result of the AIF Mergers.

Under the AIF Merger Agreement, as of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time (such date, the “AIF Determination Date”), each of MFIC and AIF will deliver to the other a calculation of its net asset value as of such date (such calculation with respect to AIF, the “Closing AIF Net Asset Value” and such calculation with respect to MFIC, the “Closing AIF Merger MFIC Net Asset Value”), in each case using the same set of assumptions, methodologies and adjustments as has been historically used in preparing such calculation. Based on such calculations, the parties will calculate: (1) the “AIF Per Share NAV,” which will be equal to (i) the Closing AIF Net Asset Value divided by (ii) the number of shares of AIF Common Stock issued and outstanding as of the AIF Determination Date (excluding any AIF Cancelled Shares) and (2) the “AIF Merger MFIC Per Share NAV,” which will be equal to (i) the Closing AIF Merger MFIC Net Asset Value divided by (ii) the number of shares of MFIC Common Stock issued and outstanding as of the AIF Determination Date. The “AIF Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the AIF Per Share NAV divided by (ii) the AIF Merger MFIC Per Share NAV.

MFIC and AIF will update and redeliver the Closing AIF Merger MFIC Net Asset Value or the Closing AIF Net Asset Value, respectively, in the event that the closing of the AIF Mergers is subsequently materially delayed or there is a material change to such calculation between the AIF Determination Date and the closing of the AIF Mergers and as needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time.


Table of Contents

Immediately following the AIF Effective Time, MFIC will repay or prepay any amounts outstanding under AIF’s existing credit facility as of the AIF Effective Time, subject to the conditions set forth in MFIC’s senior secured credit facility.

Promptly following closing of the AIF Mergers, MFIC Adviser or one of its affiliates will pay directly to holders of shares of AIF Common Stock that are issued and outstanding immediately prior to the AIF Effective Time a special payment equal to $0.25 per share of AIF Common Stock, subject to deduction for any applicable withholding tax. This payment will not be made by or through AIF. The specific tax characteristics of the $0.25 per share special payment are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

The AIF Merger Agreement contains certain termination rights, including if the AIF Mergers are not completed on or before November 7, 2024, or if the requisite approvals of MFIC’s and AIF’s stockholders are not obtained. The AIF Merger Agreement provides that, upon the termination of the AIF Merger Agreement under certain circumstances involving entry into a definitive transaction by AIF with a third party, such third party that enters into the definitive transaction with AIF may be required to pay MFIC a termination fee of $6,348,267. The AIF Merger Agreement also provides that, upon the termination of the AIF Merger Agreement under certain circumstances involving entry into a definitive transaction by MFIC with a third party, such third party that enters into the definitive agreement with MFIC may be required to pay to AIF a termination fee of $29,905,339.

Within thirty days following the closing of the AIF Mergers or the termination of the AIF Merger Agreement pursuant to the terms thereof, as applicable, subject to the closing of the AFT Mergers and applicable law, MFIC shall distribute to the holder of each share of MFIC Common Stock as of a record date to be determined by the MFIC Board an amount in cash equal to $0.20 per share of MFIC Common Stock held by such holder. The specific tax characteristics of the $0.20 per share special distribution are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

Your vote is extremely important. The presence at the MFIC Special Meeting, virtually or represented by proxy, of MFIC Stockholders entitled to cast a majority of all the votes entitled to be cast at the MFIC Special Meeting will constitute a quorum of MFIC. At the MFIC Special Meeting, MFIC Common Stockholders will be asked to vote on the MFIC Share Issuance Proposal. The affirmative vote of MFIC Stockholders representing a majority of all the votes cast at the MFIC Special Meeting is required to approve the MFIC Share Issuance Proposal.

Abstentions will have no effect on the voting outcome of the MFIC Share Issuance Proposal, although abstentions will be treated as shares present for quorum purposes.

After careful consideration, and on the recommendation of a special committee of the Board of Directors of MFIC (the “MFIC Board”), the MFIC Board unanimously approved the Merger Agreements, declared the Mergers and the transactions contemplated by the Merger Agreements advisable and unanimously recommends that MFIC Stockholders vote “FOR” the MFIC Share Issuance Proposal.

It is important that your shares be represented at the MFIC Special Meeting. Please follow the instructions on the enclosed proxy card and authorize a proxy to vote your shares via the Internet, by telephone or by signing, dating and returning the enclosed proxy card. MFIC encourages you to authorize a proxy to vote your shares via the Internet as it saves MFIC significant time and processing costs. Voting by proxy does not deprive you of your right to participate in the virtual MFIC Special Meeting.

This joint proxy statement/prospectus describes the MFIC Special Meeting, the Mergers and the documents related to the Mergers (including the Merger Agreements) and other related matters that MFIC Stockholders should review before voting on the MFIC Share Issuance Proposal and should be retained for future reference. Please carefully read this entire document, including “Risk Factors” beginning on page 47 and


Table of Contents

as otherwise incorporated by reference in this joint proxy statement/prospectus, for a discussion of the risks relating to the Mergers, MFIC, AFT and AIF. MFIC files periodic reports, current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the “SEC”). This information is available free of charge, and stockholder inquiries can be made, by contacting MFIC at 9 West 57th Street, New York, NY, 10019 or by calling MFIC at (212) 515-3450 or on MFIC’s website at https://www.midcapfinancialic.com. The SEC also maintains a website at www.sec.gov that contains such information. Except for the documents incorporated by reference into this joint proxy statement/prospectus, information on MFIC’s website is not incorporated into or a part of this joint proxy statement/prospectus.

No matter how many or few shares of MFIC you own, your vote and participation are very important to us.

 

Sincerely yours,
 

 

Howard Widra
Executive Chairman of the MFIC Board

Neither the SEC nor any state securities commission has approved or disapproved of the shares of MFIC Common Stock to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [            ], 2024 and is first being mailed or otherwise delivered to MFIC Stockholders on or about [            ], 2024.

 

 

 

MidCap Financial Investment Corporation

9 West 57th Street

New York, NY 10019

(212) 515-3450

  

Apollo Senior Floating Rate
Fund Inc.

9 West 57th Street

New York, NY 10019

(212) 515-3200

  

Apollo Tactical Income Fund Inc.

9 West 57th Street

New York, NY 10019

(212) 515-3200

 

 


Table of Contents

MIDCAP FINANCIAL INVESTMENT CORPORATION

9 West 57th Street

New York, NY 10019

 

 

NOTICE OF VIRTUAL SPECIAL MEETING OF STOCKHOLDERS

Online Meeting Only—No Physical Meeting Location

[WEBSITE ADDRESS]

[            ], 2024, at [    ] a.m., Eastern Time

 

 

Dear Stockholder:

A Special Meeting of Stockholders (the “MFIC Special Meeting”) of MidCap Financial Investment Corporation, a Maryland corporation (“MFIC”), will be conducted online on [            ], 2024, at [    ] a.m., Eastern Time at the following website: [    ].

At the MFIC Special Meeting, the holders of shares of common stock, par value $0.001 per share (“MFIC Common Stock”), of MFIC (“MFIC Stockholders”) will consider and vote on a proposal to approve the issuance of shares of MFIC Common Stock pursuant to the Mergers (as defined below) in accordance with NASDAQ listing rule requirements (“MFIC Share Issuance” and such proposal, the “MFIC Share Issuance Proposal”).

MFIC, Apollo Senior Floating Rate Fund Inc., a Maryland corporation (“AFT”) and Apollo Tactical Income Fund Inc., a Maryland corporation (“AIF”), are proposing a combination of all three companies by mergers and related transactions pursuant to two separate Agreements and Plan of Merger. MFIC is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Each of AFT and AIF are registered under the 1940 Act as diversified, closed-end management investment companies.

AFT Mergers: Pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AFT, AFT Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AFT Merger Sub”), and, for the limited purposes set forth therein, Apollo Investment Management, L.P., a Delaware limited partnership and the investment adviser to MFIC (“MFIC Adviser”) (as may be amended from time to time, the “AFT Merger Agreement”), subject to the terms and conditions set forth in the AFT Merger Agreement, as of the applicable effective time (the “AFT Effective Time”) AFT Merger Sub would merge with and into AFT (the “AFT First Merger”), with AFT continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AFT First Merger, AFT would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AFT First Merger, the “AFT Mergers”).

AIF Mergers: Pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AIF, AIF Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AIF Merger Sub”), and, for the limited purposes set forth therein, MFIC Adviser (as may be amended from time to time, the “AIF Merger Agreement” and together with the AFT Merger Agreement, the “Merger Agreements”), subject to the terms and conditions set forth in the AIF Merger Agreement, as of the applicable effective time (the “AIF Effective Time”) AIF Merger Sub would merge with and into AIF (the “AIF First Merger”), with AIF continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AIF First Merger, AIF would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AIF First Merger, the “AIF Mergers” and, together with the AFT Mergers, the “Mergers”).


Table of Contents

AFTER CAREFUL CONSIDERATION, AND ON THE RECOMMENDATION OF A SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF MFIC (THE “MFIC BOARD”), THE MFIC BOARD UNANIMOUSLY APPROVED THE MERGER AGREEMENTS, DECLARED THE MERGERS AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENTS ADVISABLE AND UNANIMOUSLY RECOMMENDS THAT THE MFIC STOCKHOLDERS VOTE “FOR” THE MFIC SHARE ISSUANCE PROPOSAL.

You have the right to receive notice of, and to vote at, the MFIC Special Meeting if you were a stockholder of record of MFIC at the close of business on [            ], 2024. A joint proxy statement/prospectus is attached to this Notice that describes the matters to be voted upon at the MFIC Special Meeting or any adjournment(s) or postponement(s) thereof. The enclosed proxy card will instruct you as to how you may authorize a proxy to vote your shares via the Internet, by telephone or by signing, dating and returning the enclosed proxy card. In addition, information regarding how to find the logistical details of the virtual MFIC Special Meeting (including how to remotely access, participate in and vote during the virtual meeting) is included beginning on page 55 of the attached joint proxy statement/prospectus.

Whether or not you plan to participate in the MFIC Special Meeting, we encourage you to authorize a proxy to vote your shares by following the instructions on the enclosed proxy card. Please note, however, that if you wish to vote during the MFIC Special Meeting and your shares are held of record by a broker or nominee, you must obtain a “legal” proxy issued in your name from that record holder.

We are not aware of any other business that may properly be brought before the MFIC Special Meeting and, pursuant to our bylaws, only the matters set forth in the notice of special meeting may be brought before the MFIC Special Meeting.

Thank you for your continued support of MFIC.

 

By order of the Board of Directors,
 

 

Kristin Hester
Chief Legal Officer and Secretary

New York, NY

[            ], 2024

To ensure proper representation at the MFIC Special Meeting, please follow the instructions on the enclosed proxy card to authorize a proxy to vote your shares via the Internet or telephone, or by signing, dating and returning the enclosed proxy card. Even if you authorize a proxy to vote your shares prior to the virtual MFIC Special Meeting, you still may participate in the virtual MFIC Special Meeting.


Table of Contents

APOLLO SENIOR FLOATING RATE FUND INC.

9 West 57th Street

New York, NY 10019

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

[            ], 2024

 

 

Dear Stockholder:

You are cordially invited to attend the Special Meeting of Stockholders (the “AFT Special Meeting”) of Apollo Senior Floating Rate Fund Inc., a Maryland corporation (“AFT”), to be held virtually on [            ], 2024, at [    ] a.m., Eastern Time, at the following website: [    ]. Stockholders of record of AFT at the close of business on [            ], 2024 are entitled to notice of, and to vote at, the AFT Special Meeting or any adjournment or postponement thereof.

MidCap Financial Investment Corporation, a Maryland corporation (“MFIC”), AFT and Apollo Tactical Income Fund Inc., a Maryland corporation (“AIF”), are proposing a combination of all three companies by mergers and related transactions pursuant to two separate Agreements and Plan of Merger. MFIC is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Each of AFT and AIF are registered under the 1940 Act as diversified, closed-end management investment companies.

The notice of special meeting and the joint proxy statement/prospectus accompanying this letter provide an outline of the business to be conducted at the AFT Special Meeting. At the AFT Special Meeting, you will be asked to approve the merger of AFT Merger Sub (as defined below) with and into AFT (the “AFT Merger”), with AFT continuing as the surviving company and as a wholly-owned subsidiary of MFIC, pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AFT, AFT Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AFT Merger Sub”), and, for the limited purposes set forth therein, Apollo Investment Management, L.P., a Delaware limited partnership and the investment adviser to MFIC (“MFIC Adviser”) (as may be amended from time to time, the “AFT Merger Agreement”), subject to the terms and conditions set forth in the AFT Merger Agreement, AFT Merger Sub would merge with and into AFT (the “AFT Merger”) (such proposal, the “AFT Merger Proposal”), with AFT continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AFT Mergers, AFT would merge with and into MFIC, with MFIC continuing as the surviving company.

The closing of the AFT Mergers (as defined below) (the “AFT Closing”) is contingent upon:

(a) MFIC Stockholder approval of the issuance of shares of MFIC common stock, par value $0.001 per share (“MFIC Common Stock”) pursuant to the Mergers (as defined below) in accordance with NASDAQ listing rule requirements (“MFIC Share Issuance” and such proposal, the “MFIC Share Issuance Proposal”),

(b) approval of the AFT Mergers by holders of shares of common stock, par value $0.001 per share (“AFT Common Stock”), of AFT, and

(c) satisfaction or waiver of certain other closing conditions.

If the AFT Mergers do not close, then MFIC will not issue shares of MFIC Common Stock to holders of AFT Common Stock (“AFT Stockholders”), even if the MFIC Share Issuance Proposal is approved by the MFIC Stockholders.

The closing of the AIF Mergers (as defined below) (the “AIF Closing”) is contingent upon:

(a) MFIC Stockholder approval of the MFIC Share Issuance Proposal,


Table of Contents

(b) approval of the AIF Mergers by holders of shares of common stock, par value $0.001 per share (“AIF Common Stock”), of AIF, and

(c) satisfaction or waiver of certain other closing conditions.

If the AIF Mergers do not close, then MFIC will not issue shares of MFIC Common Stock to holders of AIF Common Stock (“AIF Stockholders”), even if the MFIC Share Issuance Proposal is approved by the MFIC Stockholders. The AFT Closing is not contingent upon the AIF Closing having occurred, and the AIF Closing is not contingent upon the AFT Closing having occurred.

As of September 30, 2023, the net asset value (“NAV”) of MFIC Common Stock was $15.28 per share. As of September 30, 2023, the NAV of AFT Common Stock was $15.05 per share. As of September 30, 2023, the NAV of AIF Common Stock was $14.63 per share. Based on the NAVs of MFIC, AFT and AIF as of September 30, 2023, (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9849 and 0.9577 shares of MFIC Common Stock for each share of AFT Common Stock and AIF Common Stock outstanding.

AFT Mergers: Pursuant to the AFT Merger Agreement, AFT Merger Sub would merge with and into AFT (the “AFT First Merger”), with AFT continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AFT First Merger, AFT would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AFT First Merger, the “AFT Mergers”).

Subject to the terms and conditions of the AFT Merger Agreement, at the AFT Effective Time, each share of AFT Common Stock issued and outstanding immediately prior to the AFT Effective Time (other than shares owned by MFIC or any of its consolidated subsidiaries, including AFT Merger Sub (the “AFT Cancelled Shares”)) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AFT Exchange Ratio (as defined below) (cash will be paid in lieu of fractional shares). AFT has no preferred stock outstanding, and no preferred stock will be issued by MFIC as a result of the AFT Mergers.

Under the AFT Merger Agreement, as of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time (such date, the “AFT Determination Date”), MFIC and AFT will deliver to the other a calculation of its NAV as of such date (such calculation with respect to AFT, the “Closing AFT Net Asset Value” and such calculation with respect to MFIC, the “Closing AFT Merger MFIC Net Asset Value”), in each case using the same set of assumptions, methodologies and adjustments as has been historically used in preparing such calculation. Based on such calculations, the parties will calculate: (1) the “AFT Per Share NAV,” which will be equal to (i) the Closing AFT Net Asset Value divided by (ii) the number of shares of AFT Common Stock issued and outstanding as of the AFT Determination Date (excluding any AFT Cancelled Shares) and (2) the “AFT Merger MFIC Per Share NAV,” which will be equal to (A) the Closing AFT Merger MFIC Net Asset Value divided by (B) the number of shares of MFIC Common Stock issued and outstanding as of the AFT Determination Date. The “AFT Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the AFT Per Share NAV divided by (ii) the AFT Merger MFIC Per Share NAV.

MFIC and AFT will update and redeliver the Closing AFT Merger Company Net Asset Value or the Closing AFT Net Asset Value, respectively, in the event that the closing of the AFT Mergers is subsequently materially delayed or there is a material change to such calculation between the AFT Determination Date and the closing of the AFT Mergers and as needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time.

Immediately following the AFT Effective Time, MFIC will repay or prepay any amounts outstanding under AFT’s existing credit facility as of the AFT Effective Time, subject to the conditions set forth in MFIC’s senior secured credit facility.


Table of Contents

Promptly following closing of the AFT Mergers, MFIC Adviser or one of its affiliates will pay directly to holders of shares of AFT Common Stock that are issued and outstanding immediately prior to the AFT Effective Time a special payment equal to $0.25 per share of AFT Common Stock, subject to deduction for any applicable withholding tax. This payment will not be made by or through AFT. The specific tax characteristics of the $0.25 per share special payment are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

The AFT Merger Agreement contains certain termination rights, including if the AFT Mergers are not completed on or before November 7, 2024, or if the requisite approvals of MFIC’s and AFT’s stockholders are not obtained. The AFT Merger Agreement provides that, upon the termination of the AFT Merger Agreement under certain circumstances involving entry into a definitive transaction by AFT with a third party, such third party that enters into the definitive transaction with AFT may be required to pay MFIC a termination fee of $7,029,482. The AFT Merger Agreement also provides that, upon the termination of the AFT Merger Agreement under certain circumstances involving entry into a definitive transaction by MFIC with a third party, such third party that enters into the definitive agreement with MFIC may be required to pay to AFT a termination fee of $29,905,339.

Within thirty days following the closing of the AFT Mergers or the termination of the AFT Merger Agreement pursuant to the terms thereof, as applicable, subject to the closing of the AIF Mergers and applicable law, MFIC shall distribute to the holder of each share of MFIC Common Stock as of a record date to be determined by the MFIC Board an amount in cash equal to $0.20 per share of MFIC Common Stock held by such holder. The specific tax characteristics of the $0.20 per share special distribution are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

AIF Mergers: Pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AIF, AIF Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AIF Merger Sub”), and, for the limited purposes set forth therein, MFIC Adviser (as may be amended from time to time, the “AIF Merger Agreement” and, together with the AFT Merger Agreement, the “Merger Agreements”), subject to the terms and conditions set forth in the AIF Merger Agreement, as of the applicable effective time (the “AIF Effective Time”) AIF Merger Sub would merge with and into AIF (the “AIF First Merger”), with AIF continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AIF First Merger, AIF would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AIF First Merger, the “AIF Mergers” and, together with the AFT Mergers, the “Mergers”).

Subject to the terms and conditions of the AIF Merger Agreement, at the AIF Effective Time, each share of common stock, par value $0.001 per share, of AIF (the “AIF Common Stock”) issued and outstanding immediately prior to the AIF Effective Time (other than shares owned by MFIC or any of its consolidated subsidiaries, including AIF Merger Sub (the “AIF Cancelled Shares”)) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AIF Exchange Ratio (as defined below), plus any cash (without interest) in lieu of fractional shares. AIF has no preferred stock outstanding, and no preferred stock will be issued by MFIC as a result of the AIF Mergers.

Under the AIF Merger Agreement, as of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time (such date, the “AIF Determination Date”), each of MFIC and AIF will deliver to the other a calculation of its net asset value as of such date (such calculation with respect to AIF, the “Closing AIF Net Asset Value” and such calculation with respect to MFIC, the “Closing AIF Merger MFIC Net Asset Value”), in each case using the same set of assumptions, methodologies and adjustments as has been historically used in preparing such calculation. Based on such calculations, the parties will calculate: (1) the “AIF Per Share NAV,” which will be equal to (i) the Closing AIF Net Asset Value divided by (ii) the number of shares of AIF Common Stock issued and outstanding as of the AIF Determination Date (excluding any AIF Cancelled Shares) and (2) the “AIF Merger MFIC Per Share NAV,” which will be equal to (i) the Closing AIF Merger MFIC Net Asset Value divided by (ii) the number of shares of MFIC Common Stock issued and outstanding as of the AIF Determination Date. The “AIF Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the AIF Per Share NAV divided by (ii) the AIF Merger MFIC Per Share NAV.


Table of Contents

MFIC and AIF will update and redeliver the Closing AIF Merger MFIC Net Asset Value or the Closing AIF Net Asset Value, respectively, in the event that the closing of the AIF Mergers is subsequently materially delayed or there is a material change to such calculation between the AIF Determination Date and the closing of the AIF Mergers and as needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time.

Immediately following the AIF Effective Time, MFIC will repay or prepay any amounts outstanding under AIF’s existing credit facility as of the AIF Effective Time, subject to the conditions set forth in MFIC’s senior secured credit facility.

Promptly following closing of the AIF Mergers, MFIC Adviser or one of its affiliates will pay directly to holders of shares of AIF Common Stock that are issued and outstanding immediately prior to the AIF Effective Time a special payment equal to $0.25 per share of AIF Common Stock, subject to deduction for any applicable withholding tax. This payment will not be made by or through AIF. The specific tax characteristics of the $0.25 per share special payment are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

The AIF Merger Agreement contains certain termination rights, including if the AIF Mergers are not completed on or before November 7, 2024, or if the requisite approvals of MFIC’s and AIF’s stockholders are not obtained. The AIF Merger Agreement provides that, upon the termination of the AIF Merger Agreement under certain circumstances involving entry into a definitive transaction by AIF with a third party, such third party that enters into the definitive transaction with AIF may be required to pay MFIC a termination fee of $6,348,267. The AIF Merger Agreement also provides that, upon the termination of the AIF Merger Agreement under certain circumstances involving entry into a definitive transaction by MFIC with a third party, such third party that enters into the definitive agreement with MFIC may be required to pay to AIF a termination fee of $29,905,339.

Within thirty days following the closing of the AIF Mergers or the termination of the AIF Merger Agreement pursuant to the terms thereof, as applicable, subject to the closing of the AFT Mergers and applicable law, MFIC shall distribute to the holder of each share of MFIC Common Stock as of a record date to be determined by the MFIC Board an amount in cash equal to $0.20 per share of MFIC Common Stock held by such holder. The specific tax characteristics of the $0.20 per share special distribution are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

Your vote is extremely important. The presence at the AFT Special Meeting, virtually or represented by proxy, of AFT Stockholders entitled to cast a majority of all the votes entitled to be cast at the AFT Special Meeting will constitute a quorum of AFT. At the AFT Special Meeting, you will be asked to vote on the AFT Merger Proposal. The approval of the AFT Merger Proposal requires the affirmative vote of a majority of the securities of AFT entitled to vote on the AFT Merger Proposal.

Abstentions will have the same effect as votes “against” the AFT Merger Proposal.

After careful consideration, and on the recommendation of a special committee of the Board of Directors of AFT (the “AFT Board”), the AFT Board unanimously approved the AFT Merger Agreement, declared the AFT Mergers and the transactions contemplated by the AFT Merger Agreement advisable and unanimously recommends that AFT Stockholders vote “FOR” the AFT Merger Proposal.

It is important that your shares be represented at the AFT Special Meeting. Please follow the instructions on the enclosed proxy card and authorize a proxy to vote your shares via the Internet, by telephone or by signing, dating and returning the enclosed proxy card. AFT encourages you to authorize a proxy to vote your shares via the Internet as it saves AFT significant time and processing costs. Voting by proxy does not deprive you of your right to participate in the virtual AFT Special Meeting.


Table of Contents

This joint proxy statement/prospectus describes the AFT Special Meeting, the Mergers, and the documents related to the Mergers (including the Merger Agreement) that AFT Stockholders should review before voting on the AFT Merger Proposal and should be retained for future reference. Please carefully read this entire document, including Risk Factors beginning on page 47 and as otherwise incorporated by reference in this joint proxy statement/prospectus, for a discussion of the risks relating to the Mergers, MFIC, AFT and AFT. AFT files periodic reports, current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the “SEC”). This information is available free of charge, and stockholder inquiries can be made, by contacting AFT at 9 West 57th Street, New York, NY, 10019 or by calling AFT at (212) 515-3200 or on AFT’s website at https://www.apollofunds.com/apollo-senior-floating-rate-fund. The SEC also maintains a website at www.sec.gov that contains such information. Except for the documents incorporated by reference into this joint proxy statement/prospectus, information on AFT’s website is not incorporated into or a part of this joint proxy statement/prospectus.

No matter how many or few shares of AFT you own, your vote and participation are very important to us.

 

Sincerely yours,
 

 

Barry Cohen
Chairman of the AFT Board

Neither the SEC nor any state securities commission has approved or disapproved of the shares of MFIC Common Stock to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [            ], 2024 and is first being mailed or otherwise delivered to AFT Stockholders on or about [            ], 2024.

 

 

 

MidCap Financial Investment Corporation

9 West 57th Street

New York, NY 10019

(212) 515-3450

  

Apollo Senior Floating Rate
Fund Inc.

9 West 57th Street

New York, NY 10019

(212) 515-3200

  

Apollo Tactical Income Fund Inc.

9 West 57th Street

New York, NY 10019

(212) 515-3200


Table of Contents

APOLLO SENIOR FLOATING RATE FUND INC.

9 West 57th Street

New York, NY 10019

 

 

NOTICE OF VIRTUAL SPECIAL MEETING OF STOCKHOLDERS

Online Meeting Only—No Physical Meeting Location

[WEBSITE ADDRESS]

[            ], 2024, at [    ] a.m., Eastern Time

 

 

Dear Stockholder:

A Special Meeting of Stockholders (the “AFT Special Meeting”) of Apollo Senior Floating Rate Fund Inc., a Maryland corporation (“AFT”), will be conducted online on [            ], 2024, at [    ] a.m., Eastern Time at the following website: [    ].

MidCap Financial Investment Corporation, a Maryland corporation (“MFIC”), AFT and Apollo Tactical Income Fund Inc., a Maryland corporation (“AIF”), are proposing a combination of all three companies by mergers and related transactions pursuant to two separate Agreements and Plan of Merger. MFIC is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Each of AFT and AIF are registered under the 1940 Act as diversified, closed-end management investment companies.

At the AFT Special Meeting, the holders of shares of common stock, par value $0.001 per share (“AFT Common Stock”), of AFT (“AFT Stockholders”) will consider and vote on a proposal to approve the merger of AFT Merger Sub (as defined below) with and into AFT (the “AFT Merger”), with AFT continuing as the surviving company and as a wholly-owned subsidiary of MFIC, pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AFT, AFT Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AFT Merger Sub”), and, for the limited purposes set forth therein, Apollo Investment Management, L.P., a Delaware limited partnership and the investment adviser to MFIC (“MFIC Adviser”) (as may be amended from time to time, the “AFT Merger Agreement”), subject to the terms and conditions set forth in the AFT Merger Agreement, AFT Merger Sub would merge with and into AFT (such proposal, the “AIF Merger Proposal”), with AFT continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AFT Mergers, AFT would merge with and into MFIC, with MFIC continuing as the surviving company.

AFT Mergers: Pursuant to the AFT Merger Agreement, AFT Merger Sub would merge with and into AFT (the “AFT First Merger”), with AFT continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AFT First Merger, AFT would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AFT First Merger, the “AFT Mergers”).

AIF Mergers: Pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AIF, AIF Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AIF Merger Sub”), and, for the limited purposes set forth therein, MFIC Adviser (as may be amended from time to time, the “AIF Merger Agreement” and together with the AFT Merger Agreement, the “Merger Agreements”), subject to the terms and conditions set forth in the AIF Merger Agreement, as of the applicable effective time (the “AIF Effective Time”) AIF Merger Sub would merge with and into AIF (the “AIF First Merger”), with AIF continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AIF First Merger, AIF would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AIF First Merger, the “AIF Mergers” and, together with the AFT Mergers, the “Mergers”).


Table of Contents

AFTER CAREFUL CONSIDERATION, AND ON THE RECOMMENDATION OF A SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF AFT (THE “AFT BOARD”), THE AFT BOARD UNANIMOUSLY APPROVED THE AFT MERGER AGREEMENT, DECLARED THE AFT MERGERS AND THE TRANSACTIONS CONTEMPLATED BY THE AFT MERGER AGREEMENT ADVISABLE, AND UNANIMOUSLY RECOMMENDS THAT AFT STOCKHOLDERS VOTE “FOR” THE AFT MERGER PROPOSAL.

You have the right to receive notice of, and to vote at, the AFT Special Meeting if you were a stockholder of record of AFT at the close of business on [            ], 2024. A joint proxy statement/prospectus is attached to this Notice that describes the matters to be voted upon at the AFT Special Meeting or any adjournment(s) or postponement(s) thereof. The enclosed proxy card will instruct you as to how you may authorize a proxy to vote your shares via the Internet, by telephone or by signing, dating and returning the enclosed proxy card. In addition, information regarding how to find the logistical details of the virtual AFT Special Meeting (including how to remotely access, participate in and vote during the virtual meeting) is included beginning on page 58 of the attached joint proxy statement/prospectus.

Whether or not you plan to participate in the AFT Special Meeting, we encourage you to authorize a proxy to vote your shares by following the instructions on the enclosed proxy card. Please note, however, that if you wish to vote during the AFT Special Meeting and your shares are held of record by a broker or nominee, you must obtain a “legal” proxy issued in your name from that record holder.

We are not aware of any other business that may properly be brought before the AFT Special Meeting, and, pursuant to our bylaws, only the matters set forth in the notice of special meeting may be brought before the AFT Special Meeting.

Thank you for your continued support of AFT.

 

By order of the Board of Directors,
 

 

Kristin Hester
Chief Legal Officer and Secretary

New York, NY

[            ], 2024

To ensure proper representation at the AFT Special Meeting, please follow the instructions on the enclosed proxy card to authorize a proxy to vote your shares via the Internet or telephone, or by signing, dating and returning the enclosed proxy card. Even if you authorize a proxy to vote your shares prior to the virtual AFT Special Meeting, you still may participate in the virtual AFT Special Meeting.


Table of Contents

APOLLO TACTICAL INCOME FUND INC.

9 West 57th Street

New York, NY 10019

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

[            ], 2024

 

 

Dear Stockholder:

You are cordially invited to attend the Special Meeting of Stockholders (the “AIF Special Meeting”) of Apollo Tactical Income Fund Inc., a Maryland corporation (“AIF”), to be held virtually on [            ], 2024, at [    ] a.m., Eastern Time, at the following website: [    ]. Stockholders of record of AIF at the close of business on [            ], 2024 are entitled to notice of, and to vote at, the AIF Special Meeting or any adjournment or postponement thereof.

MidCap Financial Investment Corporation, a Maryland corporation (“MFIC”), AIF and Apollo Senior Floating Rate Fund Inc., a Maryland corporation (“AFT”), are proposing a combination of all three companies by mergers and related transactions pursuant to two separate Agreements and Plan of Merger. MFIC is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Each of AFT and AIF are registered under the 1940 Act as diversified, closed-end management investment companies.

The notice of special meeting and the joint proxy statement/prospectus accompanying this letter provide an outline of the business to be conducted at the AIF Special Meeting. At the AIF Special Meeting, you will be asked to approve the merger of AIF Merger Sub (as defined below) with and into AIF (the “AIF Mergers”), with AIF continuing as the surviving company and as a wholly-owned subsidiary of MFIC, pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AIF, AIF Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AIF Merger Sub”), and, for the limited purposes set forth therein, Apollo Investment Management, L.P., a Delaware limited partnership and the investment adviser to MFIC (“MFIC Adviser”) (as may be amended from time to time, the “AIF Merger Agreement”), subject to the terms and conditions set forth in the AIF Merger Agreement, AIF Merger Sub would merge with and into AIF (the “AIF Mergers”) (such proposal, the “AIF Merger Proposal”), with AIF continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AIF Mergers, AIF would merge with and into MFIC, with MFIC continuing as the surviving company.

The closing of the AIF Mergers (as defined below) (the “AIF Closing”) is contingent upon:

(a) MFIC Stockholder approval of the issuance of shares of MFIC common stock, par value $0.001 per share (“MFIC Common Stock”) pursuant to the Mergers (as defined below) in accordance with NASDAQ listing rule requirements (“MFIC Share Issuance” and such proposal, the “MFIC Share Issuance Proposal”),

(b) approval of the AIF Mergers by holders of shares of common stock, par value $0.001 per share (“AIF Common Stock”), of AIF, and

(c) satisfaction or waiver of certain other closing conditions.

If the AIF Mergers do not close, then MFIC will not issue shares of MFIC Common Stock to holders of AIF Common Stock (“AIF Stockholders”), even if the MFIC Share Issuance Proposal is approved by the MFIC Stockholders.

The closing of the AFT Mergers (as defined below) (the “AFT Closing”) is contingent upon:

(a) MFIC Stockholder approval of the MFIC Share Issuance Proposal,


Table of Contents

(b) approval of the AFT Mergers by holders of shares of common stock, par value $0.001 per share (“AFT Common Stock”), of AFT, and

(c) satisfaction or waiver of certain other closing conditions.

If the AFT Mergers do not close, then MFIC will not issue shares of MFIC Common Stock to holders of AFT Common Stock (“AFT Stockholders”), even if the MFIC Share Issuance Proposal is approved by the MFIC Stockholders. The AIF Closing is not contingent upon the AFT Closing having occurred, and the AFT Closing is not contingent upon the AIF Closing having occurred.

As of September 30, 2023, the net asset value (“NAV”) of MFIC Common Stock was $15.28 per share. As of September 30, 2023, the NAV of AFT Common Stock was $15.05 per share. As of September 30, 2023, the NAV of AIF Common Stock was $14.63 per share. Based on the NAVs of MFIC, AFT and AIF as of September 30, 2023, (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9849 and 0.9577 shares of MFIC Common Stock for each share of AFT Common Stock and AIF Common Stock outstanding.

AIF Mergers: Pursuant to the AIF Merger Agreement, AIF Merger Sub would merge with and into AIF (the “AIF First Merger”), with AIF continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AIF First Merger, AIF would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AIF First Merger, the “AIF Mergers”).

Subject to the terms and conditions of the AIF Merger Agreement, at the AIF Effective Time, each share of AIF Common Stock issued and outstanding immediately prior to the AIF Effective Time (other than shares owned by MFIC or any of its consolidated subsidiaries, including AIF Merger Sub (the “AIF Cancelled Shares”)) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AIF Exchange Ratio (as defined below) (cash will be paid in lieu of fractional shares). AIF has no preferred stock outstanding, and no preferred stock will be issued by MFIC as a result of the AIF Mergers.

Under the AIF Merger Agreement, as of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time (such date, the “AIF Determination Date”), MFIC and AIF will deliver to the other a calculation of its NAV as of such date (such calculation with respect to AIF, the “Closing AIF Net Asset Value” and such calculation with respect to MFIC, the “Closing AIF Merger MFIC Net Asset Value”), in each case using the same set of assumptions, methodologies and adjustments as has been historically used in preparing such calculation. Based on such calculations, the parties will calculate: (1) the “AIF Per Share NAV,” which will be equal to (i) the Closing AIF Net Asset Value divided by (ii) the number of shares of AIF Common Stock issued and outstanding as of the AIF Determination Date (excluding any AIF Cancelled Shares) and (2) the “AIF Merger MFIC Per Share NAV,” which will be equal to (A) the Closing AIF Merger MFIC Net Asset Value divided by (B) the number of shares of MFIC Common Stock issued and outstanding as of the AIF Determination Date. The “AIF Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the AIF Per Share NAV divided by (ii) the AIF Merger MFIC Per Share NAV.

MFIC and AIF will update and redeliver the Closing AIF Merger Company Net Asset Value or the Closing AIF Net Asset Value, respectively, in the event that the closing of the AIF Mergers is subsequently materially delayed or there is a material change to such calculation between the AIF Determination Date and the closing of the AIF Mergers and as needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time.

Immediately following the AIF Effective Time, MFIC will repay or prepay any amounts outstanding under AIF’s existing credit facility as of the AIF Effective Time, subject to the conditions set forth in MFIC’s senior secured credit facility.

Promptly following closing of the AIF Mergers, MFIC Adviser or one of its affiliates will pay directly to holders of shares of AIF Common Stock that are issued and outstanding immediately prior to the AIF Effective Time a special payment equal to $0.25 per share of AIF Common Stock, subject to deduction for any applicable


Table of Contents

withholding tax. This payment will not be made by or through AIF. The specific tax characteristics of the $0.25 per share special payment are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

The AIF Merger Agreement contains certain termination rights, including if the AIF Mergers are not completed on or before November 7, 2024, or if the requisite approvals of MFIC’s and AIF’s stockholders are not obtained. The AIF Merger Agreement provides that, upon the termination of the AIF Merger Agreement under certain circumstances involving entry into a definitive transaction by AIF with a third party, such third party that enters into the definitive transaction with AIF may be required to pay MFIC a termination fee of $6,348,267. The AIF Merger Agreement also provides that, upon the termination of the AIF Merger Agreement under certain circumstances involving entry into a definitive transaction by MFIC with a third party, such third party that enters into the definitive agreement with MFIC may be required to pay to AIF a termination fee of $29,905,339.

Within thirty days following the closing of the AIF Mergers or the termination of the AIF Merger Agreement pursuant to the terms thereof, as applicable, subject to the closing of the AFT Mergers and applicable law, MFIC shall distribute to the holder of each share of MFIC Common Stock as of a record date to be determined by the MFIC Board an amount in cash equal to $0.20 per share of MFIC Common Stock held by such holder. The specific tax characteristics of the $0.20 per share special distribution are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

AFT Mergers: Pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AFT, AFT Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AFT Merger Sub”), and, for the limited purposes set forth therein, MFIC Adviser (as may be amended from time to time, the “AFT Merger Agreement” and, together with the AIF Merger Agreement, the “Merger Agreements”), subject to the terms and conditions set forth in the AFT Merger Agreement, as of the applicable effective time (the “AFT Effective Time”) AFT Merger Sub would merge with and into AFT (the “AFT First Merger”), with AFT continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AFT First Merger, AFT would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AFT First Merger, the “AFT Mergers” and, together with the AIF Mergers, the “Mergers”).

Subject to the terms and conditions of the AFT Merger Agreement, at the AFT Effective Time, each share of common stock, par value $0.001 per share, of AFT (the “AFT Common Stock”) issued and outstanding immediately prior to the AFT Effective Time (other than shares owned by MFIC or any of its consolidated subsidiaries, including AFT Merger Sub (the “AFT Cancelled Shares”)) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AFT Exchange Ratio (as defined below), plus any cash (without interest) in lieu of fractional shares. AFT has no preferred stock outstanding, and no preferred stock will be issued by MFIC as a result of the AFT Mergers.

Under the AFT Merger Agreement, as of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time (such date, the “AFT Determination Date”), each of MFIC and AFT will deliver to the other a calculation of its net asset value as of such date (such calculation with respect to AFT, the “Closing AFT Net Asset Value” and such calculation with respect to MFIC, the “Closing AFT Merger MFIC Net Asset Value”), in each case using the same set of assumptions, methodologies and adjustments as has been historically used in preparing such calculation. Based on such calculations, the parties will calculate: (1) the “AFT Per Share NAV,” which will be equal to (i) the Closing AFT Net Asset Value divided by (ii) the number of shares of AFT Common Stock issued and outstanding as of the AFT Determination Date (excluding any AFT Cancelled Shares) and (2) the “AFT Merger MFIC Per Share NAV,” which will be equal to (i) the Closing AFT Merger MFIC Net Asset Value divided by (ii) the number of shares of MFIC Common Stock issued and outstanding as of the AFT Determination Date. The “AFT Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the AFT Per Share NAV divided by (ii) the AFT Merger MFIC Per Share NAV.


Table of Contents

MFIC and AFT will update and redeliver the Closing AFT Merger MFIC Net Asset Value or the Closing AFT Net Asset Value, respectively, in the event that the closing of the AFT Mergers is subsequently materially delayed or there is a material change to such calculation between the AFT Determination Date and the closing of the AFT Mergers and as needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time.

Immediately following the AFT Effective Time, MFIC will repay or prepay any amounts outstanding under AFT’s existing credit facility as of the AFT Effective Time, subject to the conditions set forth in MFIC’s senior secured credit facility.

Promptly following closing of the AFT Mergers, MFIC Adviser or one of its affiliates will pay directly to holders of shares of AFT Common Stock that are issued and outstanding immediately prior to the AFT Effective Time a special payment equal to $0.25 per share of AFT Common Stock, subject to deduction for any applicable withholding tax. This payment will not be made by or through AFT. The specific tax characteristics of the $0.25 per share special payment are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

The AFT Merger Agreement contains certain termination rights, including if the AFT Mergers are not completed on or before November 7, 2024, or if the requisite approvals of MFIC’s and AFT’s stockholders are not obtained. The AFT Merger Agreement provides that, upon the termination of the AFT Merger Agreement under certain circumstances involving entry into a definitive transaction by AFT with a third party, such third party that enters into the definitive transaction with AFT may be required to pay MFIC a termination fee of $7,029,482. The AFT Merger Agreement also provides that, upon the termination of the AFT Merger Agreement under certain circumstances involving entry into a definitive transaction by MFIC with a third party, such third party that enters into the definitive agreement with MFIC may be required to pay to AFT a termination fee of $29,905,339.

Within thirty days following the closing of the AFT Mergers or the termination of the AFT Merger Agreement pursuant to the terms thereof, as applicable, subject to the closing of the AIF Mergers and applicable law, MFIC shall distribute to the holder of each share of MFIC Common Stock as of a record date to be determined by the MFIC Board an amount in cash equal to $0.20 per share of MFIC Common Stock held by such holder. The specific tax characteristics of the $0.20 per share special distribution are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

Your vote is extremely important. The presence at the AIF Special Meeting, virtually or represented by proxy, of AIF Stockholders entitled to cast a majority of all the votes entitled to be cast at the AIF Special Meeting will constitute a quorum of AIF. At the AIF Special Meeting, you will be asked to vote on the AIF Merger Proposal. The approval of the AIF Merger Proposal requires the affirmative vote of a majority of the securities of AIF entitled to vote on the AIF Merger Proposal.

Abstentions will have the same effect as votes “against” the AIF Merger Proposal.

After careful consideration, and on the recommendation of a special committee of the Board of Directors of AIF (the “AIF Board”), the AIF Board unanimously approved the AIF Merger Agreement, declared the AIF Mergers and the transactions contemplated by the AIF Merger Agreement advisable and unanimously recommends that AIF Stockholders vote “FOR” the AIF Merger Proposal.

It is important that your shares be represented at the AIF Special Meeting. Please follow the instructions on the enclosed proxy card and authorize a proxy to vote your shares via the Internet, by telephone or by signing, dating and returning the enclosed proxy card. AIF encourages you to authorize a proxy to vote your shares via the Internet as it saves AIF significant time and processing costs. Voting by proxy does not deprive you of your right to participate in the virtual AIF Special Meeting.


Table of Contents

This joint proxy statement/prospectus describes the AIF Special Meeting, the Mergers, and the documents related to the Mergers (including the Merger Agreement) that AIF Stockholders should review before voting on the AIF Merger Proposal and should be retained for future reference. Please carefully read this entire document, including Risk Factors beginning on page 47 and as otherwise incorporated by reference in this joint proxy statement/prospectus, for a discussion of the risks relating to the Mergers, MFIC, AIF and AFT. AIF files periodic reports, current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the “SEC”). This information is available free of charge, and stockholder inquiries can be made, by contacting AIF at 9 West 57th Street, New York, NY, 10019 or by calling AIF at (212) 515-3200 or on AIF’s website at https://www.apollofunds.com/apollo-tactical-income-fund. The SEC also maintains a website at www.sec.gov that contains such information. Except for the documents incorporated by reference into this joint proxy statement/prospectus, information on AIF’s website is not incorporated into or a part of this joint proxy statement/prospectus.

No matter how many or few shares of AIF you own, your vote and participation are very important to us.

 

Sincerely yours,
 

 

Barry Cohen
Chairman of the AIF Board

Neither the SEC nor any state securities commission has approved or disapproved of the shares of MFIC Common Stock to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [            ], 2024 and is first being mailed or otherwise delivered to AIF Stockholders on or about [            ], 2024.

 

 

 

MidCap Financial Investment Corporation

9 West 57th Street

New York, NY 10019

(212) 515-3450

  

Apollo Senior Floating Rate
Fund Inc.

9 West 57th Street

New York, NY 10019

(212) 515-3200

  

Apollo Tactical Income Fund Inc.

9 West 57th Street

New York, NY 10019

(212) 515-3200


Table of Contents

APOLLO TACTICAL INCOME FUND INC.

9 West 57th Street

New York, NY 10019

 

 

NOTICE OF VIRTUAL SPECIAL MEETING OF STOCKHOLDERS

Online Meeting Only—No Physical Meeting Location

[WEBSITE ADDRESS]

[            ], 2024, at [    ] a.m., Eastern Time

 

 

Dear Stockholder:

A Special Meeting of Stockholders (the “AIF Special Meeting”) of Apollo Tactical Income Fund Inc., a Maryland corporation (“AIF”), will be conducted online on [            ], 2024, at [    ] a.m., Eastern Time at the following website: [    ].

MidCap Financial Investment Corporation, a Maryland corporation (“MFIC”), AIF and Apollo Senior Floating Rate Fund Inc., a Maryland corporation (“AFT”), are proposing a combination of all three companies by mergers and related transactions pursuant to two separate Agreements and Plan of Merger. MFIC is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Each of AFT and AIF are registered under the 1940 Act as diversified, closed-end management investment companies.

At the AIF Special Meeting, the holders of shares of common stock, par value $0.001 per share (“AIF Common Stock”), of AIF (“AIF Stockholders”) will consider and vote on a proposal to approve the merger of AIF Merger Sub (as defined below) with and into AIF (the “AIF Mergers”), with AIF continuing as the surviving company and as a wholly-owned subsidiary of MFIC, pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AIF, AIF Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AIF Merger Sub”), and, for the limited purposes set forth therein, Apollo Investment Management, L.P., a Delaware limited partnership and the investment adviser to MFIC (“MFIC Adviser”) (as may be amended from time to time, the “AIF Merger Agreement”), subject to the terms and conditions set forth in the AIF Merger Agreement, AIF Merger Sub would merge with and into AIF (such proposal, the “AIF Merger Proposal”), with AIF continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AIF Mergers, AIF would merge with and into MFIC, with MFIC continuing as the surviving company.

AIF Mergers: Pursuant to the AIF Merger Agreement, AIF Merger Sub would merge with and into AIF (the “AIF First Merger”), with AIF continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AIF First Merger, AIF would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AIF First Merger, the “AIF Mergers”).

AFT Mergers: Pursuant to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AFT, AFT Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC (“AFT Merger Sub”), and, for the limited purposes set forth therein, MFIC Adviser (as may be amended from time to time, the “AFT Merger Agreement” and together with the AIF Merger Agreement, the “Merger Agreements”), subject to the terms and conditions set forth in the AFT Merger Agreement, as of the applicable effective time (the “AFT Effective Time”) AFT Merger Sub would merge with and into AFT (the “AFT First Merger”), with AFT continuing as the surviving company and as a wholly-owned subsidiary of MFIC. Immediately after the effectiveness of the AFT First Merger, AFT would merge with and into MFIC, with MFIC continuing as the surviving company (together with the AFT First Merger, the “AFT Mergers” and, together with the AIF Mergers, the “Mergers”).


Table of Contents

AFTER CAREFUL CONSIDERATION, AND ON THE RECOMMENDATION OF A SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF AIF (THE “AIF BOARD”), THE AIF BOARD UNANIMOUSLY APPROVED THE AIF MERGER AGREEMENT, DECLARED THE AIF MERGERS AND THE TRANSACTIONS CONTEMPLATED BY THE AIF MERGER AGREEMENT ADVISABLE, AND UNANIMOUSLY RECOMMENDS THAT AIF STOCKHOLDERS VOTE “FOR” THE AIF MERGER PROPOSAL.

You have the right to receive notice of, and to vote at, the AIF Special Meeting if you were a stockholder of record of AIF at the close of business on [            ], 2024. A joint proxy statement/prospectus is attached to this Notice that describes the matters to be voted upon at the AIF Special Meeting or any adjournment(s) or postponement(s) thereof. The enclosed proxy card will instruct you as to how you may authorize a proxy to vote your shares via the Internet, by telephone or by signing, dating and returning the enclosed proxy card. In addition, information regarding how to find the logistical details of the virtual AIF Special Meeting (including how to remotely access, participate in and vote during the virtual meeting) is included beginning on page 61 of the attached joint proxy statement/prospectus.

Whether or not you plan to participate in the AIF Special Meeting, we encourage you to authorize a proxy to vote your shares by following the instructions on the enclosed proxy card. Please note, however, that if you wish to vote during the AIF Special Meeting and your shares are held of record by a broker or nominee, you must obtain a “legal” proxy issued in your name from that record holder.

We are not aware of any other business that may properly be brought before the AIF Special Meeting, and, pursuant to our bylaws, only the matters set forth in the notice of special meeting may be brought before the AIF Special Meeting.

Thank you for your continued support of AIF.

 

By order of the Board of Directors,
 

 

Kristin Hester
Chief Legal Officer and Secretary

New York, NY

[            ], 2024

To ensure proper representation at the AIF Special Meeting, please follow the instructions on the enclosed proxy card to authorize a proxy to vote your shares via the Internet or telephone, or by signing, dating and returning the enclosed proxy card. Even if you authorize a proxy to vote your shares prior to the virtual AIF Special Meeting, you still may participate in the virtual AIF Special Meeting.


Table of Contents

TABLE OF CONTENTS

 

     Page  

ABOUT THIS DOCUMENT

     1  

QUESTIONS AND ANSWERS ABOUT THE STOCKHOLDER MEETINGS AND THE MERGERS

     4  

SUMMARY OF THE MERGERS

     28  

RISK FACTORS

     47  

COMPARATIVE FEES AND EXPENSES

     59  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     65  

CAPITALIZATION

     67  

THE MFIC SPECIAL MEETING

     69  

THE AFT SPECIAL MEETING

     72  

THE AIF SPECIAL MEETING

     75  

THE MERGERS

     78  

DESCRIPTION OF THE AFT MERGER AGREEMENT

     134  

DESCRIPTION OF THE AIF MERGER AGREEMENT

     155  

DESCRIPTION OF THE MFIC SIDE LETTER AGREEMENT

     176  

DESCRIPTION OF THE AFT SIDE LETTER AGREEMENT

     177  

DESCRIPTION OF THE AIF SIDE LETTER AGREEMENT

     178  

ACCOUNTING TREATMENT OF THE MERGERS

     179  

CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     180  

MFIC PROPOSAL—APPROVAL OF THE MFIC SHARE ISSUANCE PROPOSAL

     195  

AFT PROPOSAL—APPROVAL OF THE AFT MERGER PROPOSAL

     196  

AIF PROPOSAL—APPROVAL OF THE AIF MERGER PROPOSAL

     197  

SHARE PRICE INFORMATION

     198  

MANAGEMENT OF MFIC, AFT AND AIF

     202  

PORTFOLIO MANAGEMENT OF MFIC

     203  

PORTFOLIO MANAGEMENT OF AFT AND AIF

     207  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS OF MFIC

     211  

BUSINESS OF MFIC

     212  

INVESTMENT OBJECTIVE AND STRATEGY OF MFIC

     213  

FINANCIAL HIGHLIGHTS OF MFIC

     214  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF MFIC

     216  

SENIOR SECURITIES OF MFIC

     217  

PORTFOLIO COMPANIES OF MFIC

     220  

CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS OF MFIC

     238  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS OF AFT

     240  

INVESTMENT OBJECTIVE AND STRATEGY OF AFT

     241  

FINANCIAL HIGHLIGHTS OF AFT

     242  

LEGAL PROCEEDINGS OF AFT

     244  

SENIOR SECURITIES OF AFT

     245  

CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS OF AFT

     246  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS OF AIF

     248  

INVESTMENT OBJECTIVE AND STRATEGY OF AIF

     249  

FINANCIAL HIGHLIGHTS OF AIF

     250  

LEGAL PROCEEDINGS OF AIF

     252  

SENIOR SECURITIES OF AIF

     253  

CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS OF AIF

     254  

DESCRIPTION OF CAPITAL STOCK OF MFIC

     256  

DESCRIPTION OF CAPITAL STOCK OF AFT

     264  

 

i


Table of Contents

DESCRIPTION OF CAPITAL STOCK OF AIF

     271  

DISTRIBUTION REINVESTMENT PLAN OF MFIC, AFT AND AIF

     278  

COMPARISON OF MFIC, AFT AND AIF STOCKHOLDER RIGHTS

     279  

CUSTODIAN, TRANSFER AND DISTRIBUTION PAYING AGENT AND REGISTRAR

     286  

BROKERAGE ALLOCATION AND OTHER PRACTICES OF MFIC

     287  

BROKERAGE ALLOCATION AND OTHER PRACTICES OF AFT

     288  

BROKERAGE ALLOCATION AND OTHER PRACTICES OF AIF

     290  

LEGAL MATTERS

     292  

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

     293  

INDEPENDENT ACCOUNTANTS

     293  

OTHER MATTERS

     294  

STOCKHOLDERS SHARING AN ADDRESS

     295  

WHERE YOU CAN FIND MORE INFORMATION

     296  

INCORPORATION BY REFERENCE FOR MFIC

     297  

INCORPORATION BY REFERENCE FOR AFT

     298  

INCORPORATION BY REFERENCE FOR AIF

     299  

COMPARISON OF CLOSED-END FUNDS AND BDCS

     300  

ANNEX A—AFT MERGER AGREEMENT

     A-1  

ANNEX B—AIF MERGER AGREEMENT

     B-1  

ANNEX C-1—OPINION OF THE FINANCIAL ADVISOR TO THE MFIC SPECIAL COMMITTEE FOR THE AFT MERGERS

     C-1  

ANNEX C-2—OPINION OF THE FINANCIAL ADVISOR TO THE MFIC SPECIAL COMMITTEE FOR THE AIF MERGERS

     C-5  

ANNEX D—OPINION OF THE FINANCIAL ADVISOR TO THE AFT SPECIAL COMMITTEE

     D-1  

ANNEX E—OPINION OF THE FINANCIAL ADVISOR TO THE AIF SPECIAL COMMITTEE

     E-1  

PART C

     II-1  

OTHER INFORMATION

     II-1  

SIGNATURES

     II-5  

EXHIBIT INDEX

     II-6  

 

ii


Table of Contents

ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form N-14 filed with the U.S. Securities and Exchange Commission (the “SEC”) by MFIC, (File No. 333-275640), constitutes a prospectus of MFIC under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the MFIC Common Stock to be issued to AFT Stockholders and AIF Stockholders pursuant to the Merger Agreements.

MFIC, AFT and AIF, are proposing a combination of all three companies by the Mergers and certain related transactions pursuant to the Merger Agreements. For more information regarding the Mergers and these related transactions, see the section of this document titled “The Mergers.”

MFIC is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Each of AFT and AIF are registered under the 1940 Act as diversified, closed-end management investment companies.

This document also constitutes a joint proxy statement of MFIC, AFT and AIF under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It also constitutes a notice of meeting with respect to: (1) the MFIC Special Meeting, at which MFIC Stockholders will be asked to vote upon the MFIC Share Issuance Proposal; (2) the AFT Special Meeting, at which AFT Stockholders will be asked to vote upon the AFT Merger Proposal; and (3) the AIF Special Meeting, at which AIF Stockholders will be asked to vote upon the AIF Merger Proposal.

No one has been authorized to provide you with information that is different from that contained or incorporated by reference in this joint proxy statement/prospectus, including in determining how to vote the shares of MFIC Common Stock, AFT Common Stock or AIF Common Stock, as applicable. This joint proxy statement/prospectus is dated [            ], 2024. You should assume that the information contained or incorporated by reference in this joint proxy statement/prospectus is accurate only as of that date, and any information in documents that we have incorporated by reference is accurate only as of the date of such document incorporated by reference. The business, financial condition, liquidity, results of operations and prospects of MFIC, AFT or AIF may have changed since those dates. Neither any mailing of this joint proxy statement/prospectus to MFIC Stockholders, AFT Stockholders or AIF Stockholders nor the issuance of MFIC Common Stock in connection with the Mergers (as defined below) will create any implication to the contrary.

This joint proxy statement/prospectus contains a description of the representations and warranties that MFIC, AFT and AIF made to each other in the Merger Agreements. Representations and warranties made by MFIC, AFT, AIF and other applicable parties are also set forth in contracts and other documents (including the Merger Agreements) that are attached or filed as exhibits to this joint proxy statement/prospectus or are incorporated by reference into this joint proxy statement/prospectus. These materials are included or incorporated by reference only to provide you with information regarding the terms and conditions of the agreements, and not to provide any other factual information regarding MFIC, AFT or AIF or their respective businesses. Accordingly, the representations and warranties and other provisions of the Merger Agreements should not be read alone, but instead should be read only in conjunction with the other information provided elsewhere in this joint proxy statement/prospectus or incorporated by reference into this joint proxy statement/prospectus.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

Except where the context otherwise indicates, information contained in this joint proxy statement/prospectus regarding MFIC has been provided by MFIC, information contained in this joint proxy statement/prospectus regarding AFT has been provided by AFT and information contained in this joint proxy statement/prospectus regarding AIF has been provided by AIF.

 

1


Table of Contents

SUPPLEMENTAL FINANCIAL INFORMATION

In May 2020, the SEC adopted Rule 6-11 under Regulation S-X, which eliminated the requirement to provide pro forma financial information for fund acquisitions if certain supplemental information is disclosed, as described in Rule 6-11(d) under Regulation S-X (“Rule 6-11(d)”). Furthermore, the SEC amended Form N-14 to make the disclosure requirements therein consistent with Rule 6-11(d). MFIC, AFT and AIF believe that the disclosure in this joint proxy statement/prospectus meets the supplemental disclosure requirements set forth in Rule 6-11(d) because: (1) this joint proxy statement/prospectus includes a pro forma fee table, showing (a) the pre-transaction fee structures of MFIC, AFT and AIF and (b) the post-transaction fee structure of the combined company, (2) MFIC, AFT and AIF have determined that the Mergers would not result in a material change in MFIC’s, AFT’s and AIF’s investment portfolio due to investment restrictions, and (3) MFIC, AFT and AIF have determined that there are no material differences in accounting policies of MFIC, AFT and AIF.

The sums or percentages, as applicable, of certain tables included in this joint proxy statement/prospectus may not foot due to rounding.

CERTAIN DEFINED TERMS

When used in this document, unless otherwise indicated in this document or the context otherwise requires:

 

   

“AFT” refers to Apollo Senior Floating Rate Fund Inc., a Maryland corporation;

 

   

“AFT Common Stock” refers to the shares of common stock, par value $0.001 per share, of AFT;

 

   

“AFT Effective Time” refers to the effective time of the AFT First Merger;

 

   

“AFT First Merger” refers to the merger of AFT Merger Sub with and into AFT, with AFT as the surviving company;

 

   

“AFT Merger Agreement” refers to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AFT, AFT Merger Sub and, for the limited purposes set forth therein, MFIC Adviser (as may be amended from time to time);

 

   

“AFT Merger Proposal” refers to the proposal for AFT Stockholders to approve the AFT First Merger;

 

   

“AFT Merger Sub” refers to AFT Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC;

 

   

“AFT Mergers” refers to, taken together, the AFT First Merger and the AFT Second Merger;

 

   

“AFT Second Merger” refers to the merger of AFT (as the surviving company of the AFT First Merger) with and into MFIC, with MFIC as the surviving company;

 

   

“AFT Special Meeting” refers to the Special Meeting of AFT Stockholders to consider and vote on the AFT Merger Proposal;

 

   

“AFT Stockholders” refers to the holders of shares of AFT Common Stock;

 

   

“AIF” refers to Apollo Tactical Income Fund Inc., a Maryland corporation;

 

   

“AIF Common Stock” refers to the shares of common stock, par value $0.001 per share, of AIF;

 

   

“AIF Effective Time” refers to the effective time of the AIF First Merger;

 

   

“AIF First Merger” refers to the merger of AIF Merger Sub with and into AIF, with AIF as the surviving company;

 

2


Table of Contents
   

“AIF Merger Agreement” refers to the Agreement and Plan of Merger, dated as of November 7, 2023, by and among MFIC, AIF, AIF Merger Sub and, for the limited purposes set forth therein, MFIC Adviser (as may be amended from time to time);

 

   

“AIF Merger Proposal” refers to the proposal for AIF Stockholders to approve the AIF First Merger;

 

   

“AIF Merger Sub” refers to AIF Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of MFIC;

 

   

“AIF Mergers” refers to, taken together, the AIF First Merger and the AIF Second Merger;

 

   

“AIF Second Merger” refers to the merger of AIF (as the surviving company of the AIF First Merger) with and into MFIC, with MFIC as the surviving company;

 

   

“AIF Special Meeting” refers to the Special Meeting of AIF Stockholders to consider and vote on the AIF Merger Proposal;

 

   

“AIF Stockholders” refers to the holders of shares of AIF Common Stock;

 

   

“Merger Agreements” refers to, taken together, the AFT Merger Agreement and the AIF Merger Agreement;

 

   

“Mergers” refers to, taken together, the AFT Mergers and the AIF Mergers;

 

   

“MFIC” or “Acquiring Fund” refers to MidCap Financial Investment Corporation, a Maryland corporation;

 

   

“MFIC Adviser” refers to Apollo Investment Management, L.P., a Delaware limited partnership and the investment adviser to MFIC;

 

   

“MFIC Common Stock” refers to the shares of common stock, par value $0.001 per share, of MFIC;

 

   

“MFIC Share Issuance Proposal” refers to the proposal for MFIC Stockholders to approve the issuance of MFIC Common Stock pursuant to the Mergers in accordance with NASDAQ listing rule requirements;

 

   

“MFIC Special Meeting” refers to the Special Meeting of MFIC Stockholders to consider and vote on the MFIC Share Issuance Proposal;

 

   

“MFIC Stockholders” refers to the holders of shares of MFIC Common Stock;

 

   

“Target Fund” refers to each of AFT and AIF.

 

3


Table of Contents

QUESTIONS AND ANSWERS ABOUT THE STOCKHOLDER MEETINGS AND THE MERGERS

The questions and answers below highlight only selected information from this joint proxy statement/prospectus. They do not contain all of the information that may be important to you. You should read carefully this entire document, and any information incorporated by reference herein, to fully understand the Merger Agreements and the transactions contemplated thereby (including the Mergers) and the voting procedures for each of the MFIC Special Meeting, the AFT Special Meeting and the AIF Special Meeting.

Questions and Answers about the Stockholder Meetings

 

Q:

Why am I receiving these materials?

 

A:

MFIC is furnishing these materials in connection with the solicitation of proxies by the Board of Directors of MFIC (the “MFIC Board”) for use at the MFIC Special Meeting to be held virtually on [            ], 2024, at [    ] a.m., Eastern Time, at the following website: [    ], and any adjournments or postponements thereof.

AFT is furnishing these materials in connection with the solicitation of proxies by the Board of Directors of AFT (the “AIF Board”) for use at the AFT Special Meeting to be held virtually on [            ], 2024, at [    ] a.m., Eastern Time, at the following website: [    ], and any adjournments or postponements thereof.

AIF is furnishing these materials in connection with the solicitation of proxies by the Board of Directors of AIF (the “AIF Board”) for use at the AIF Special Meeting to be held virtually on [            ], 2024, at [    ] a.m., Eastern Time, at the following website: [    ], and any adjournments or postponements thereof.

This joint proxy statement/prospectus and the accompanying materials are being mailed on or about [            ], 2024 to stockholders of record of MFIC, AFT and AIF described below and are available at [    ].

The MFIC Special Meeting, AFT Special Meeting and AIF Special Meeting are being held in connection with the proposed Mergers. Apollo Investment Management, L.P., a Delaware limited partnership and the investment adviser to MFIC (“MFIC Adviser”), believes that the Mergers will be in the best interests of MFIC Stockholders, AFT Stockholders and AIF Stockholders. See “—If I am a MFIC Stockholder, why are the Mergers being proposed?”, “—If I am an AFT Stockholder, why are the Mergers being proposed?”, “—If I am an AIF Stockholder, why are the Mergers being proposed?”, and “The Mergers—Reasons for the Mergers” for additional information.

 

Q:

What items will be considered and voted on at the MFIC Special Meeting?

 

A:

At the MFIC Special Meeting, MFIC Stockholders will be asked to approve the issuance of shares of MFIC Common Stock to AFT Stockholders and AIF Stockholders pursuant to the Merger Agreements in accordance with NASDAQ listing rule requirements (the “MFIC Share Issuance Proposal”).

 

Q:

What items will be considered and voted on at the AFT Special Meeting?

 

A:

At the AFT Special Meeting, AFT Stockholders will be asked to approve the AFT Mergers pursuant to the AFT Merger Agreement (the “AFT Merger Proposal”).

 

Q:

What items will be considered and voted on at the AIF Special Meeting?

 

A:

At the AIF Special Meeting, AIF Stockholders will be asked to approve the AIF Mergers pursuant to the AIF Merger Agreement (the “AIF Merger Proposal”).

 

4


Table of Contents
Q:

How does the MFIC Board recommend voting on the MFIC Share Issuance Proposal at the MFIC Special Meeting?

 

A:

After careful consideration, and on the recommendation of a special committee of the MFIC Board (the “MFIC Special Committee”), the MFIC Board approved the Merger Agreements, declared the Mergers and the transactions contemplated by the Merger Agreements advisable and unanimously recommends that MFIC Stockholders vote “FOR” the MFIC Share Issuance Proposal (the “MFIC Board Recommendation”).

 

Q:

How does the AFT Board recommend voting on the AFT Merger Proposal at the AFT Special Meeting?

 

A:

After careful consideration, and on the recommendation of a special committee of the AFT Board (the “AFT Special Committee”), the AFT Board approved the AFT Merger Agreement, declared the AFT Mergers and the transactions contemplated by the AFT Merger Agreement advisable and unanimously recommends that AFT Stockholders vote “FOR” the AFT Merger Proposal (the “AFT Board Recommendation”).

 

Q:

How does the AIF Board recommend voting on the AIF Merger Proposal at the AIF Special Meeting?

 

A:

After careful consideration, and on the recommendation of a special committee of the AIF Board (the “AIF Special Committee”), the AIF Board approved the AIF Merger Agreement, declared the AIF Mergers and the transactions contemplated by the AIF Merger Agreement advisable and unanimously recommends that AIF Stockholders vote “FOR” the AIF Merger Proposal (the “AIF Board Recommendation”).

 

Q:

What is the composition and purpose of the MFIC Special Committee?

 

A:

The MFIC Special Committee consists of Barbara Matas, R. Rudolph Reinfrank and Emanuel Pearlman, each of whom are directors of the MFIC Board who are not “interested persons” of MFIC (“MFIC Independent Directors”), as defined in the Investment Company Act of 1940, as amended (the “1940 Act”). Barbara Matas is the chair of the MFIC Special Committee. The MFIC Special Committee was authorized to, among other things: (1) review, evaluate and investigate the Mergers, including to determine whether the Mergers are advisable and fair to and in the best interests of MFIC and all MFIC Stockholders, and (2) recommend whether or not the MFIC Board should approve or reject the Mergers. The MFIC Special Committee was not obligated to recommend the Mergers to the MFIC Board. The MFIC Special Committee was also authorized to, and did, select and retain, at MFIC’s expense, outside legal counsel and an independent financial advisor to assist the MFIC Special Committee in its evaluation of the Mergers.

The MFIC Special Committee unanimously recommended that the MFIC Board approve the Merger Agreements and the transactions contemplated thereby, including the Mergers. See “The Mergers—Reasons for the Mergers—MFIC.

 

Q:

What is the composition and purpose of the AFT Special Committee?

 

A:

The AFT Special Committee consists of Glenn N. Marchak, Meredith Coffey and Todd J. Slotkin, each of whom are directors of the AFT Board who are not “interested persons” of AFT (“AFT Independent Directors”), as defined in the 1940 Act. Mr. Marchak is the chair of the AFT Special Committee. The AFT Special Committee was authorized to, among other things: (1) review, evaluate and investigate the Mergers, including to determine whether the Mergers are advisable and fair to and in the best interests of AFT and all AFT Stockholders, and (2) recommend whether or not the AFT Board should approve or reject the Mergers. The AFT Special Committee was not obligated to recommend the Mergers to the AFT Board. The AFT Special Committee was also authorized to, and did, select and retain, at AFT’s expense, outside legal counsel and an outside financial advisor to assist the AFT Special Committee in its evaluation of the Mergers.

 

5


Table of Contents

The AFT Special Committee unanimously recommended that the AFT Board approve the AFT Merger Agreement and the transactions contemplated thereby, including the AFT Mergers. See “The Mergers—Reasons for the Mergers—AFT.

 

Q:

What is the composition and purpose of the AIF Special Committee?

 

A:

The AIF Special Committee consists of Glenn N. Marchak, Meredith Coffey and Todd J. Slotkin, each of whom are directors of the AIF Board who are not “interested persons” of AIF (“AIF Independent Directors”), as defined in the 1940 Act. Mr. Marchak is the chair of the AIF Special Committee. The AIF Special Committee was authorized to, among other things: (1) review, evaluate and investigate the Mergers, including to determine whether the Mergers are advisable and fair to and in the best interests of AIF and all AIF Stockholders, and (2) recommend whether or not the AIF Board should approve or reject the Mergers. The AIF Special Committee was not obligated to recommend the Mergers to the AIF Board. The AIF Special Committee was also authorized to, and did, select and retain, at AIF’s expense, outside legal counsel and an outside financial advisor to assist the AIF Special Committee in its evaluation of the Mergers.

The AIF Special Committee unanimously recommended that the AIF Board approve the AIF Merger Agreement and the transactions contemplated thereby, including the AIF Mergers. See “The Mergers—Reasons for the Mergers—AIF.

 

Q:

If I am an MFIC Stockholder, what is the “record date” and what does it mean?

 

A:

The record date for the MFIC Special Meeting is the close of business on [            ], 2024 (the “MFIC Record Date”). The MFIC Record Date was established by the MFIC Board, and only holders of record of shares of MFIC Stock on the MFIC Record Date are entitled to receive notice of the MFIC Special Meeting and vote at the MFIC Special Meeting. As of the MFIC Record Date, there were [            ] shares of MFIC Common Stock issued and outstanding and entitled to vote at the MFIC Special Meeting.

 

Q:

If I am an AFT Stockholder, what is the “record date” and what does it mean?

 

A:

The record date for the AFT Special Meeting is the close of business on [            ], 2024 (the “AFT Record Date”). The AFT Record Date was established by the AFT Board, and only holders of record of shares of AFT Common Stock on the AFT Record Date are entitled to receive notice of the AFT Special Meeting and vote at the AFT Special Meeting. As of the AFT Record Date, there were [            ] shares of AFT Common Stock issued and outstanding and entitled to vote at the AIF Special Meeting.

 

Q:

If I am an AIF Stockholder, what is the “record date” and what does it mean?

 

A:

The record date for the AIF Special Meeting is the close of business on [                ], 2024 (the “AIF Record Date”). The AIF Record Date was established by the AIF Board, and only holders of record of shares of AIF Common Stock on the AIF Record Date are entitled to receive notice of the AIF Special Meeting and vote at the AIF Special Meeting. As of the AIF Record Date, there were [            ] shares of AIF Common Stock issued and outstanding and entitled to vote at the AIF Special Meeting.

 

Q:

If I am a MFIC Stockholder, how many votes do I have?

 

A:

Each share of MFIC Common Stock has one vote on each matter to be considered at the MFIC Special Meeting or any adjournment or postponement thereof. Each share of MFIC Common Stock is entitled to one vote for each share of MFIC Common Stock held on the MFIC Record Date for the MFIC Special Meeting.

 

Q:

If I am a AFT Stockholder, how many votes do I have?

 

A:

Each share of AFT Common Stock has one vote on the matter to be considered at the AFT Special Meeting or any adjournment or postponement thereof. Each share of AFT Common Stock is entitled to one vote for each share of AFT Common Stock held on the AFT Record Date for the AFT Special Meeting.

 

6


Table of Contents
Q:

If I am a AIF Stockholder, how many votes do I have?

 

A:

Each share of AIF Common Stock has one vote on the matter to be considered at the AIF Special Meeting or any adjournment or postponement thereof. Each share of AIF Common Stock is entitled to one vote for each share of AIF Common Stock held on the AIF Record Date for the AIF Special Meeting.

 

Q:

If I am a MFIC Stockholder, how do I vote?

 

A:

The MFIC Special Meeting will be hosted virtually via live Internet webcast. Any MFIC Stockholder can attend the MFIC Special Meeting online at [    ]. If you were an MFIC Stockholder as of the MFIC Record Date, or you hold a valid proxy for the MFIC Special Meeting, you can vote at the MFIC Special Meeting. It is important to note that MFIC Stockholders have the same rights and opportunities by participating in a virtual meeting as they would if attending an in-person meeting. A summary of the information you need to attend the MFIC Special Meeting online is as follows:

 

   

Instructions on how to attend and participate via the Internet, including how to demonstrate proof of ownership of MFIC Common Stock, are posted at [    ];

 

   

Assistance with questions regarding how to attend and participate via the Internet will be provided at [    ] on the day of the MFIC Special Meeting;

 

   

The webcast will start at [    ] a.m., Eastern Time, on [            ], 2024. Online check-in will begin at [    ] a.m., Eastern Time. Please allow time for online check-in procedures;

 

   

MFIC Stockholders may vote and submit questions while attending the MFIC Special Meeting via the Internet; and

 

   

MFIC Stockholders will need a control number to enter the MFIC Special Meeting.

An MFIC Stockholder may also authorize a proxy by telephone or through the Internet using the toll-free telephone numbers or web address printed on your proxy card. Authorizing a proxy by telephone or through the Internet requires you to input the control number located on your proxy card. After inputting the control number, you will be prompted to direct your proxy to vote on the MFIC Share Issuance Proposal. You will have an opportunity to review your directions and make any necessary changes before submitting your directions and terminating the telephone call or Internet link.

 

   

By Internet: [    ] or scanning the QR Barcode on the enclosed proxy card.

 

   

By telephone: [    ] to reach a toll-free, automated touchtone voting line, or [    ] Monday through Friday [9:00 a.m. until 9:00 p.m.] Eastern Time to reach a toll-free, live operator line.

 

   

By mail: You may also authorize a proxy to vote your shares by mail by following the directions and indicating your instructions on the enclosed proxy card, dating and signing the proxy card, and promptly returning the proxy card in the envelope provided, which requires no postage if mailed in the United States. Please allow sufficient time for your proxy card to be received on or prior to [    ] p.m., Eastern Time, on [            ], 2024.

Important notice regarding the availability of proxy materials for the MFIC Special Meeting. MFIC’s joint proxy statement/prospectus and the proxy card are available at [    ].

 

Q:

If I am a AFT Stockholder, how do I vote?

 

A:

The AFT Special Meeting will be hosted virtually via live Internet webcast. Any AFT Stockholder can attend the AFT Special Meeting online at [    ]. If you were an AFT Stockholder as of the AFT Record Date, or you hold a valid proxy for the AFT Special Meeting, you can vote at the AFT Special Meeting. It is important to note that AFT Stockholders have the same rights and opportunities by participating in a virtual

 

7


Table of Contents
  meeting as they would if attending an in-person meeting. A summary of the information you need to attend the AFT Special Meeting online is as follows:

 

   

Instructions on how to attend and participate via the Internet, including how to demonstrate proof of ownership of AFT Common Stock, are posted at [    ];

 

   

Assistance with questions regarding how to attend and participate via the Internet will be provided at [    ] on the day of the AFT Special Meeting;

 

   

The webcast will start at [    ] a.m., Eastern Time, on [            ], 2024. Online check-in will begin at [    ] a.m., Eastern Time. Please allow time for online check-in procedures;

 

   

AFT Stockholders may vote and submit questions while attending the AFT Special Meeting via the Internet; and

 

   

AFT Stockholders will need a control number to enter the AFT Special Meeting.

An AFT Stockholder may also authorize a proxy by telephone or through the Internet using the toll-free telephone numbers or web address printed on your proxy card. Authorizing a proxy by telephone or through the Internet requires you to input the control number located on your proxy card. After inputting the control number, you will be prompted to direct your proxy to vote on the AFT Merger Proposal. You will have an opportunity to review your directions and make any necessary changes before submitting your directions and terminating the telephone call or Internet link.

 

   

By Internet: [    ] or scanning the QR Barcode on the enclosed proxy card.

 

   

By telephone: [    ] to reach a toll-free, automated touchtone voting line, or [    ] Monday through Friday [9:00 a.m. until 9:00 p.m.] Eastern Time to reach a toll-free, live operator line.

 

   

By mail: You may also authorize a proxy to vote your shares by mail by following the directions and indicating your instructions on the enclosed proxy card, dating and signing the proxy card, and promptly returning the proxy card in the envelope provided, which requires no postage if mailed in the United States. Please allow sufficient time for your proxy card to be received on or prior to [    ] p.m., Eastern Time, on [            ], 2024.

Important notice regarding the availability of proxy materials for the AFT Special Meeting. AFT’s joint proxy statement/prospectus and the proxy card are available at [    ].

 

Q:

If I am a AIF Stockholder, how do I vote?

 

A:

The AIF Special Meeting will be hosted virtually via live Internet webcast. Any AIF Stockholder can attend the AIF Special Meeting online at [    ]. If you were an AIF Stockholder as of the AIF Record Date, or you hold a valid proxy for the AIF Special Meeting, you can vote at the AIF Special Meeting. It is important to note that AIF Stockholders have the same rights and opportunities by participating in a virtual meeting as they would if attending an in-person meeting. A summary of the information you need to attend the AIF Special Meeting online is as follows:

 

   

Instructions on how to attend and participate via the Internet, including how to demonstrate proof of ownership of AIF Common Stock, are posted at [    ];

 

   

Assistance with questions regarding how to attend and participate via the Internet will be provided at [    ] on the day of the AIF Special Meeting;

 

   

The webcast will start at [    ] a.m., Eastern Time, on [            ], 2024. Online check-in will begin at [    ] a.m., Eastern Time. Please allow time for online check-in procedures;

 

   

AIF Stockholders may vote and submit questions while attending the AIF Special Meeting via the Internet; and

 

   

AIF Stockholders will need a control number to enter the AIF Special Meeting.

 

8


Table of Contents

An AIF Stockholder may also authorize a proxy by telephone or through the Internet using the toll-free telephone numbers or web address printed on your proxy card. Authorizing a proxy by telephone or through the Internet requires you to input the control number located on your proxy card. After inputting the control number, you will be prompted to direct your proxy to vote on the AIF Merger Proposal. You will have an opportunity to review your directions and make any necessary changes before submitting your directions and terminating the telephone call or Internet link.

 

   

By Internet: [    ] or scanning the QR Barcode on the enclosed proxy card.

 

   

By telephone: [    ] to reach a toll-free, automated touchtone voting line, or [    ] Monday through Friday [9:00 a.m. until 9:00 p.m.] Eastern Time to reach a toll-free, live operator line.

 

   

By mail: You may also authorize a proxy to vote your shares by mail by following the directions and indicating your instructions on the enclosed proxy card, dating and signing the proxy card, and promptly returning the proxy card in the envelope provided, which requires no postage if mailed in the United States. Please allow sufficient time for your proxy card to be received on or prior to [    ] p.m., Eastern Time, on [            ], 2024.

Important notice regarding the availability of proxy materials for the AIF Special Meeting. AIF’s joint proxy statement/prospectus and the proxy card are available at [    ].

 

Q:

What if a MFIC Stockholder does not specify a choice for a matter when authorizing a proxy?

 

A:

All properly executed proxies representing shares of MFIC Common Stock received at the MFIC Special Meeting will be voted in accordance with the directions given. If the enclosed proxy card is signed and returned without any directions given, the shares of MFIC Common Stock will be voted “FOR” the MFIC Share Issuance Proposal.

 

Q:

What if a AFT Stockholder does not specify a choice for a matter when authorizing a proxy?

 

A:

All properly executed proxies representing shares of AFT Common Stock received at the AFT Special Meeting will be voted in accordance with the directions given. If the enclosed proxy card is signed and returned without any directions given, the shares of AFT Common Stock will be voted “FOR” the AFT Merger Proposal.

 

Q:

What if a AIF Stockholder does not specify a choice for a matter when authorizing a proxy?

 

A:

All properly executed proxies representing shares of AIF Common Stock received at the AIF Special Meeting will be voted in accordance with the directions given. If the enclosed proxy card is signed and returned without any directions given, the shares of AIF Common Stock will be voted “FOR” the AIF Merger Proposal.

 

Q:

If I am a MFIC Stockholder, AFT Stockholder and AIF Stockholder, how can I revoke a proxy?

 

A:

If you are a stockholder of record of MFIC, AFT or AIF, you may revoke a proxy at any time before it is exercised by notifying Broadridge Investor Communication Solutions, Inc. (“Broadridge”) in writing sufficiently in advance of the MFIC Special Meeting, AFT Special Meeting and AIF Special Meeting, respectively, by submitting a properly executed later-dated proxy, or by voting electronically at the MFIC Special Meeting, AFT Special Meeting and AIF Special Meeting, respectively. If you hold shares of MFIC Common Stock, AFT Common Stock and AIF Common Stock through a broker or nominee, you must follow the instructions you receive from them in order to revoke your voting instructions. Participating in the virtual MFIC Special Meeting, AFT Special Meeting and AIF Special Meeting does not revoke your proxy unless you also vote online at the MFIC Special Meeting, AFT Special Meeting and AIF Special Meeting, respectively.

 

9


Table of Contents
Q:

How do I vote shares of MFIC Common Stock, AFT Common Stock or AIF Common Stock held through a broker or nominee?

 

A:

If you hold shares of MFIC Common Stock, AFT Common Stock or AIF Common Stock through a broker or nominee, you must direct your intermediary regarding how you would like your shares voted by following the voting instructions you receive from your broker or nominee. Please instruct your broker or nominee regarding how you would like your shares voted so your vote can be counted.

 

Q:

What constitutes a “quorum” for the MFIC Special Meeting?

 

A:

For MFIC to conduct business at the MFIC Special Meeting, a quorum of MFIC Stockholders must be present. The presence at the MFIC Special Meeting, virtually or represented by proxy, of MFIC Stockholders entitled to cast a majority of all the votes entitled to be cast at the MFIC Special Meeting will constitute a quorum of MFIC. Abstentions will be treated as shares present for quorum purposes. Since MFIC Stockholders will only vote on the MFIC Share Issuance Proposal, there will not be any broker non-votes. You should instruct your broker or other nominee as to how to vote your shares following the directions contained in such voting instruction card.

Pursuant to MFIC’s Sixth Amended and Restated Bylaws (the “MFIC Bylaws”), if such quorum is not established for the MFIC Special Meeting, the chairman of the MFIC Special Meeting will have the power to adjourn the MFIC Special Meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the MFIC Special Meeting.

 

Q:

What constitutes a “quorum” for the AFT Special Meeting?

 

A:

For AFT to conduct business at the AFT Special Meeting, a quorum of AFT Stockholders must be present. The presence at the AFT Special Meeting, virtually or represented by proxy, of AFT Stockholders entitled to cast a majority of all the votes entitled to be cast at the AFT Special Meeting will constitute a quorum of AFT. Abstentions will be treated as shares present for quorum purposes. Since AFT Stockholders will only vote on the AFT Merger Proposal, there will not be any broker non-votes. You should instruct your broker or other nominee as to how to vote your shares following the directions contained in such voting instruction card.

Pursuant to AFT’s Amended and Restated Bylaws (the “AFT Bylaws”), if such quorum is not established for the AFT Special Meeting, the chairman of the AFT Special Meeting will have the power to adjourn the AFT Special Meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the AFT Special Meeting.

 

Q:

What constitutes a “quorum” for the AIF Special Meeting?

 

A:

For AIF to conduct business at the AIF Special Meeting, a quorum of AIF Stockholders must be present. The presence at the AIF Special Meeting, virtually or represented by proxy, of AIF Stockholders entitled to cast a majority of all the votes entitled to be cast at the AIF Special Meeting will constitute a quorum of AIF. Abstentions will be treated as shares present for quorum purposes. Since AIF Stockholders will only vote on the AIF Merger Proposal, there will not be any broker non-votes. You should instruct your broker or other nominee as to how to vote your shares following the directions contained in such voting instruction card.

Pursuant to AIF’s Amended and Restated Bylaws (the “AIF Bylaws”), if such quorum is not established for the AIF Special Meeting, the chairman of the AIF Special Meeting will have the power to adjourn the AIF Special Meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the AIF Special Meeting.

 

10


Table of Contents
Q:

What vote is required to approve the MFIC Share Issuance Proposal being considered at the MFIC Special Meeting?

 

A:

The affirmative vote of MFIC Stockholders representing a majority of all the votes cast at the MFIC Special Meeting is required to approve the MFIC Share Issuance Proposal.

Abstentions will have no effect on the voting outcome of the MFIC Share Issuance Proposal, although abstentions will be treated as shares present for quorum purposes. If the enclosed proxy card is signed and returned without any directions given, the shares of MFIC Common Stock will be voted “FOR” the MFIC Share Issuance Proposal.

 

Q:

What vote is required to approve the AFT Merger Proposal being considered at the AFT Special Meeting?

 

A:

The affirmative vote of a majority of the securities of AFT entitled to vote on the AFT Merger Proposal is required for approval of the AFT Merger Proposal.

Abstentions will have the same effect as votes “against” the AFT Merger Proposal. If the enclosed proxy card is signed and returned without any directions given, the shares of AFT Common Stock will be voted “FOR” the AFT Merger Proposal.

 

Q:

What vote is required to approve the AIF Merger Proposal being considered at the AIF Special Meeting?

 

A:

The affirmative vote of a majority of the securities of AIF entitled to vote on the AIF Merger Proposal is required for approval of the AIF Merger Proposal.

Abstentions will have the same effect as votes “against” the AIF Merger Proposal. If the enclosed proxy card is signed and returned without any directions given, the shares of AIF Common Stock will be voted “FOR” the AIF Merger Proposal.

 

Q:

What will happen if the AFT Merger Proposal being considered at the AFT Special Meeting and/or the MFIC Share Issuance Proposal being considered at the MFIC Special Meeting is/are not approved by the required vote?

 

A:

As discussed in more detail in “Description of the AFT Merger Agreement—Conditions to Closing the AFT Mergers,” the closing of the AFT Mergers (the “AFT Closing”) are conditioned on (i) AFT Stockholder approval of the AFT Merger Proposal, (ii) MFIC Stockholder approval of the MFIC Share Issuance Proposal and (iii) satisfaction or waiver of certain other closing conditions.

If the AFT Mergers do not close because either MFIC Stockholders or AFT Stockholders do not approve the applicable proposals or any of the other conditions to the AFT Closing is not satisfied or waived, each of MFIC and AFT will continue to operate as a stand-alone company pursuant to the current agreements in place for each, and each of MFIC’s and AFT’s respective directors and officers will continue to serve as its directors and officers, respectively, until their successors are duly elected and qualified, or their resignation.

 

Q:

What will happen if the AIF Merger Proposal being considered at the AIF Special Meeting and/or the MFIC Share Issuance Proposal being considered at the MFIC Special Meeting is/are not approved by the required vote?

 

A:

As discussed in more detail in “Description of the AIF Merger Agreement—Conditions to Closing the AIF Mergers,” the closing of the AIF Mergers (the “AIF Closing”) are conditioned on (i) AIF Stockholder approval of the AIF Merger Proposal, (ii) MFIC Stockholder approval of the MFIC Share Issuance Proposal and (iii) satisfaction or waiver of certain other closing conditions.

If the AIF Mergers do not close because either MFIC Stockholders or AIF Stockholders do not approve the applicable proposals or any of the other conditions to the AIF Closing is not satisfied or waived, each of

 

11


Table of Contents

MFIC and AIF will continue to operate as a stand-alone company pursuant to the current agreements in place for each, and each of MFIC’s and AIF’s respective directors and officers will continue to serve as its directors and officers, respectively, until their successors are duly elected and qualified, or their resignation.

 

Q:

When will the final voting results be announced?

 

A:

Preliminary voting results will be announced at each stockholder meeting. Final voting results for MFIC, AFT and AIF will be published by MFIC in a current report on Form 8-K within four business days after the date of the MFIC Special Meeting.

 

Q:

Will MFIC, AFT and AIF incur expenses in soliciting proxies?

 

A:

MFIC, AFT and AIF will bear the cost of preparing, assembling and mailing this joint proxy statement/prospectus and the accompanying Notice of Special Meeting of MFIC Stockholders, Notice of Special Meeting of AFT Stockholders and Notice of Special Meeting of AIF Stockholders, as applicable, and proxy cards based on their respective NAVs as of September 30, 2023. Solely in the event that the AFT Mergers are consummated, MFIC Adviser shall reimburse each of MFIC and AFT for all fees and expenses incurred and payable by MFIC and AFT, in connection with or related to soliciting proxies. Solely in the event that the AIF Mergers are consummated, MFIC Adviser shall reimburse each of MFIC and AIF for all fees and expenses incurred and payable by MFIC and AIF, in connection with or related to soliciting proxies. If either of the Mergers is consummated, MFIC Adviser shall reimburse MFIC for all fees and expenses incurred and payable by MFIC related to the merger transactions. If both Mergers are not consummated, MFIC Adviser shall reimburse MFIC for all fees and expenses incurred and payable by MFIC up to a specified amount. If the AFT Mergers are not consummated, MFIC Adviser shall reimburse AFT for all fees and expenses incurred and payable by AFT up to $375,000. If the AIF Mergers are not consummated, MFIC Adviser shall reimburse AIF for all fees and expenses incurred and payable by AIF up to $375,000. Accordingly, in the event that the specific amount is exceeded by MFIC, AFT or AIF, then MFIC Stockholders, AFT Stockholders or AIF Stockholders, as applicable, would bear the costs that exceed the amount reimbursed by MFIC Adviser. MFIC, AFT and AIF intend to use the services of Broadridge to aid in the solicitation of proxies for an estimated fee of approximately $108,000 ($50,000 for MFIC, $30,000 for AFT and $28,000 for AIF) plus pass through charges. No additional compensation will be paid to directors, officers or regular employees for such services. For more information regarding expenses related to the Mergers, see “Questions and Answers about the Mergers—Who is responsible for paying the expenses relating to completing the Mergers?

 

Q:

What does it mean if I receive more than one proxy card?

 

A:

Some of your shares of MFIC Common Stock, AFT Common Stock or AIF Common Stock, as applicable, may be registered differently or held in a different account. You should authorize a proxy to vote the shares in each of your accounts via the Internet or by mail or telephone. If you mail proxy cards, please sign, date and return each proxy card to guarantee that all of your shares are voted. If you hold your shares in registered form and wish to combine your stockholder accounts in the future, you should call MFIC Investor Relations department at (212) 515-3450, AIF at (877) 864-4834 or AFT at (877) 864-4834.

 

Q:

Are the proxy materials available electronically?

 

A:

In addition to mailing hard copies of the proxy materials, MFIC, AFT and AIF have made the registration statement (of which this joint proxy statement/prospectus forms a part), the Notice of Special Meeting of MFIC Stockholders, the Notice of Special Meeting of AFT Stockholders, the Notice of Special Meeting of AIF Stockholders and the proxy cards available to MFIC Stockholders, AFT Stockholders and AIF Stockholders on the Internet. Stockholders may (i) access and review the proxy materials of MFIC, AFT and AIF, as applicable, (ii) authorize their proxies, as described in “The MFIC Special Meeting—Voting of

 

12


Table of Contents
  Proxies,” “The AFT Special Meeting—Voting of Proxies,” “The AIF Special Meeting—Voting of Proxies,” and/or (iii) elect to receive certain future proxy materials by electronic delivery via the Internet address provided below.

The registration statement (of which this joint proxy statement/prospectus forms a part), the Notice of Special Meeting of MFIC Stockholders, the Notice of Special Meeting of AFT Stockholders, the Notice of Special Meeting of AIF Stockholders and the proxy cards are available at [    ].

 

Q:

Will my vote make a difference?

 

A:

Yes; your vote is very important. Your vote is needed to ensure the proposals can be acted upon. Please respond immediately to help avoid potential delays and save significant additional expenses associated with soliciting stockholder votes.

 

Q:

Whom can I contact with any additional questions?

 

A:

If you are an MFIC Stockholder, you can contact Investor Relations at the below contact information with any additional questions:

Investor Relations

MidCap Financial Investment Corporation

9 West 57th Street

New York, NY 10019

(212) 515-3450

If you are an AFT Stockholder, you can contact AFT at the below contact information with any additional questions:

Investor Relations

Apollo Senior Floating Rate Fund Inc.

9 West 57th Street

New York, NY 10019

(877) 864-4834

If you are an AIF Stockholder, you can contact AIF at the below contact information with any additional questions:

Investor Relations

Apollo Tactical Income Fund Inc.

9 West 57th Street

New York, NY 10019

(877) 864-4834

 

Q:

Where can I find more information about MFIC, AFT and AIF?

 

A:

You can find more information about MFIC, AFT and AIF in the documents described under the caption “Where You Can Find More Information.”

 

Q:

What do I need to do now?

 

A:

We urge you to read carefully this entire document, including its annexes and the documents incorporated by reference. You should also review the documents referenced under “Where You Can Find More Information” and consult with your accounting, legal and tax advisors.

 

13


Table of Contents

Questions and Answers about the Mergers

 

Q:

If I am a MFIC Stockholder, why are the Mergers being proposed?

 

A:

The Mergers are being proposed because MFIC Adviser believes the Mergers are in the best interests of MFIC Stockholders. MFIC Adviser expects the Mergers to be accretive to both net investment income per share and return on equity for MFIC Stockholders. MFIC Adviser expects this accretion to result from several factors, including the deployment of incremental leverage on AFT’s and AIF’s net assets and the elimination of certain redundant professional services and other duplicative corporate expenses following the AFT Closing and the AIF Closing.

In addition, MFIC Adviser believes that the Mergers will provide several other benefits for MFIC Stockholders, including, but not limited to: (i) increased scale, (ii) increased portfolio diversification and an improvement in other portfolio metrics, (iii) increased stock liquidity, (iv) a potential expansion in the combined company’s equity research analyst coverage and (v) improved access to capital. See “The Mergers—Reasons for the Mergers” for additional information.

 

Q:

If I am an AFT Stockholder, why are the AFT Mergers being proposed?

 

A:

The AFT Mergers are being proposed because AFT Adviser believes the AFT Mergers are in the best interests of AFT Stockholders. AFT Adviser expects the AFT Mergers to be accretive to both net investment income per share and return on equity for AFT Stockholders. AFT Adviser expects this accretion to result from several factors, including the deployment of incremental leverage on AFT’s net assets, the proposed rotation in the ordinary course following the AFT Closing of AFT’s liquid assets into directly originated loans to middle market companies originated by Apollo and the elimination of certain redundant professional services and other duplicative corporate expenses following the AFT Closing.

AFT Adviser believes that the AFT Mergers will provide several other benefits for AFT Stockholders, including, but not limited to: (i) the AFT Stockholder Payment, (ii) increased scale, (iii) increased stock liquidity, (iv) immediate research analyst coverage and (v) improved access to capital. In addition, AFT Adviser expects the combined company’s access to greater leverage following the AFT Closing to provide the combined company with the flexibility to use the additional leverage to, among other things, grow the assets within the combined company’s portfolio, and potentially invest in assets that AFT Adviser believes produce better risk-adjusted returns as compared to AFT’s existing assets.

AFT Adviser believes that the many benefits of the AFT Mergers outweigh the increase in total fees and interest expense that will be borne by the combined company under the MFIC Advisory Agreement as compared to the total fees and interest expense currently payable by AFT. See “—If I’m a AFT Stockholder or AIF Stockholder, will my expenses increase as a result of the Mergers?” and “The Mergers—Reasons for the Mergers” for additional information.

 

Q:

If I am an AIF Stockholder, why are the AIF Mergers being proposed?

 

A:

The AIF Mergers are being proposed because AIF Adviser believes the AIF Mergers are in the best interests of AIF Stockholders. AIF Adviser expects the AIF Mergers to be accretive to both net investment income per share and return on equity for AIF Stockholders. AIF Adviser expects this accretion to result from several factors, including the deployment of incremental leverage on AIF’s net assets, the proposed rotation in the ordinary course following the AIF Closing of AIF’s liquid assets into directly originated loans to middle market companies originated by Apollo and the elimination of certain redundant professional services and other duplicative corporate expenses following the AIF Closing.

AIF Adviser believes that the AIF Mergers will provide several other benefits for AIF Stockholders, including, but not limited to: (i) the AIF Stockholder Payment, (ii) increased scale, (iii) increased stock liquidity, (iv) immediate research analyst coverage and (v) improved access to capital. In addition, AIF Adviser expects the combined company’s access to greater leverage following the AIF Closing to provide the combined company with the flexibility to use the additional leverage to, among other things, grow the assets within the combined

 

14


Table of Contents

company’s portfolio, and potentially invest in assets that AIF Adviser believes produce better risk-adjusted returns as compared to AIF’s existing assets.

AIF Adviser believes that the many benefits of the AIF Mergers outweigh the increase in total fees and interest expense that will be borne by the combined company under the MFIC Advisory Agreement as compared to the total fees and interest expense currently payable by AIF. See “—If I’m a AFT Stockholder or AIF Stockholder, will my expenses increase as a result of the Mergers?” and “The Mergers—Reasons for the Mergers” for additional information.

 

Q:

Did the Boards consider any potential conflicts of interest in the course of their deliberations?

 

A:

In the course of their deliberations, the Boards took into account that MFIC, AFT and AIF have external investment advisers that are affiliated with one another. In addition, the Boards recognized that the MFIC Advisory Agreement includes higher total fees than those currently payable by AFT or AIF under its respective Advisory Agreement, and, as a result, MFIC Adviser would recognize higher total fees after the AFT Closing and/or the AIF Closing. Accordingly, the Boards formed the Special Committees comprised of the independent directors of each Board to consider the Mergers, who, in turn, engaged their own financial advisors to assist them in their evaluation of the Mergers. Following their deliberations, the Special Committees unanimously recommended the Mergers to their respective Boards, even with these potential conflicts of interest taken into account.

 

Q:

What will happen in the Mergers?

 

A:

Pursuant to the terms of the AFT Merger Agreement, at the effective time of the AFT Mergers (the “AFT Effective Time”), AFT Merger Sub will be merged with and into AFT. AFT will be the surviving company and will continue its existence as a corporation under the laws of the State of Maryland, and the separate corporate existence of AFT Merger Sub will cease. Immediately after the occurrence of the AFT Effective Time, AFT will merge with and into MFIC with MFIC continuing as the surviving company.

Pursuant to the terms of the AIF Merger Agreement, at the effective time of the AIF Mergers (the “AIF Effective Time”), AIF Merger Sub will be merged with and into AIF. AIF will be the surviving company and will continue its existence as a corporation under the laws of the State of Maryland, and the separate corporate existence of AIF Merger Sub will cease. Immediately after the occurrence of the AIF Effective Time, AIF will merge with and into MFIC with MFIC continuing as the surviving company.

 

Q:

What is the difference between a closed-end management investment company and a business development company?

 

A:

There are certain similarities and differences between business development companies (“BDCs”), and registered closed-end management investment companies (“CECs”). Special provisions of the 1940 Act allow certain qualified closed-end companies to elect to be regulated as BDCs rather than as CECs. In order to make an election to be treated as a BDC rather than a CEC, a fund must be operated for the purpose of investing in securities of non-public or small capitalization United States companies and making managerial assistance available to such companies. Making available managerial assistance means, among other things, any arrangement whereby a BDC, through its investment manager, directors, officers or employees, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company. BDCs must have at least 70% of its assets invested in “qualifying assets” (as described below) for it to acquire any assets other than qualifying securities.

Another material difference between CECs and BDCs is that CECs may not incur additional debt unless asset coverage is at least 300% immediately after giving effect to the issuance, whereas for a BDC the same asset coverage must be at least 200% (or 150% under certain circumstances). The difference in asset coverage generally means that AIF and AFT may only incur leverage up to a debt-to-equity ratio of approximately 1:2, whereas MFIC, which has an asset coverage of 150%, can incur leverage up to a debt-to-equity ratio of approximately 2:1. Also, while only a single class of debt is permitted for CECs, BDCs are

 

15


Table of Contents

allowed to issue multiple classes of debt. In terms of investment management compensation, a CEC may not pay compensation based on gains to its advisor unless all common shareholders are “qualified clients” under the 1940 Act, or the fees are structured as fulcrum fees. A BDC, however, may pay a capital gains based performance fee of up to 20% of realized gains if it does not have an option or profit sharing plan. For additional information regarding MFIC’s capital gains based performance fee, see “—What are the pro forma costs and expenses estimated to be incurred by the combined company in the first year following completion of the Mergers?” and “Comparative Fees and Expenses.” Finally, a BDC has more flexibility with respect to transactions with certain remote affiliates, which include shareholders that own more than 5% of a BDC’s outstanding voting securities, but under 25% of the voting securities. A BDC may engage in certain affiliated transactions with such remote affiliates so long as those transactions are, among other things, approved by a majority of the independent directors. For additional information regarding the differences between the 1940 Act’s regulation of CECs and BDCs, see “Comparison of Closed-End Funds and BDCs.”

 

Q:

What will AFT Stockholders receive in the AFT Merger?

 

A:

Subject to the terms and conditions of the AFT Merger Agreement, at the AFT Effective Time, each share of AFT Common Stock issued and outstanding immediately prior to the AFT Effective Time (other than shares owned by MFIC or any of its consolidated subsidiaries, including AFT Merger Sub (the “AFT Cancelled Shares”)) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AFT Exchange Ratio (as defined below) (cash will be paid in lieu of fractional shares). AFT has no preferred stock outstanding, and no preferred stock will be issued by MFIC as a result of the AFT Mergers.

Under the AFT Merger Agreement, as of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time (such date, the “AFT Determination Date”), MFIC and AFT will deliver to the other a calculation of its NAV as of such date (such calculation with respect to AFT, the “Closing AFT Net Asset Value” and such calculation with respect to MFIC, the “Closing AFT Merger MFIC Net Asset Value”), in each case using the same set of assumptions, methodologies and adjustments as has been historically used in preparing such calculation. Based on such calculations, the parties will calculate: (1) the “AFT Per Share NAV,” which will be equal to (i) the Closing AFT Net Asset Value divided by (ii) the number of shares of AFT Common Stock issued and outstanding as of the AFT Determination Date (excluding any AFT Cancelled Shares) and (2) the “AFT Merger MFIC Per Share NAV,” which will be equal to (A) the Closing AFT Merger MFIC Net Asset Value divided by (B) the number of shares of MFIC Common Stock issued and outstanding as of the AFT Determination Date. The “AFT Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the AFT Per Share NAV divided by (ii) the AFT Merger MFIC Per Share NAV. Furthermore, promptly following the AFT Closing, the MFIC Adviser or one of its affiliates will pay directly to holders of shares of AFT Common Stock that are issued and outstanding immediately prior to the AFT Effective Time a special payment equal to $0.25 per share of AFT Common Stock, subject to deduction for any applicable withholding tax (the “AFT Stockholder Payment”). This payment will not be made by or through AFT.

MFIC and AFT will update and redeliver the Closing AFT Merger MFIC Net Asset Value and the Closing AFT Net Asset Value, respectively, in the event that the AFT Closing is subsequently materially delayed or there is a material change to such calculation between the AFT Determination Date and the AFT Closing and as needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time.

See “Summary of the Mergers—AFT Merger Structure” for a graphical representation of the structure of the AFT Mergers.

 

Q:

What will AIF Stockholders receive in the AIF Mergers?

 

A:

Subject to the terms and conditions of the AIF Merger Agreement, at the AIF Effective Time, each share of AIF Common Stock issued and outstanding immediately prior to the AIF Effective Time (other than shares owned by MFIC or any of its consolidated subsidiaries, including AIF Merger Sub (the “AIF Cancelled Shares”)) will be converted into the right to receive a number of shares of MFIC Common Stock equal to

 

16


Table of Contents
  the AIF Exchange Ratio (as defined below) (cash will be paid in lieu of fractional shares). AIF has no preferred stock outstanding, and no preferred stock will be issued by MFIC as a result of the AIF Mergers.

Under the AIF Merger Agreement, as of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time (such date, the “AIF Determination Date”), MFIC and AIF will deliver to the other a calculation of its NAV as of such date (such calculation with respect to AIF, the “Closing AIF Net Asset Value” and such calculation with respect to MFIC, the “Closing AIF Merger MFIC Net Asset Value”), in each case using the same set of assumptions, methodologies and adjustments as has been historically used in preparing such calculation. Based on such calculations, the parties will calculate: (1) the “AIF Per Share NAV,” which will be equal to (i) the Closing AIF Net Asset Value divided by (ii) the number of shares of AIF Common Stock issued and outstanding as of the AIF Determination Date (excluding any AIF Cancelled Shares) and (2) the “AIF Merger MFIC Per Share NAV,” which will be equal to (A) the Closing AIF Merger MFIC Net Asset Value divided by (B) the number of shares of MFIC Common Stock issued and outstanding as of the AIF Determination Date. The “AIF Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the AIF Per Share NAV divided by (ii) the AIF Merger MFIC Per Share NAV. Furthermore, promptly following the AIF Closing, the MFIC Adviser or one of its affiliates will pay directly to holders of shares of AIF Common Stock that are issued and outstanding immediately prior to the AIF Effective Time a special payment equal to $0.25 per share of AIF Common Stock, subject to deduction for any applicable withholding tax (the “AIF Stockholder Payment”). This payment will not be made by or through AIF.

MFIC and AIF will update and redeliver the Closing AIF Merger MFIC Net Asset Value and the Closing AIF Net Asset Value, respectively, in the event that the AIF Closing is subsequently materially delayed or there is a material change to such calculation between the AIF Determination Date and the AIF Closing and as needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time.

See “Summary of the Mergers— AIF Merger Structure” for a graphical representation of the structure of the AIF Mergers.

 

Q:

What will MFIC Stockholders receive in the Mergers?

 

A:

MFIC Stockholders will continue to own their shares of MFIC Common Stock following the Mergers.

See “Summary of the Mergers—Merger Structure” for a graphical representation of the structure of the Mergers.

 

Q:

Is the AFT Exchange Ratio subject to any adjustment?

 

A:

Yes. The AFT Exchange Ratio will be appropriately adjusted (to the extent not already taken into account in determining the Closing AFT Merger MFIC Net Asset Value and the Closing AFT Net Asset Value, as applicable) if, between the AFT Determination Date and the AFT Effective Time, the respective outstanding shares of MFIC Common Stock or AFT Common Stock will have been increased or decreased or changed into or exchanged for a different number or kind of shares or securities, in each case, as a result of any reclassification, recapitalization, stock split, reverse stock split, split-up, combination or exchange of shares, or if a stock dividend or dividend payable in any other securities will be authorized and declared with a record date within such period, as permitted by the AFT Merger Agreement. Because the AFT Exchange Ratio will be determined within 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time, the time period during which such an adjustment could occur will be relatively short.

 

Q:

Is the AIF Exchange Ratio subject to any adjustment?

 

A:

Yes. The AIF Exchange Ratio will be appropriately adjusted (to the extent not already taken into account in determining the Closing AIF Merger MFIC Net Asset Value and the Closing AIF Net Asset Value, as applicable) if, between the AIF Determination Date and the AIF Effective Time, the respective outstanding shares of MFIC Common Stock or AIF Common Stock will have been increased or decreased or changed

 

17


Table of Contents
  into or exchanged for a different number or kind of shares or securities, in each case, as a result of any reclassification, recapitalization, stock split, reverse stock split, split-up, combination or exchange of shares, or if a stock dividend or dividend payable in any other securities will be authorized and declared with a record date within such period, as permitted by the AIF Merger Agreement. Because the AIF Exchange Ratio will be determined within 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time, the time period during which such an adjustment could occur will be relatively short.

 

Q:

Who is responsible for paying the expenses relating to completing the Mergers?

 

A:

If the Mergers are not completed, MFIC, AFT and AIF will have incurred substantial expenses for which no ultimate benefit will have been received. MFIC has incurred out-of-pocket expenses in connection with the Mergers for investment banking, legal and accounting fees and financial printing and other related charges, much of which will be incurred even if the Mergers are not completed. Upon the closing of each Merger, an affiliate of Apollo has agreed to reimburse MFIC, AFT and AIF for all merger-related expenses incurred and payable in connection with the transactions. If a Merger does not close, a portion of the merger-related expenses of MFIC, AFT or AIF, as applicable, will be reimbursed by an affiliate of Apollo (with the remainder to be borne by MFIC, AFT or AIF, as applicable). It is anticipated that MFIC Adviser or its affiliate will bear expenses of approximately $7,235,000 in connection with the Mergers, if consummated. It is anticipated that MFIC will bear expenses of approximately $0 if the AFT Mergers are not consummated and the AIF Mergers are consummated, and expenses of approximately $0 if the AIF Mergers are not consummated and the AFT Mergers are consummated. It is anticipated that AFT will bear expenses of approximately $478,000 if the AFT Mergers are not consummated, after taking into account MFIC Adviser’s expense reimbursement of $375,000. It is anticipated that AIF will bear expenses of approximately $420,000 if the AIF Mergers are not consummated, after taking into account MFIC Adviser’s expense reimbursement of $375,000.

 

Q:

If I’m an MFIC Stockholder, will my expenses increase as a result of the Mergers?

 

A:

The investment advisory agreement between MFIC and MFIC Adviser (the “MFIC Advisory Agreement”) will remain in place for the combined company. As a result, the terms of the management fee and incentive fee will continue to be the same under the MFIC Advisory Agreement. See “—What are the pro forma costs and expenses estimated to be incurred by the combined company in the first year following completion of the Mergers?” and “Comparative Fees and Expenses” for additional details and assumptions.

 

Q:

If I’m a AFT Stockholder or AIF Stockholder, will my expenses increase as a result of the Mergers?

 

A:

As a result of the Mergers, AFT Stockholder and AIF Stockholder expenses will likely increase. The MFIC Advisory Agreement includes a 1.75% base management fee based on average net assets of MFIC, an incentive fee based on income of 17.50% and an incentive fee based on capital gains of 17.50%. Following the Mergers, AFT Stockholders and AIF Stockholders will be subject to MFIC’s management fee and incentive fee. The investment advisory agreement between AFT and Apollo Credit Management, LLC (the “AFT/AIF Adviser”) (the “AFT Advisory Agreement”) includes a 1.0% base management fee based on average daily managed assets and no incentive fee. The investment advisory agreement between AIF and AFT/AIF Adviser (the “AIF Advisory Agreement”) includes a 1.0% base management fee based on average daily managed assets and no incentive fee. As a result, the total fees to be paid by the combined company under the MFIC Advisory Agreement could potentially be higher than total fees currently payable by AFT or AIF under its respective Advisory Agreement.

In addition, as discussed above, MFIC has the ability to incur more debt than AFT and AIF. As of September 30, 2023, MFIC’s asset coverage ratio was 169%, whereas AFT’s and AIF’s asset coverage ratios were 280% and 275%, respectively. The additional leverage at MFIC corresponds to additional interest expense in the amount of approximately 10.22% on net assets relative to 3.53% and 3.66% for AFT and AIF, respectively.

Futhermore, MFIC’s expenses are greater than AFT’s and AIF’s expenses due to MFIC’s additional filing requirements, including but not limited to the requirement to file a 10-K on a annual basis and 10-Qs on a

 

18


Table of Contents

quarterly basis, as opposed to AFT and AIF, which are only required to file an annual report and semi-annual report. See “—What are the pro forma costs and expenses estimated to be incurred by the combined company in the first year following completion of the Mergers?” and “Comparative Fees and Expenses” for additional details and assumptions.

 

Q:

What are the pro forma costs and expenses estimated to be incurred by the combined company in the first year following completion of the Mergers?

 

A:

The following tables are intended to assist MFIC Stockholders, AFT Stockholders and AIF Stockholders in understanding the costs and expenses that an investor in shares of MFIC Common Stock, AFT Common Stock or AIF Common Stock bears directly or indirectly and, based on the assumptions described in “Comparative Fees and Expenses,” the pro forma costs and expenses estimated to be incurred by the combined company in the first year following completion of the Mergers based on net assets and total assets. Although there appears to be significant differences in expenses based on net assets, since AFT and AIF are levered, we believe that it is appropriate for investors to review the expenses of MFIC, AFT and AIF based on total assets as well. We caution you that some of the percentages indicated in the table below are estimates and may vary. The tables below are based on information as of September 30, 2023 for each party (except as noted below) and includes expenses of the applicable consolidated subsidiaries. Any footing differences are due to rounding. See “Comparative Fees and Expenses” for additional details and assumptions.

 

     Actual     Pro Forma(5)  
   MFIC     AFT     AIF     MFIC/
AFT/AIF(1)
    MFIC/
AFT(2)
    MFIC/
AIF(3)
 

Annual expenses (as a percentage of net assets attributable to common stock):

            

Base management fees(4)

     1.75     1.57     1.59     1.75     1.75     1.75

Incentive fees

     2.42     None       None       2.57     2.62     2.63

Interest payments on borrowed funds

     10.22     3.53     3.66     8.79     8.79     8.79

Other expenses

     1.53     0.88     0.92     1.19     1.17     1.17

Total annual expenses

     15.91     5.99     6.16     14.30     14.32     14.34

Annual expenses (as a percentage of total assets):

            

Base management fees(4)

     0.70     0.98     0.98     0.77     0.74     0.74

Incentive fees

     0.97     None       None       1.15     1.12     1.12

Interest payments on borrowed funds

     4.12     2.19     2.26     3.93     3.93     3.93

Other expenses

     0.62     0.55     0.57     0.53     0.52     0.52

Total annual expenses

     6.40     3.71     3.81     6.38     6.31     6.31

 

  (1)

Represents MFIC’s pro forma capitalization as adjusted to reflect the effects following the completion of both the AFT Mergers and AIF Mergers. The AFT Closing is not contingent upon the AIF Closing having occurred, and the AIF Closing is not contingent upon the AFT Closing having occurred.

  (2)

Represents MFIC’s pro forma capitalization as adjusted to reflect the effects following the completion of the AFT Mergers. The AFT Closing is not contingent upon the AIF Closing having occurred, and the AIF Closing is not contingent upon the AFT Closing having occurred.

  (3)

Represents MFIC’s pro forma capitalization as adjusted to reflect the effects following the completion of the AIF Mergers. The AIF Closing is not contingent upon the AFT Closing having occurred, and the AFT Closing is not contingent upon the AIF Closing having occurred.

  (4)

Base management fees are being calculated on average net assets for MFIC. Base management fees are being calculated for AFT and AIF based on average daily managed assets.

 

19


Table of Contents
  (5)

The MFIC Special Distribution is excluded from this pro-forma calculation as such distribution would affect the net assets of MFIC. The expenses relating to the Mergers are not included in these pro-forma calculations because MFIC Adviser will pay the transaction-related expenses if the Mergers are consummated. These pro-forma calculations assume that the AFT Mergers and AIF Mergers will occur.

 

Q:

What are the potential benefits that could offset the likely higher expenses associated with owning shares in MFIC as the combined company relative to owning shares in AFT and AIF, respectively?

 

A:

AFT Adviser and AIF Adviser believe that the potential benefits of the transaction to AFT Stockholders and AIF Stockholders outweigh the higher expenses. As a BDC, MFIC can incur leverage up to a debt-to-equity ratio of approximately 2:1. In contrast, AFT and AIF can incur leverage up to a debt-to-equity ratio of approximately 1:2. Given that MFIC is permitted to incur more leverage than AFT and AIF, owning shares in MFIC as the combined company will allow AFT Stockholders and AIF Stockholders to have access to greater leverage which has the potential to increase and sustain the combined company’s investment yield and returns to stockholders. Typically, funds use leverage to earn an investment return on equity through leverage that exceeds the cost of borrowing and thereby increases the returns to stockholders. The increased debt-to-equity ratio of MFIC as the combined company has the potential to magnify the results of returns to stockholders in both a positive and negative direction. In addition, access to greater leverage provides MFIC as the combined company with flexibility to use the additional leverage to potentially:

 

   

Grow the assets within the combined company’s portfolio;

   

Increase the combined company’s net investment income with a larger portfolio;

   

Provide a higher return on equity; and

   

Invest in assets that AFT Adviser and AIF Adviser believe produce better risk-adjusted returns as compared to AFT’s and AIF’s existing assets.

 

Q:

Will there be any special payments in connection with the AFT Mergers?

 

A:

Promptly following the closing of the AFT Mergers, the MFIC Adviser or one of its affiliates will pay directly to holders of shares of AFT Common Stock that are issued and outstanding immediately prior to the AFT Effective Time the AFT Stockholder Payment, subject to deduction for any applicable withholding tax. This payment will not be made by or through AFT.

 

Q:

Will there be any special payments in connection with the AIF Mergers?

 

A:

Promptly following the closing of the AIF Mergers, the MFIC Adviser or one of its affiliates will pay directly to holders of shares of AIF Common Stock that are issued and outstanding immediately prior to the AIF Effective Time the AIF Stockholder Payment, subject to deduction for any applicable withholding tax. This payment will not be made by or through AIF.

 

Q:

Will there be a special distribution following the consummation of the Mergers?

 

A:

Within thirty days following the closing of the AIF Mergers or the termination of the AIF Merger Agreement pursuant to the terms thereof, as applicable, subject to the closing of the AFT Mergers and applicable law, MFIC shall distribute to the holder of each share of MFIC Common Stock as of a record date to be determined by the MFIC Board an amount in cash equal to $0.20 per share of MFIC is described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

Within thirty days following the closing of the AFT Mergers or the termination of the AFT Merger Agreement pursuant to the terms thereof, as applicable, subject to the closing of the AIF Mergers and applicable law, MFIC shall distribute to the holder of each share of MFIC Common Stock as of a record date to be determined by the MFIC Board an amount in cash equal to $0.20 per share of MFIC Common Stock held by such holder. The specific tax characteristics of the $0.20 per share special distribution are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

 

20


Table of Contents
Q:

Will I receive regular distributions after the Mergers?

 

A:

Subject to applicable legal restrictions and the sole discretion of the MFIC Board, after the Mergers, MFIC intends to declare and pay regular distributions to MFIC Stockholders on a quarterly basis. For a history of the distribution declarations and distributions paid by MFIC for the nine months ended September 30, 2023, see “Share Price Information—MFIC.” The amount and timing of past distributions are not a guarantee of any future distributions, or the amount thereof, the payment, timing and amount of which will be determined by the MFIC Board and depend on MFIC’s financial condition and earnings, contractual restrictions, legal and regulatory considerations and other factors. See “Distribution Reinvestment Plan of MFIC, AIF and AFT” for information regarding MFIC’s distribution reinvestment plan (“DRIP”).

Following the AFT Effective Time, the holders of shares of AFT Common Stock will be entitled to receive distributions declared by the MFIC Board with a record date after the AFT Effective Time theretofore payable with respect to the whole shares of MFIC Common Stock received as part of the AFT Merger Consideration (as defined below).

Following the AIF Effective Time, the holders of shares of AIF Common Stock will be entitled to receive distributions declared by the MFIC Board with a record date after the AIF Effective Time theretofore payable with respect to the whole shares of MFIC Common Stock received as part of the AIF Merger Consideration (as defined below).

 

Q:

Are the Mergers subject to any third party consents?

 

A:

Under the Merger Agreements, MFIC, AFT and AIF have agreed to cooperate with each other and use reasonable best efforts to take, or cause to be taken, in good faith, all actions, and to do, or cause to be done, all things necessary, including to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings (including any required applications, notices or other filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), to obtain as promptly as practicable all permits of all governmental entities and all permits, consents, approvals, confirmations and authorizations of all third parties, in each case, that are necessary or advisable, to consummate the transactions contemplated by the Merger Agreements (including the Mergers) in the most expeditious manner practicable, and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such third parties and governmental entities. There can be no assurance that any permits, consents, approvals, confirmations or authorizations will be obtained or that such permits, consents, approvals, confirmations or authorizations will not impose conditions or requirements that, individually or in the aggregate, would or could reasonably be expected to have a material adverse effect on the financial condition, results of operations, assets or business of the combined company following the Mergers.

 

Q:

What will happen to AFT’s and AIF’s credit facilities following the Mergers?

 

A:

Immediately following the AFT Effective Time, MFIC will repay or prepay any amounts outstanding under AFT’s existing credit facility as of the AFT Effective Time, subject to the conditions set forth in MFIC’s senior secured credit facility.

Immediately following the AIF Effective Time, MFIC will repay or prepay any amounts outstanding under AIF’s existing credit facility as of the AIF Effective Time, subject to the conditions set forth in MFIC’s senior secured credit facility.

 

Q:

How will the combined company be managed following the Mergers?

 

A:

Subject to applicable law, the directors of MFIC immediately prior to the Mergers will remain the directors of MFIC, as the surviving company following the Mergers, and will hold office until their respective successors are duly elected and qualify, or their earlier death, resignation or removal. Subject to applicable

 

21


Table of Contents
  law, the officers of MFIC immediately prior to the Mergers will remain the officers of MFIC and will hold office until their respective successors are duly appointed and qualify, or their earlier death, resignation or removal. Following the Mergers, MFIC Adviser will continue to be the investment adviser to MFIC.

 

Q:

How does the investment strategy of AFT and AIF differ from that of MFIC and what investment strategy changes are expected to occur in connection with the Mergers?

 

A:

MFIC, AFT and AIF are proposing a combination of all three companies by mergers with MFIC as the surviving company. MFIC, AFT and AIF have substantially similar investment objectives. MFIC’s investment objective is not changing in connection with Mergers. Accordingly, no material changes to the investment strategy of the Target Funds is expected to occur in connection with the Mergers. The table below compares the investment objective of each Fund

 

    

MFIC

(Acquiring Fund)

  

AFT

(Target Fund)

  

AIF

(Target Fund)

Investment Objective

   MFIC’s investment objective is to generate current income and, to a lesser extent, long-term capital appreciation. MFIC invests primarily in directly originated and privately negotiated first lien senior secured loans to privately held U.S. middle-market companies, which it generally defines as companies with less than $75 million in EBITDA, as may be adjusted for market disruptions, mergers and acquisitions-related charges and synergies, and other items. To a lesser extent, MFIC may invest in other types of securities including first lien unitranche, second lien senior secured, unsecured, subordinated, and mezzanine loans, and equities in both private and public middle market companies.    AFT’s investment objective is to seek current income and preservation of capital. AFT seeks to achieve its investment objective by investing primarily in senior, secured loans made to companies whose debt is rated below investment grade and investments with similar characteristics.    AIF’s primary investment objective is to seek current income with a secondary objective of preservation of capital. AIF seeks to achieve its investment objectives primarily by allocating its assets among different types of credit instruments based on absolute and relative value considerations and its analysis of the credit markets.

For additional information, see “Investment Objective and Strategy of MFIC”, “Investment Objective and Strategy of AFT” and “Investment Objective and Strategy of AIF.”

 

22


Table of Contents
Q:

What are the differences in the character of the investments in which MFIC invests, as opposed to AFT and/or AIF, if any, and how will the investments made by AFT Stockholders and AIF Stockholders change as a result of the proposed Mergers?

 

A:

Although MFIC’s, AFT’s and AIF’s portfolios appear similar, there are various differences in the types of investments MFIC makes, compared to AFT and AIF. Apollo received an exemptive order from the SEC (the “Order”), which permits MFIC and other regulated funds greater flexibility to negotiate the terms of co-investment transactions with certain affiliates, including investment funds managed by MFIC Adviser or its affiliates. Pursuant to the Order, MFIC invests on a side-by-side basis with one or more other Apollo funds in directly originated loans to privately held U.S. middle-market companies. As a result, 92% of MFIC’s portfolio consists of direct corporate lending as of September 30, 2023.

While AFT’s and AIF’s portfolios consist of direct originated loans, the majority of AFT’s and AIF’s portfolios consists of broadly syndicated loans. As of September 30, 2023, AFT’s portfolio consisted of 23% direct corporate lending, 71% broadly syndicated loans, 5% high yield bonds, and 1% other and AIF’s portfolio consisted of 33% direct corporate lending, 46% broadly syndicated loans, 13% high yield bonds, and 7% structured credit, and 1% other.

Following the AFT Closing and AIF Closing and in the ordinary course, AFT Stockholders and AIF Stockholders investments will reflect the character of the investments in which MFIC invests consistent with its investment objective. MFIC Adviser believes this will benefit AFT Stockholders and AIF Stockholders because they will primarily invest in directly originated corporate loans, which MFIC Adviser believes produce better risk-adjusted returns as compared to AFT’s and AIF’s existing assets.

 

Q:

How does the portfolio composition of AFT and AIF differ from that of MFIC?

 

A:

MFIC is primarily focused on investing in directly originated corporate loans. AFT and AIF are both focused on investing in broadly syndicated loans, high yield bonds, structured credit and other (in the case of AIF), in addition to directly originated corporate loans. As of September 30, 2023, directly originated corporate loans represented approximately 92% of MFIC’s portfolio, 23% of AFT’s portfolio and 33% of AIF’s portfolio, at fair value. As of September 30, 2023, the weighted average yield of directly originated corporate loans at cost, exclusive of investments on non-accrual status, was 12.1% for MFIC, 11.9% for AFT and 11.7% for AIF.

MFIC Adviser, AFT Adviser, and AIF Adviser believe directly originated corporate loans produce better risk-adjusted returns than broadly syndicated loans and high yield bonds due several factors including credit documentation control, due diligence access, and comprehensive relationship with borrowers, among other factors.

 

23


Table of Contents
Q:

What types of industries does MFIC, AFT and AIF invest in?

 

A:

MFIC, AFT and AIF hold investments in various industries. The table below includes a summary of the industries that each Fund holds investments in and the percentage of total investments in each industry as of September 30, 2023 for each Fund.

 

Industry Classification(1)

   MFIC      AFT      AIF  

Advertising, Printing & Publishing

     1.9      5.2      7.3

Aerospace & Defense

     0.0      2.2      2.4

Automotive

     2.6      1.0      1.5

Aviation and Consumer Transport

     8.5      0.0      0.0

Beverage, Food & Tobacco

     4.2      0.0      0.0

Business Services

     12.2      18.0      9.9

Chemicals, Plastics & Rubber

     2.3      5.8      4.6

Construction & Building

     2.1      0.0      0.0

Consumer Goods – Durable

     1.0      0.0      0.0

Consumer Goods – Non-durable

     3.5      2.7      2.2

Consumer Services

     7.8      1.7      2.8

Containers, Packaging and Glass

     0.0      4.4      2.7

Diversified Investment Vehicles, Banking, Finance, Real Estate

     1.9      9.5      7.4

Education

     1.5      0.0      0.0

Energy – Oil & Gas

     0.0      0.0      1.7

Environmental Industries

     0.0      2.3      1.6

Healthcare & Pharmaceuticals

     17.7      12.2      14.7

High Tech Industries

     18.5      18.6      18.7

Hotel, Gaming, Leisure, Restaurants

     1.2      1.9      3.2

Insurance

     3.5      0.0      0.0

Manufacturing, Capital Equipment

     2.1      0.0      0.0

Media: Broadcasting & Subscription

     0.0      2.5      1.3

Retail

     1.4      2.5      2.6

Structured Finance

     0.0      0.0      7.4

Telecommunications

     0.3      5.6      3.8

Transportation – Cargo, Distribution

     2.9      0.0      0.0

Wholesale

     2.0      1.3      1.4

Other

     0.7      2.6      2.8

Total Investments

     100.0      100.0      100.0

 

(1)

This table only represents industries above 1% of the total investments of MFIC, AFT and AIF, respectively.

 

Q:

How do the distribution policies of AFT and AIF differ from those of MFIC and what changes are expected to occur in connection with the Mergers?

 

A:

AFT and AIF generally make regular monthly cash distributions of all or a portion of its net investment income available to its respective stockholders. For a history of the distribution declarations and distributions paid by AFT for the nine months ended September 30, 2023, see “Share Price Information—AFT.” For a history of the distribution declarations and distributions paid by AIF for the nine months ended September 30, 2023, see “Share Price Information—AIF.”

MFIC generally declares and pays regular distributions to MFIC Stockholders on a quarterly basis. Subject to applicable legal restrictions and the sole discretion of the MFIC Board, after the consummation of the Mergers, MFIC intends to declare and pay regular distributions to MFIC Stockholders on a quarterly basis. For a history of the distribution declarations and distributions paid by MFIC since the nine months ended September 30, 2023, see “Share Price Information—MFIC.”

 

24


Table of Contents

As a result, AFT Stockholders and AIF Stockholders should expect the distribution policy to change from a monthly basis to quarterly basis in connection with the Mergers.

 

Q:

Will the composition of the MFIC Board change following the Mergers?

 

A:

No. As stated above, following the Mergers and subject to applicable law, the directors of MFIC immediately prior to the Mergers will remain the directors of MFIC.

 

Q:

Are MFIC Stockholders able to exercise appraisal rights?

 

A:

No. MFIC Stockholders will not be entitled to exercise appraisal rights with respect to any matter to be voted upon at the MFIC Special Meeting. Any MFIC Stockholder may abstain from voting or vote against any of such matters.

 

Q:

Are AFT Stockholders able to exercise appraisal rights?

 

A:

No. AFT Stockholders will not be entitled to exercise appraisal rights with respect to any matter to be voted upon at the AFT Special Meeting. Any AFT Stockholder may abstain from voting or vote against any of such matters.

 

Q:

Are AIF Stockholders able to exercise appraisal rights?

 

A:

No. AIF Stockholders will not be entitled to exercise appraisal rights with respect to any matter to be voted upon at the AIF Special Meeting. Any AIF Stockholder may abstain from voting or vote against any of such matters.

 

Q:

When do you expect to complete the Mergers?

 

A:

While there can be no assurance as to the exact timing, or that the Mergers will be completed at all, MFIC, AFT and AIF are working to complete the Mergers by the first half of 2024. It is currently expected that the Mergers will be completed promptly following receipt of the required stockholder approvals at the MFIC Special Meeting, the AFT Special Meeting and the AIF Special Meeting and satisfaction or waiver of the other closing conditions set forth in the Merger Agreements.

 

Q:

Are the Mergers expected to be taxable to MFIC Stockholders for U.S. federal income tax purposes?

 

A:

No. The Mergers are not expected to be a taxable event for MFIC Stockholders for U.S. federal income tax purposes. MFIC Stockholders should read the section captioned “Certain Material U.S. Federal Income Tax Considerations—Certain Material U.S. Federal Income Tax Consequences of the Mergers” for a more complete discussion of the U.S. federal income tax consequences of the Mergers. MFIC Stockholders should consult with their own tax advisors to determine the tax consequences of the Mergers to them.

 

Q:

Are the Mergers expected to be taxable to AFT Stockholders for U.S. federal income tax purposes?

 

A:

No. The Mergers are intended to qualify as a “reorganization,” within the meaning of Section 368(a) of the Code, and it is a condition to the obligations of each of MFIC, of AIF and of AFT to consummate the Mergers that MFIC, AIF and AFT, respectively, has received a written opinion from Simpson Thacher & Bartlett LLP (“Simpson Thacher”), outside legal counsel to MFIC, AIF and AFT, in each case dated as of the AFT Closing and AIF Closing, respectively, and substantially to the effect that the Mergers, taken together, will qualify as a “reorganization,” within the meaning of Section 368(a) of the Code. If the Mergers qualify as a reorganization for U.S. federal income tax purposes, AFT Stockholders are not expected to recognize any gain or loss for U.S. federal income tax purposes, except to the extent of the

 

25


Table of Contents
  special payment, on the exchange of shares of AFT Common Stock for shares of MFIC Common Stock pursuant to the Mergers, and except for any gain or loss that may result from the receipt of cash in lieu of fractional shares of MFIC Common Stock. AFT Stockholders should read the section captioned “Certain Material U.S. Federal Income Tax Considerations—Certain Material U.S. Federal Income Tax Consequences of the Mergers” for a more complete discussion of the U.S. federal income tax consequences of the Mergers. AFT Stockholders should consult with their own tax advisors to determine the tax consequences of the Mergers to them.

 

Q:

Are the Mergers expected to be taxable to AIF Stockholders for U.S. federal income tax purposes?

 

A:

No. The Mergers are intended to qualify as a “reorganization,” within the meaning of Section 368(a) of the Code, and it is a condition to the obligations of each of MFIC, of AIF and of AFT to consummate the Mergers that MFIC, AIF and AFT, respectively, have received a written opinion from Simpson Thacher & Bartlett LLP (“Simpson Thacher”), outside legal counsel to MFIC, AIF and AFT, in each case dated as of the AIF Closing and the AFT Closing, respectively, and substantially to the effect that the Mergers, taken together, will qualify as a “reorganization,” within the meaning of Section 368(a) of the Code. If the Mergers qualify as a reorganization for U.S. federal income tax purposes, AIF Stockholders are not expected to recognize any gain or loss for U.S. federal income tax purposes, except to the extent of the special payment, on the exchange of shares of AIF Common Stock for shares of MFIC Common Stock pursuant to the Mergers, and except for any gain or loss that may result from the receipt of cash in lieu of fractional shares of MFIC Common Stock. AIF Stockholders should read the section captioned “Certain Material U.S. Federal Income Tax Considerations—Certain Material U.S. Federal Income Tax Consequences of the Mergers” for a more complete discussion of the U.S. federal income tax consequences of the Mergers. AIF Stockholders should consult with their own tax advisors to determine the tax consequences of the Mergers to them.

 

Q:

What happens if the Mergers are not consummated?

 

A:

If the AFT Mergers are not completed for any reason, AFT Stockholders will not receive any consideration for their shares of AFT Common Stock, in connection with the AFT Mergers. Also, AFT Stockholders will not receive the AFT Stockholder Payment in connection with the transactions contemplated by the AFT Merger Agreement. Instead, each of MFIC and AFT will remain a stand-alone company.

If the AIF Mergers are not completed for any reason, AIF Stockholders will not receive any consideration for their shares of AIF Common Stock, in connection with the AIF Mergers. Also, AIF Stockholders will not receive the AIF Stockholder Payment in connection with the transactions contemplated by the AIF Merger Agreement. Instead, each of MFIC and AIF will remain a stand-alone company.

If both the AFT Mergers and the AIF Mergers are not completed for any reason, MFIC Stockholders will not receive the MFIC Distribution in connection with the Mergers.

 

Q:

Did the MFIC Special Committee receive an opinion from the financial advisor to the MFIC Special Committee regarding the Merger Consideration?

 

A:

Yes. The MFIC Special Committee received an opinion, dated November 6, 2023, from the financial advisor to the MFIC Special Committee as to the fairness, from a financial point of view, of: (i) the AFT Exchange Ratio, and (ii) the AIF Exchange Ratio. The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken in preparing the opinion, is attached as Annex C-1 and Annex C-2 to this joint proxy statement/prospectus. The opinion was for the information of, and was directed to, the MFIC Special Committee (in its capacity as such) and, as requested by the MFIC Special Committee, the MFIC Board (in its capacity as such) in connection with their respective consideration of the financial terms of the Mergers. The opinion addressed only the fairness, from a financial point of view, of: (i) the AFT Exchange Ratio, and (ii) the

 

26


Table of Contents
  AIF Exchange Ratio. It did not address the underlying business decision of MFIC to engage in the Mergers or enter into the Merger Agreement or constitute a recommendation to the MFIC Special Committee or the MFIC Board in connection with the Mergers, and it does not constitute a recommendation to any MFIC Stockholder or any stockholder of any other entity as to how to vote or act in connection with the Mergers or any other matter. For more information, see the section entitled “The Mergers—Opinion of the Financial Advisor to the MFIC Special Committee.”

 

Q:

Did the AFT Special Committee receive an opinion from the financial advisor to the AFT Special Committee regarding the AFT Merger Consideration and the AFT Stockholder Payment?

 

A:

Yes. The AFT Special Committee received an opinion, dated November 6, 2023, from the financial advisor to the AFT Special Committee as to the fairness, from a financial point of view, to the holders of AFT Common Stock of the Total Per Share AFT Consideration (defined as the AFT Merger Consideration (disregarding cash paid for fractional shares) and the AFT Stockholder Payment, taken together). The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken in preparing the opinion, is attached as Annex D to this joint proxy statement/prospectus. The opinion was for the information of, and was directed to, the AFT Special Committee (in its capacity as such) and, as requested by the AFT Special Committee, the AFT Board (in its capacity as such) in connection with their respective consideration of the financial terms of the AFT Mergers. The opinion addressed only the fairness, from a financial point of view, of the Total Per Share AFT Consideration to the holders of AFT Common Stock. It did not address the underlying business decision of AFT to engage in the AFT Mergers or enter into the AFT Merger Agreement or constitute a recommendation to the AFT Special Committee or the AFT Board in connection with the AFT Mergers, and it does not constitute a recommendation to any holder of AFT Common Stock or any stockholder of any other entity as to how to vote or act in connection with the AFT Mergers or any other matter. For more information, see the section entitled “The Mergers—Opinion of the Financial Advisor to the AFT Special Committee.”

 

Q:

Did the AIF Special Committee receive an opinion from the financial advisor to the AIF Special Committee regarding the AIF Merger Consideration and the AIF Stockholder Payment?

 

A:

Yes. The AIF Special Committee received an opinion, dated November 6, 2023, from the financial advisor to the AIF Special Committee as to the fairness, from a financial point of view, to the holders of AIF Common Stock of the Total Per Share AIF Consideration (defined as the AIF Merger Consideration (disregarding cash paid for fractional shares) and the AIF Stockholder Payment, taken together). The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken in preparing the opinion, is attached as Annex E to this joint proxy statement/prospectus. The opinion was for the information of, and was directed to, the AIF Special Committee (in its capacity as such) and, as requested by the AIF Special Committee, the AIF Board (in its capacity as such) in connection with their respective consideration of the financial terms of the AIF Mergers. The opinion addressed only the fairness, from a financial point of view, of the Total Per Share AIF Consideration to the holders of AIF Common Stock. It did not address the underlying business decision of AIF to engage in the AIF Mergers or enter into the AIF Merger Agreement or constitute a recommendation to the AIF Special Committee or the AIF Board in connection with the AIF Mergers, and it does not constitute a recommendation to any holder of AIF Common Stock or any stockholder of any other entity as to how to vote or act in connection with the AIF Mergers or any other matter. For more information, see the section entitled “The Mergers—Opinion of the Financial Advisor to the AIF Special Committee.”

 

27


Table of Contents

SUMMARY OF THE MERGERS

This summary highlights selected information contained elsewhere in this joint proxy statement/prospectus and may not contain all of the information that is important to you. You should carefully read this entire joint proxy statement/prospectus, including the other documents to which this joint proxy statement/prospectus refers for a more complete understanding of the Mergers. In particular, you should read the annexes attached to this joint proxy statement/prospectus, including the Merger Agreements, which are attached as Annex A and Annex B hereto, as they are the legal documents that govern the Mergers. See “Where You Can Find More Information.” For a discussion of the risk factors you should carefully consider, see the section entitled “Risk Factors” beginning page 40.

The Parties to the Mergers

MidCap Financial Investment Corporation

9 West 57th Street

New York, NY 10019

(212) 515-3450

MFIC, a Maryland corporation incorporated on February 2, 2004, is a closed-end, externally managed, diversified management investment company that has elected to be treated as a BDC under the 1940 Act. In addition, for tax purposes MFIC has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Code. On August 1, 2022, MFIC changed its name from “Apollo Investment Corporation” to “MidCap Financial Investment Corporation.” MFIC’s Common Stock began to trade under the ticker “MFIC” on the NASDAQ Global Stock Market on August 12, 2022. Prior to August 12, 2022, MFIC’s Common Stock traded on the NASDAQ Global Select Market under the ticker “AINV.”

MFIC’s investment objective is to generate current income and, to a lesser extent, long-term capital appreciation. MFIC invests primarily in directly originated and privately negotiated first lien senior secured loans to privately held U.S. middle-market companies, which MFIC generally defines as companies with less than $75 million in EBITDA, as may be adjusted for market disruptions, mergers and acquisitions-related charges and synergies, and other items. To a lesser extent, MFIC may invest in other types of securities including, first lien unitranche, second lien senior secured, unsecured, subordinated, and mezzanine loans, and equities in both private and public middle market companies.

AFT Merger Sub, Inc.

9 West 57th Street

New York, NY 10019

(212) 515-3450

AFT Merger Sub is a Maryland corporation and a newly incorporated wholly-owned direct subsidiary of MFIC. AFT Merger Sub was formed in connection with and for the sole purpose of the AFT Mergers.

Apollo Senior Floating Rate Fund Inc.

9 West 57th Street

New York, NY 10019

(212) 515-3200

AFT, a Maryland corporation incorporated on February 23, 2011, is a diversified, closed-end management investment company. In addition, for tax purposes AFT has elected to be treated as a RIC under Subchapter M of the Code. AFT’s Common Stock began to trade under the ticker “AFT” on the NYSE on February 23, 2011.

AFT’s investment objective is to seek current income and preservation of capital. AFT seeks to achieve its investment objective by investing primarily in senior, secured loans made to companies whose debt is rated

 

28


Table of Contents

below investment grade (“Senior Loans”) and investments with similar characteristics. Senior Loans typically hold a first lien priority and pay interest at rates that are determined periodically on the basis of a floating base lending rate plus a spread. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”); however, the Secured Overnight Financing Rate (“SOFR”) or the prime rate offered by one or more major U.S. banks and the certificate of deposit rate used by commercial lenders may also be used. Senior Loans are typically made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities (“Borrower(s)”) that operate in various industries and geographical regions. AFT seeks to generate current income and preservation of capital through a disciplined approach to credit selection and under normal market conditions will invest at least 80% of its managed assets in floating rate Senior Loans and investments with similar economic characteristics. This policy and AFT’s investment objective are not fundamental and may be changed by the Board of AFT with at least 60 days’ prior written notice provided to shareholders. Part of AFT’s investment objective is to seek preservation of capital. AFT’s ability to achieve capital preservation may be limited by its investment in credit instruments that have speculative characteristics. There can be no assurance that AFT will achieve its investment objective.

AIF Merger Sub, Inc.

9 West 57th Street

New York, NY 10019

(212) 515-3450

AIF Merger Sub is a Maryland corporation and a newly incorporated wholly-owned direct subsidiary of MFIC. AIF Merger Sub was formed in connection with and for the sole purpose of the AIF Mergers.

Apollo Tactical Income Fund Inc.

9 West 57th Street

New York, NY 10019

(212) 515-3200

AIF, a Maryland corporation incorporated on February 25, 2013, is a diversified, closed-end management investment company. In addition, for tax purposes AIF has elected to be treated as a RIC under Subchapter M of the Code. AIF’s Common Stock began to trade under the ticker “AIF” on the New York Stock Exchange (“NYSE”) on February 25, 2013.

AIF’s primary investment objective is to seek current income with a secondary objective of preservation of capital. AIF seeks to achieve its investment objectives primarily by allocating its assets among different types of credit instruments based on absolute and relative value considerations and its analysis of the credit markets. This ability to dynamically allocate AIF’s assets may result in AIF’s portfolio becoming concentrated in a particular type of credit instrument (such as Senior Loans or high yield corporate bonds) and substantially less invested in other types of credit instruments. Under normal market conditions, at least 80% of AIF’s managed assets will be invested in credit instruments and investments with similar economic characteristics. For purposes of this policy, “credit instruments” will include Senior Loans, subordinated loans, high yield corporate bonds, notes, bills, debentures, distressed securities, mezzanine securities, structured products (including, without limitation, collateralized debt obligations (“CDOs”), collateralized loan obligations (“CLOs”) and asset-backed securities), bank loans, corporate loans, convertible and preferred securities, government and municipal obligations, mortgage-backed securities, repurchase agreements, and other fixed-income instruments of a similar nature that may be represented by derivatives such as options, forwards, futures contracts or swap agreements. This policy and AIF’s investment objectives are not fundamental and may be changed by the Board with at least 60 days’ prior written notice provided to shareholders. AIF will seek to preserve capital to the extent consistent with its primary investment objective. AIF’s ability to achieve capital preservation may be limited by its investment in credit instruments that have speculative characteristics. There can be no assurance that AIF will achieve its investment objectives.

 

29


Table of Contents

Apollo Investment Management, L.P.

9 West 57th Street

New York, NY 10019

(212) 515-3450

MFIC is externally managed and advised by Apollo Investment Management, L.P., an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (“AGM”). MFIC Adviser is a Delaware limited partnership that is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). MFIC Adviser, subject to the overall supervision of the MFIC Board, manages the day-to-day operations of, and provides investment advisory services to MFIC.

AGM and other affiliates manage other funds that may have investment mandates that are similar, in whole or in part, with MFIC. MFIC Adviser and its affiliates may determine that an investment is appropriate both for MFIC and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, MFIC Adviser may determine that MFIC should invest on a side-by-side basis with one or more other funds. MFIC makes all such investments subject to compliance with applicable regulations and interpretations, and MFIC’s allocation procedures. Certain types of negotiated co-investments may be made only in accordance with the terms of the exemptive order (the “Order”) MFIC received from the SEC permitting MFIC to do so. Under the terms of the Order, a “required majority” (as defined in Section 57(o) of the 1940 Act) of MFIC’s independent directors must be able to reach certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to MFIC and MFIC’s Stockholders and do not involve overreaching of MFIC or MFIC’s Stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of MFIC’s Stockholders and is consistent with MFIC’s Board approved criteria. In certain situations where co-investment with one or more funds managed by MFIC Adviser or its affiliates is not covered by the Order, the personnel of MFIC Adviser or its affiliates will need to decide which fund will proceed with the investment. Such personnel will make these determinations based on allocation policies and procedures, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations. The Order is subject to certain terms and conditions so there can be no assurance that MFIC will be permitted to co-invest with certain of our affiliates other than in the circumstances currently permitted by regulatory guidance and the Order.

AFT Merger Structure

The AFT Mergers will result in the combination of MFIC and AFT with MFIC as the surviving company. Pursuant to the terms of the AFT Merger Agreement, at the AFT Effective Time, AFT Merger Sub will be merged with and into AFT. AFT will be the surviving company and will continue its existence as corporation under the laws of the State of Maryland. As of the AFT Effective Time, the separate corporate existence of AFT Merger Sub will cease. Immediately after the occurrence of the AFT Effective Time, AFT will merge with and into MFIC with MFIC continuing as the surviving company.

 

30


Table of Contents

The following is a graphical representation of the structure of the AFT Mergers:

 

 

 

LOGO

 

 

LOGO

 

31


Table of Contents

As of September 30, 2023, the NAV of MFIC Common Stock was $15.28 per share. As of September 30, 2023, the NAV of AFT Common Stock was $15.05 per share. Based on the NAVs of MFIC and AFT as of September 30, 2023 (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9849 shares of MFIC Common Stock for each share of AFT Common Stock outstanding. Following the AFT Mergers, MFIC Adviser will continue to be the investment adviser to MFIC.

The AFT Merger Agreement is attached as Annex A to this joint proxy statement/prospectus. MFIC and AFT encourage their respective stockholders to read the AFT Merger Agreement carefully and in its entirety, as it is the legal document governing the AFT Mergers.

AIF Merger Structure

The AIF Mergers will result in the combination of MFIC and AIF with MFIC as the surviving company. Pursuant to the terms of the AIF Merger Agreement, at the AIF Effective Time, AIF Merger Sub will be merged with and into AIF. AIF will be the surviving company and will continue its existence as corporation under the laws of the State of Maryland. As of the AIF Effective Time, the separate corporate existence of AIF Merger Sub will cease. Immediately after the occurrence of the AIF Effective Time, AIF will merge with and into MFIC with MFIC continuing as the surviving company.

The following is a graphical representation of the structure of the AIF Mergers:

 

 

 

 

LOGO

 

32


Table of Contents

 

LOGO

As of September 30, 2023, the NAV of MFIC Common Stock was $15.28 per share. As of September 30, 2023, the NAV of AIF Common Stock was $14.63 per share. Based on the NAVs of MFIC and AIF as of September 30, 2023 (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9577 shares of MFIC Common Stock for each share of AIF Common Stock outstanding. Following the AIF Mergers, MFIC Adviser will continue to be the investment adviser to MFIC.

The AIF Merger Agreement is attached as Annex B to this joint proxy statement/prospectus. MFIC and AIF encourage their respective stockholders to read the AIF Merger Agreement carefully and in its entirety, as it is the legal document governing the AIF Mergers.

AFT Merger Consideration

Subject to the terms and conditions of the AFT Merger Agreement, at the effective time of the AFT Mergers (the “AFT Effective Time”), each share of AFT Common Stock issued and outstanding immediately prior to the AFT Effective Time (other than shares owned by MFIC or any of its consolidated subsidiaries, including AFT Merger Sub (the “AFT Cancelled Shares”)) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AFT Exchange Ratio (as defined below) (cash will be paid in lieu of fractional shares). AFT has no preferred stock outstanding, and no preferred stock will be issued by MFIC as a result of the AFT Mergers.

As of September 30, 2023, the net asset value (“NAV”) of MFIC Common Stock was $15.28 per share and as of September 30, 2023, the NAV of AFT Common Stock was $15.05 per share. Based on the NAVs of MFIC and AFT as of September 30, 2023 (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9849 shares of MFIC Common Stock for each share of AFT Common Stock outstanding.

Under the AFT Merger Agreement, as of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the AFT Determination Date, MFIC and AFT will deliver to the other the Closing AFT Net Asset Value and the Closing AFT Merger MFIC Net Asset Value, respectively, in each case using the same set of assumptions, methodologies and adjustments as has been historically used in preparing such calculation. Based on such calculations, the parties will calculate: (1) the AFT Per Share NAV, and (2) the AFT

 

33


Table of Contents

Merger MFIC Per Share NAV. The AFT Exchange Ratio will be equal to the quotient (rounded to four decimal places) of (i) the AFT Per Share NAV divided by (ii) the AFT Merger MFIC Per Share NAV. Furthermore, promptly following the AFT Closing the MFIC Adviser or one of its affiliates will pay directly to holders of shares of AFT Common Stock that are issued and outstanding immediately prior to the AFT Effective Time a special payment equal to $0.25 per share of AFT Common Stock, subject to deduction for any applicable withholding tax. This payment will not be made by or through AFT.

MFIC and AFT will update and redeliver the Closing AFT Merger MFIC Net Asset Value and the Closing AFT Net Asset Value, respectively, in the event that the AFT Closing is subsequently materially delayed or there is a material change to such calculation between the AFT Determination Date and the AFT Closing and as needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time.

The AFT Exchange Ratio will be appropriately adjusted (to the extent not already taken into account in determining the Closing AFT Merger MFIC Net Asset Value and the Closing AFT Net Asset Value, as applicable) if, between the AFT Determination Date and the AFT Effective Time, the respective outstanding shares of MFIC Common Stock or AFT Common Stock will have been increased or decreased or changed into or exchanged for a different number or kind of shares or securities, in each case, as a result of any reclassification, recapitalization, stock split, reverse stock split, split-up, combination or exchange of shares, or if a stock dividend or dividend payable in any other securities will be authorized and declared with a record date within such period, as permitted by the AFT Merger Agreement. Because the AFT Exchange Ratio will be determined within 48 hours (excluding Sundays and holidays) prior to the AFT Effective Time, the time period during which such an adjustment could occur will be relatively short.

The AFT Closing is contingent upon (i) MFIC Stockholder approval of the MFIC Share Issuance Proposal, (ii) AFT Stockholder approval of the AFT Mergers and (iii) satisfaction or waiver of certain other closing conditions.

After the AFT Determination Date and until the AFT Mergers are completed, the NAV of the shares of MFIC Common Stock to be issued in the AFT Mergers will continue to fluctuate but, except as described above, the number of shares to be issued to AFT Stockholders will remain fixed.

AIF Merger Consideration

Subject to the terms and conditions of the AIF Merger Agreement, at the effective time of the AIF Mergers (the “AIF Effective Time”), each share of AIF Common Stock issued and outstanding immediately prior to the AIF Effective Time (other than shares owned by MFIC or any of its consolidated subsidiaries, including AIF Merger Sub (the “AIF Cancelled Shares”)) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AIF Exchange Ratio (as defined below) (cash will be paid in lieu of fractional shares). AIF has no preferred stock outstanding, and no preferred stock will be issued by MFIC as a result of the AIF Mergers.

As of September 30, 2023, the net asset value (“NAV”) of MFIC Common Stock was $15.28 per share and as of September 30, 2023, the NAV of AIF Common Stock was $14.63 per share. Based on the NAVs of MFIC and AIF as of September 30, 2023 (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9577 shares of MFIC Common Stock for each share of AIF Common Stock outstanding.

Under the AIF Merger Agreement, as of a mutually agreed date no earlier than 48 hours (excluding Sundays and holidays) prior to the AIF Determination Date, MFIC and AIF will deliver to the other the Closing AIF Net Asset Value and the Closing AIF Merger MFIC Net Asset Value, respectively, in each case using the same set of assumptions, methodologies and adjustments as has been historically used in preparing such calculation. Based on such calculations, the parties will calculate: (1) the AIF Per Share NAV, and (2) the AIF Merger MFIC Per Share NAV. The AIF Exchange Ratio will be equal to the quotient (rounded to four decimal places) of (i) the

 

34


Table of Contents

AIF Per Share NAV divided by (ii) the AIF Merger MFIC Per Share NAV. Furthermore, promptly following the AIF Closing the MFIC Adviser or one of its affiliates will pay directly to holders of shares of AIF Common Stock that are issued and outstanding immediately prior to the AIF Effective Time a special payment equal to $0.25 per share of AIF Common Stock, subject to deduction for any applicable withholding tax. This payment will not be made by or through AIF.

MFIC and AIF will update and redeliver the Closing AIF Merger MFIC Net Asset Value and the Closing AIF Net Asset Value, respectively, in the event that the AIF Closing is subsequently materially delayed or there is a material change to such calculation between the AIF Determination Date and the AIF Closing and as needed to ensure that the calculation is determined within 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time.

The AIF Exchange Ratio will be appropriately adjusted (to the extent not already taken into account in determining the Closing AIF Merger MFIC Net Asset Value and the Closing AIF Net Asset Value, as applicable) if, between the AIF Determination Date and the AIF Effective Time, the respective outstanding shares of MFIC Common Stock or AIF Common Stock will have been increased or decreased or changed into or exchanged for a different number or kind of shares or securities, in each case, as a result of any reclassification, recapitalization, stock split, reverse stock split, split-up, combination or exchange of shares, or if a stock dividend or dividend payable in any other securities will be authorized and declared with a record date within such period, as permitted by the AIF Merger Agreement. Because the AIF Exchange Ratio will be determined within 48 hours (excluding Sundays and holidays) prior to the AIF Effective Time, the time period during which such an adjustment could occur will be relatively short.

The AIF Closing is contingent upon (i) MFIC Stockholder approval of the MFIC Share Issuance Proposal, (ii) AIF Stockholder approval of the AIF Mergers and (iii) satisfaction or waiver of certain other closing conditions.

After the AIF Determination Date and until the AIF Mergers are completed, the NAV of the shares of MFIC Common Stock to be issued in the AIF Mergers will continue to fluctuate but, except as described above, the number of shares to be issued to AIF Stockholders will remain fixed.

AFT Stockholder Payment

In connection with the transactions contemplated by the AFT Merger Agreement, and to compensate AFT Stockholders, promptly following closing of the AFT Mergers, MFIC Adviser or one of its affiliates will pay directly to holders of shares of AFT Common Stock that are issued and outstanding immediately prior to the AFT Effective Time a special payment equal to $0.25 per share of AFT Common Stock, subject to deduction for any applicable withholding tax. This payment will not be made by or through AFT. The specific tax characteristics of the $0.25 per share special payment are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization."

AIF Stockholder Payment

In connection with the transactions contemplated by the AIF Merger Agreement, and to compensate AIF Stockholders, promptly following closing of the AIF Mergers, MFIC Adviser or one of its affiliates will pay directly to holders of shares of AIF Common Stock that are issued and outstanding immediately prior to the AIF Effective Time a special payment equal to $0.25 per share of AIF Common Stock, subject to deduction for any applicable withholding tax. This payment will not be made by or through AIF. The specific tax characteristics of the $0.25 per share special payment are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization."

MFIC Distribution

Within thirty days following the closing of the AIF Mergers (as defined below) or the termination of the AIF Merger Agreement (as defined below) pursuant to the terms thereof, as applicable, subject to the closing of

 

35


Table of Contents

the AFT Mergers and applicable law, MFIC shall distribute to the holder of each share of MFIC Common Stock as of a record date to be determined by the MFIC Board an amount in cash equal to $0.20 per share of MFIC Common Stock held by such holder. The specific tax characteristics of the $0.20 per share special distribution are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

Within thirty days following the closing of the AFT Mergers or the termination of the AFT Merger Agreement pursuant to the terms thereof, as applicable, subject to the closing of the AIF Mergers and applicable law, MFIC shall distribute to the holder of each share of MFIC Common Stock as of a record date to be determined by the MFIC Board an amount in cash equal to $0.20 per share of MFIC Common Stock held by such holder. The specific tax characteristics of the $0.20 per share special distribution are described in “Certain Material U.S. Federal Income Tax Considerations—Tax Consequences if the Merger Qualifies as a Reorganization.”

Market Price of Securities

MFIC’s Common Stock is traded on the NASDAQ Global Select Market under the symbol “MFIC.” Prior to August 12, 2022, MFIC’s common stock traded on the NASDAQ Global Select Market under the ticker “AINV.” AFT’s Common Stock and AIF’s Common Stock is traded on the NYSE under the symbol “AFT” and “AIF,” respectively.

The following table presents the most recently determined NAV per share of MFIC Common Stock, AFT Common Stock and AIF Common Stock.

 

     MFIC
Common
Stock
     AFT
Common
Stock
     AIF
Common
Stock
 

NAV per Share as of September 30, 2023

   $ 15.28      $ 15.05      $ 14.63  

Risks Relating to the Mergers

The Mergers and the other transactions contemplated by the Merger Agreements are subject to, among others, the following risks. MFIC Stockholders, AFT Stockholders and AIF Stockholders should carefully consider these risks before deciding how to vote on the proposals to be voted on at their respective special meeting.

 

   

Most MFIC Stockholders, AFT Stockholders and AIF Stockholders will experience a reduction in percentage ownership and voting power in the combined company as a result of the Mergers.

 

   

MFIC may be unable to realize the benefits anticipated by the Mergers, including estimated cost savings when the companies have fully integrated their portfolios, or it may take longer than anticipated to achieve such benefits. Immediately following the Mergers, AFT Stockholder and AIF Stockholder expenses will likely increase.

 

   

The announcement and pendency of the proposed Mergers could adversely affect MFIC’s, AFT’s and AIF’s business, financial results and operations.

 

   

If either or both of the Mergers do not close, MFIC, AFT and/or AIF will not benefit from the expenses incurred in pursuit of such Merger(s).

 

   

The termination of either or both of the Merger Agreements could negatively impact MFIC, AFT and/or AIF.

 

   

The Merger Agreements limit the ability of MFIC, AFT and AIF to pursue alternatives to the Mergers.

 

   

Under certain circumstances, a third party that enters into a definitive transaction agreement with MFIC, AFT or AIF may be obligated to pay a termination fee upon termination of the AFT Merger

 

36


Table of Contents
 

Agreement or the AIF Merger Agreement, as applicable. This termination fee requirement might result in a potential competing acquirer proposing to pay a lower per share price to acquire MFIC, AFT or AIF, as applicable, than it might otherwise have proposed to pay, or deciding not to make a competing acquisition proposal.

 

   

The opinions delivered to the MFIC Special Committee, the AFT Special Committee and the AIF Special Committee from their respective financial advisors prior to the signing of the Merger Agreements will not reflect changes in circumstances since the date of the opinions.

 

   

The Mergers are subject to closing conditions, including stockholder approvals, that, if not satisfied or (to the extent legally allowed) waived, will result in either or both of the Mergers not being completed, which may result in material adverse consequences to the businesses and operations of MFIC, AFT and/or AIF.

 

   

MFIC, AFT and AIF may, to the extent legally allowed, waive one or more conditions to the Mergers without resoliciting stockholder approval.

 

   

MFIC, AFT and AIF will be subject to operational uncertainties and contractual restrictions while the Mergers are pending.

 

   

Litigation filed against MFIC, AFT and/or AIF in connection with the Mergers could result in substantial costs and could delay or prevent either or both of the Mergers from being completed.

 

   

The Mergers may trigger certain “change of control” provisions and other restrictions in contracts of MFIC, AFT, AIF or their affiliates and the failure to obtain any required consents or waivers could adversely impact the combined company.

 

   

The shares of MFIC Common Stock to be received by AFT Stockholders and AIF Stockholders as a result of the Mergers will have different rights associated with them than shares of AFT Common Stock and AIF Common Stock currently held by them.

See the section captioned “Risk Factors—Risks Relating to the Mergers” beginning on page 40 for a more detailed discussion of these risks.

U.S. Federal Income Tax Consequences of the Mergers

The Mergers are intended to qualify as a “reorganization,” within the meaning of Section 368(a) of the Code, and it is a condition to the obligations of each of MFIC, AFT and AIF to consummate the Mergers that MFIC, AFT and AIF has each received a written opinion from Simpson Thacher, outside legal counsel to MFIC, AFT and AIF, in each case dated as of the AFT Closing and AIF Closing, respectively, and substantially to the effect that the Mergers, taken together, will qualify as a “reorganization,” within the meaning of Section 368(a) of the Code. If the Mergers qualify as a reorganization for U.S. federal income tax purposes, except to the extent of the special payment, AFT Stockholders and AIF Stockholders are not expected to recognize any gain or loss for U.S. federal income tax purposes on the exchange of shares of AFT Common Stock or AIF Common Stock for shares of MFIC Common Stock pursuant to the Mergers, and except for any gain or loss that may result from the receipt of cash in lieu of fractional shares of MFIC Common Stock.

AFT Stockholders and AIF Stockholders should read the section captioned “Certain Material U.S. Federal Income Tax Considerations—Certain Material U.S. Federal Income Tax Consequences of the Mergers” for a more complete discussion of the U.S. federal income tax consequences of the Mergers. AFT Stockholders and AIF Stockholders should consult with their own tax advisors to determine the tax consequences of the Mergers to them.

The Mergers are not expected to be a taxable event for MFIC Stockholders for U.S. federal income tax purposes.

 

37


Table of Contents

Special Meeting of MFIC Stockholders

MFIC plans to hold the MFIC Special Meeting virtually on [            ], 2024, at [    ] a.m., Eastern Time, at the following website [    ]. At the MFIC Special Meeting, MFIC Stockholders will be asked to approve the MFIC Share Issuance Proposal.

An MFIC Stockholder can vote at the MFIC Special Meeting if such stockholder owned shares of MFIC Stock at the close of business on the MFIC Record Date. As of that date, there were [            ] shares of MFIC Common Stock issued and outstanding and entitled to vote. Approximately [    ] of such total outstanding shares, or approximately [    ]%, were owned beneficially or of record by directors and executive officers of MFIC.

Special Meeting of AFT Stockholders

AFT plans to hold the AFT Special Meeting virtually on [            ], 2024, at [    ] a.m., Eastern Time, at the following website [    ]. At the AFT Special Meeting, AFT Stockholders will be asked to approve the AFT Merger Proposal.

An AFT Stockholder can vote at the AFT Special Meeting if such stockholder owned shares of AFT Common Stock at the close of business on the AFT Record Date. As of that date, there were [    ] shares of AFT Common Stock outstanding and entitled to vote. Approximately [    ] of such total outstanding shares, or [    ]%, were owned beneficially or of record by directors and executive officers of AFT.

Special Meeting of AIF Stockholders

AIF plans to hold the AIF Special Meeting virtually on [            ], 2024, at [    ] a.m., Eastern Time, at the following website [    ]. At the AIF Special Meeting, AIF Stockholders will be asked to approve the AIF Merger Proposal.

An AIF Stockholder can vote at the AIF Special Meeting if such stockholder owned shares of AIF Common Stock at the close of business on the AIF Record Date. As of that date, there were [            ] shares of AIF Common Stock outstanding and entitled to vote. Approximately [    ] of such total outstanding shares, or [    ]%, were owned beneficially or of record by directors and executive officers of AIF.

MFIC Board Recommendation

The MFIC Board, upon recommendation of the MFIC Special Committee, has unanimously approved the Merger Agreements, including the Mergers and the related transactions. After careful consideration and, with respect to the MFIC Share Issuance Proposal, on the recommendation of the MFIC Special Committee, the MFIC Board unanimously approved the Merger Agreements, declared the Mergers and the transactions contemplated by the Merger Agreements advisable and unanimously recommends that MFIC Stockholders vote “FOR” the MFIC Share Issuance Proposal.

AFT Board Recommendation

The AFT Board, upon recommendation of the AFT Special Committee, has unanimously approved the AFT Merger Agreement, declared the AFT Mergers and the related transactions advisable and directed that such matters be submitted to AFT Stockholders for approval. After careful consideration, and on the recommendation of the AFT Special Committee, the AFT Board unanimously approved the AFT Merger Agreement, declared the AFT Mergers and the other transactions contemplated by the AFT Merger Agreement advisable and unanimously recommends that AFT Stockholders vote “FOR” the AFT Merger Proposal.

 

38


Table of Contents

AIF Board Recommendation

The AIF Board, upon recommendation of the AIF Special Committee, has unanimously approved the AIF Merger Agreement, declared the AIF Mergers and the related transactions advisable and directed that such matters be submitted to AIF Stockholders for approval. After careful consideration, and on the recommendation of the AIF Special Committee, the AIF Board unanimously approved the AIF Merger Agreement, declared the AIF Mergers and the other transactions contemplated by the AIF Merger Agreement advisable and unanimously recommends that AIF Stockholders vote “FOR” the AIF Merger Proposal.

Vote Required—MFIC

Each share of MFIC Common Stock has one vote on each matter to be considered at the MFIC Special Meeting or any adjournment or postponement thereof. Each share of MFIC Common Stock is entitled to one vote for each share of MFIC Common Stock held on the MFIC Record Date.

The MFIC Share Issuance Proposal

The affirmative vote of MFIC Stockholders representing a majority of all the votes cast at the MFIC Special Meeting is required to approve the MFIC Share Issuance Proposal.

Abstentions will have no effect on the voting outcome of the MFIC Share Issuance Proposal, although abstentions will be treated as shares present for quorum purposes. If the enclosed proxy card is signed and returned without any directions given, the shares of MFIC Common Stock will be voted “FOR” the MFIC Share Issuance Proposal.

Vote Required—AFT

Each share of AFT Common Stock has one vote on each matter to be considered at the AFT Special Meeting or any adjournment or postponement thereof. Each share of AFT Common Stock is entitled to one vote for each share of AFT Common Stock held on the AFT Record Date.

The AFT Merger Proposal

The affirmative vote of  a majority of the securities of AFT entitled to vote on the AFT Merger Proposal is required for approval of the AFT Merger Proposal.

Abstentions will have the same effect as votes “against” the AFT Merger Proposal. If the enclosed proxy card is signed and returned without any directions given, the shares of AFT Common Stock will be voted “FOR” the AFT Merger Proposal.

Vote Required—AIF

Each share of AIF Common Stock has one vote on each matter to be considered at the AIF Special Meeting or any adjournment or postponement thereof. Each share of AIF Common Stock is entitled to one vote for each share of AIF Common Stock held on the AIF Record Date.

The AIF Merger Proposal

The affirmative vote of  a majority of the securities of AIF entitled to vote on the AIF Merger Proposal is required for approval of the AIF Merger Proposal.

Abstentions will have the same effect as votes “against” the AIF Merger Proposal. If the enclosed proxy card is signed and returned without any directions given, the shares of AIF Common Stock will be voted “FOR” the AIF Merger Proposal.

 

39


Table of Contents

Completion of the Mergers

As more fully described elsewhere in this joint proxy statement/prospectus and in the Merger Agreements, the completion of the Mergers depends on a number of conditions being satisfied or, where legally permissible, waived. The AFT Closing is not contingent on the AIF Closing, and vice versa. For information on the conditions that must be satisfied or waived for the Mergers to occur, see “Description of the AFT Merger Agreement—Conditions to Closing the AFT Mergers” and “Description of the AIF Merger Agreement—Conditions to Closing the AIF Mergers.” While there can be no assurance as to the exact timing, or that the Mergers will be completed at all, MFIC, AFT and AIF are working to complete the Mergers by the first half of 2024. It is currently expected that the Mergers will be completed promptly following receipt of the required stockholder approvals at the MFIC Special Meeting, the AFT Special Meeting and the AIF Special Meeting and satisfaction or waiver of the other closing conditions set forth in the Merger Agreements.

Termination of the Merger

The AFT Merger Agreement contains certain termination rights, including if the AFT Mergers are not completed on or before November 7, 2024, or if the requisite approvals of MFIC’s and AFT’s stockholders are not obtained. The AFT Merger Agreement provides that, upon the termination of the AFT Merger Agreement under certain circumstances involving entry into a definitive transaction by AFT with a third party, such third party that enters into the definitive transaction with AFT may be required to pay MFIC a termination fee of $7,029,482. The AFT Merger Agreement also provides that, upon the termination of the AFT Merger Agreement under certain circumstances involving entry into a definitive transaction by MFIC with a third party, such third party that enters into the definitive agreement with MFIC may be required to pay to AFT a termination fee of $29,905,339.

The AIF Merger Agreement contains certain termination rights, including if the AIF Mergers are not completed on or before November 7, 2024, or if the requisite approvals of MFIC’s and AIF’s stockholders are not obtained. The AIF Merger Agreement provides that, upon the termination of the AIF Merger Agreement under certain circumstances involving entry into a definitive transaction by AIF with a third party, such third party that enters into the definitive transaction with AIF may be required to pay MFIC a termination fee of $6,348,267. The AIF Merger Agreement also provides that, upon the termination of the AIF Merger Agreement under certain circumstances involving entry into a definitive transaction by MFIC with a third party, such third party that enters into the definitive agreement with MFIC may be required to pay to AIF a termination fee of $29,905,339.

See “Description of the AFT Merger Agreement—Termination of the AFT Merger Agreement” and “Description of the AIF Merger Agreement—Termination of the AIF Merger Agreement” for additional information.

Other Actions Taken in Connection with the Mergers

In connection with the consummation of the AFT Mergers and AIF Mergers, the MFIC Adviser or one of its affiliates will pay directly to holders of shares of AFT Common Stock and AIF Common Stock that are issued and outstanding immediately prior to the AFT Effective Time and the AIF Effective Time the AFT Stockholder Payment and AIF Stockholder Payment, respectively, each of which is discussed above in “Summary of the Mergers—AFT Stockholder Payment” and “Summary of the Mergers—AIF Stockholder Payment.” This payment will not be made by or through AFT or AIF.

It is expected that, following the consummation of the Mergers, or one of the Mergers if the Board of Directors of MFIC has determined that the other Merger is unlikely to be consummated, the Board of Directors of MFIC will declare a special dividend to holders of shares of MFIC Common Stock that are issued and outstanding after the AFT Effective Time and/or AIF Effective Time, as the case may be, an amount in cash

 

40


Table of Contents

equal to $0.20 per share of MFIC Common Stock, subject to deduction for any applicable withholding tax. The special dividend is subject to the Board of Directors’ approval and there is no guarantee that the special dividend will be declared. See “Summary of the Mergers—MFIC Distribution” for more information.

Management of the Combined Company

Subject to applicable law, the directors of MFIC immediately prior to the Mergers will remain the directors of MFIC and will hold office until their respective successors are duly elected and qualify, or their earlier death, resignation or removal. Subject to applicable law, the officers of MFIC immediately prior to the Mergers will remain the officers of MFIC and will hold office until their respective successors are duly appointed and qualify, or their earlier death, resignation or removal. Following the Mergers, MFIC Adviser will continue to be the investment adviser to MFIC.

Reasons for the Mergers

In considering the Mergers and the terms of the Merger Agreements and the Side Letter Agreements, the Special Committees and the Boards consulted with their respective legal advisors (and, in the case of the Special Committees, their respective financial advisors), as well as management of MFIC Adviser, AFT/AIF Adviser, and considered numerous factors.

The material factors considered by the MFIC Special Committee and the MFIC Board in concluding that the Mergers are in the best interests of MFIC and MFIC Stockholders included, among others:

 

   

the combined company is expected to benefit from increased analyst coverage and improved secondary market liquidity of its shares as a result of its scale;

 

   

the expected accretion to net investment income per share via the elimination of certain redundant professional services and other corporate expenses and the potential to deploy additional leverage on the acquired investment portfolios in investments that are expected to be higher yielding than a majority of the existing portfolio holdings;

 

   

the MFIC Distribution; and

 

   

the MFIC Side Letter Agreement.

The material factors considered by the AFT Special Committee and the AFT Board in concluding that the AFT Mergers are in the best interests of AFT and AFT Stockholders included, among others:

 

   

the combined company would potentially benefit from increased analyst coverage as a result of its scale;

 

   

the combined company is expected to benefit from improved secondary market liquidity of its shares as a result of its scale;

 

   

the expected accretion to net investment income per share via the elimination of certain redundant professional services and other corporate expenses and the potential to deploy additional leverage on AFT’s investment portfolio in investments that are expected to be higher yielding than a majority of AFT’s existing portfolio holdings;

 

   

the AFT Stockholder Payment;

 

   

the MFIC Distribution; and

 

   

the AFT Side Letter Agreement.

 

41


Table of Contents

The material factors considered by the AIF Special Committee and the AIF Board in concluding that the AIF Mergers are in the best interests of AIF and AIF Stockholders included, among others:

 

   

the combined company would potentially benefit from increased analyst coverage as a result of its scale;

 

   

the combined company is expected to benefit from improved secondary market liquidity of its shares as a result of its scale;

 

   

the expected accretion to net investment income per share via the elimination of certain redundant professional services and other corporate expenses and the potential to deploy additional leverage on AIF’s investment portfolio in investments that are expected to be higher yielding than a majority of AIF’s existing portfolio holdings;

 

   

the AIF Stockholder Payment;

 

   

the MFIC Distribution; and

 

   

the AIF Side Letter Agreement.

For a further discussion of the material factors considered by the Special Committees and the Boards, see the sections below entitled “MFIC”, “AFT” and “AIF.”

MFIC

The MFIC Board consulted with its legal and other advisors, as well as management of MFIC Adviser, AFT/AIF Adviser, and considered numerous factors, including the unanimous recommendation of the MFIC Special Committee. As a result of their considerations, the MFIC Special Committee and the MFIC Board unanimously determined that the Mergers are in the best interests of MFIC and in the best interests of MFIC Stockholders, and that existing MFIC Stockholders will not suffer any dilution for purposes of Rule 17a-8 under the 1940 Act as a result of the Mergers.

In considering the Mergers and the terms of the Merger Agreements and the MFIC Side Letter Agreement, the MFIC Special Committee and the MFIC Board reviewed comparative information about MFIC, AFT and AIF. The MFIC Special Committee and the MFIC Board also considered the anticipated reasonable expectations of MFIC Stockholders, market dynamics and regulatory and legal issues. In addition, the MFIC Special Committee and the MFIC Board reviewed comprehensive information regarding the anticipated benefits and possible risks to MFIC and MFIC Stockholders as a result of the Mergers.

The MFIC Special Committee and the MFIC Board, with the assistance of their legal and other advisors (and, in the case of the MFIC Special Committee, its financial advisor), weighed various benefits and risks in considering and negotiating the terms of the Mergers, both with respect to the immediate effects of the Mergers on MFIC and MFIC Stockholders and with respect to the potential benefits that could be experienced by the combined company after the Mergers. Some of the material factors considered by the MFIC Special Committee and the MFIC Board that assisted them in concluding the Mergers are in the best interests of MFIC and MFIC Stockholders included, among others:

 

   

the combined company is expected to benefit from increased analyst coverage and improved secondary market liquidity of its shares as a result of its scale;

 

   

the expected accretion to net investment income per share via cost savings through operational synergies and the potential to deploy additional leverage on the acquired investment portfolio in investments that are expected to be higher yielding than a majority of the existing portfolio holdings;

 

   

the MFIC Distribution;

 

   

the MFIC Side Letter Agreement;

 

42


Table of Contents
   

expected greater access to more diverse and lower-cost sources of debt capital;

 

   

acquisition of known investment portfolios;

 

   

no dilution for purposes of Rule 17a-8 under the 1940 Act;

 

   

process for negotiation;

 

   

the opinion of Lazard Frères & Co. LLC (“Lazard”), the financial advisor to the MFIC Special Committee, as more fully described in the section entitled “The Mergers—Opinions of the Financial Advisor to the MFIC Special Committee”;

 

   

transaction costs of the Mergers, including fees to outside advisors; and

 

   

the absence of an adverse impact on MFIC’s regulatory obligations.

The foregoing list does not include all of the factors that the MFIC Special Committee and the MFIC Board considered in approving the proposed Mergers, the Merger Agreements and the MFIC Side Letter Agreement, and each member of the MFIC Special Committee and of the MFIC Board may have assigned different weights to different factors. In addition, the members of the MFIC Special Committee and the MFIC Board may have individually considered factors that are not listed here, or not individually considered certain factors that are listed here.

For a further discussion of the material factors considered by the MFIC Special Committee and the MFIC Board, see “The Mergers—Reasons for the Mergers.”

AFT

The AFT Board consulted with its legal and other advisors, as well as representatives of MFIC Adviser and AFT Adviser, and considered numerous factors, including the unanimous recommendation of the AFT Special Committee. As a result of their considerations, the AFT Special Committee and the AFT Board unanimously determined that the AFT Mergers are in the best interests of AFT and in the best interests of AFT Stockholders, and that existing AFT Stockholders will not suffer any dilution for purposes of Rule 17a-8 under the 1940 Act as a result of the AFT Mergers.

In considering the AFT Mergers and the terms of the AFT Merger Agreement and the AFT Side Letter Agreement, the AFT Special Committee and the AFT Board reviewed comparative information about MFIC and AFT. The AFT Special Committee and the AFT Board also considered the anticipated reasonable expectations of AFT Stockholders, market dynamics and regulatory and legal issues. In addition, the AFT Special Committee and the AFT Board reviewed comprehensive information regarding the anticipated benefits and possible risks to AFT and AFT Stockholders as a result of the AFT Mergers. The AFT Special Committee also considered the differences between closed-end funds and BDCs generally, including the differences in permissible leverage between the two types of entities. The AFT Special Committee also considered the similarities and differences in the types and characteristics of assets in the MFIC and AFT portfolios. For more information regarding the similarities and differences in the types and characteristics of assets the AFT Special Committee considered, see “Questions and Answers about the Mergers—What are the differences in the character of the investments in which MFIC invests, as opposed to AFT and/or AIF, if any, and how the investments made by AFT Stockholders and AIF Stockholders will change as a result of the proposed Mergers?

The AFT Special Committee and the AFT Board, with the assistance of their legal and other advisors (and, in the case of the AFT Special Committee, its financial advisor), weighed various benefits and risks in considering and negotiating the terms of the AFT Mergers, both with respect to the immediate effects of the AFT Mergers on AFT and AFT Stockholders and with respect to the potential benefits that could be experienced by the combined company after the AFT Mergers. The AFT Special Committee and the AFT Board also considered changes to the foregoing factors that could occur following the closing of the AIF Mergers. Some of the material

 

43


Table of Contents

factors considered by the AFT Special Committee and the AFT Board that assisted them in concluding that the AFT Mergers are in the best interests of AFT and AFT Stockholders included, among others:

 

   

the combined company would potentially benefit from increased analyst coverage as a result of its scale;

 

   

the combined company is expected to benefit from improved secondary market liquidity of its shares as a result of its scale;

 

   

the expected accretion to net investment income per share via cost savings through operational synergies, the potential to deploy additional leverage on the acquired investment portfolio in investments that MFIC expects to be higher yielding than a majority of the existing portfolio holdings and increased leverage on the combined company’s portfolio compared to AFT’s current leverage;

 

   

the AFT Stockholder Payment;

 

   

the MFIC Distribution;

 

   

the AFT Side Letter Agreement;

 

   

expected increased portfolio yield based on current portfolio yields of AFT and MFIC;

 

   

integration into a known investment portfolio;

 

   

affiliation of the management teams;

 

   

no dilution for purposes of Rule 17a-8 under the 1940 Act;

 

   

process for negotiation;

 

   

the opinion of Keefe, Bruyette & Woods, Inc. (“KBW”), the financial advisor to the AFT Special Committee, as more fully described in the section entitled “The Mergers—Opinion of the Financial Advisor to the AFT Special Committee”;

 

   

transaction costs of the AFT Mergers, including fees to outside advisors;

 

   

that the AFT Mergers are expected to qualify as a tax-free reorganization for U.S. federal income tax purposes, except to the extent of the special payment and cash received in lieu of fractional shares; and

 

   

the absence of an adverse impact on AFT’s regulatory obligations.

The foregoing list does not include all of the factors that the AFT Special Committee and the AFT Board considered in approving the proposed AFT Mergers, the AFT Merger Agreement and the AFT Side Letter Agreement, and each member of the AFT Special Committee and of the AFT Board may have assigned different weights to different factors. In addition, the members of the AFT Special Committee and the AFT Board may have individually considered factors that are not listed here, or not individually considered certain factors that are listed here.

For a further discussion of the material factors considered by the AFT Special Committee and the AFT Board, see “The Mergers—Reasons for the Mergers.”

AIF

The AIF Board consulted with its legal and other advisors, as well as representatives of MFIC Adviser and AIF Adviser, and considered numerous factors, including the unanimous recommendation of the AIF Special Committee. As a result of their considerations, the AIF Special Committee and the AIF Board unanimously determined that the AIF Mergers are in the best interests of AIF and in the best interests of AIF Stockholders, and that existing AIF Stockholders will not suffer any dilution for purposes of Rule 17a-8 under the 1940 Act as a result of the AIF Mergers.

 

44


Table of Contents

In considering the AIF Mergers and the terms of the AIF Merger Agreement and the AIF Side Letter Agreement, the AIF Special Committee and the AIF Board reviewed comparative information about MFIC and AIF. The AIF Special Committee and the AIF Board also considered the anticipated reasonable expectations of AIF Stockholders, market dynamics and regulatory and legal issues. In addition, the AIF Special Committee and the AIF Board reviewed comprehensive information regarding the anticipated benefits and possible risks to AIF and AIF Stockholders as a result of the AIF Mergers. The AIF Special Committee also considered the differences between closed-end funds and BDCs generally, including the differences in permissible leverage between the two types of entities. The AIF Special Committee also considered the similarities and differences in the types and characteristics of assets in the MFIC and AIF portfolios. For more information regarding the similarities and differences in the types and characteristics of assets the AIF Special Committee considered, see “Questions and Answers about the Mergers—What are the differences in the character of the investments in which MFIC invests, as opposed to AFT and/or AIF, if any, and how the investments made by AFT Stockholders and AIF Stockholders will change as a result of the proposed Mergers?

The AIF Special Committee and the AIF Board, with the assistance of their legal and other advisors (and, in the case of the AIF Special Committee, its financial advisor), weighed various benefits and risks in considering and negotiating the terms of the AIF Mergers, both with respect to the immediate effects of the AIF Mergers on AIF and AIF Stockholders and with respect to the potential benefits that could be experienced by the combined company after the AIF Mergers. The AIF Special Committee and the AIF Board also considered changes to the foregoing factors that could occur following the closing of the AFT Mergers. Some of the material factors considered by the AIF Special Committee and the AIF Board that assisted them in concluding that the AIF Mergers are in the best interests of AIF and AIF Stockholders included, among others:

 

   

the combined company would potentially benefit from increased analyst coverage as a result of its scale;

 

   

the combined company is expected to benefit from improved secondary market liquidity of its shares as a result of its scale;

 

   

the expected accretion to net investment income per share via cost savings through operational synergies, the potential to deploy additional leverage on the acquired investment portfolio in investments that MFIC expects to be higher yielding than a majority of the existing portfolio holdings and increased leverage on the combined company’s portfolio compared to AIF’s current leverage;

 

   

the AIF Stockholder Payment;

 

   

the MFIC Distribution;

 

   

the AIF Side Letter Agreement;

 

   

expected increased portfolio yield based on current portfolio yields of AIF and MFIC;

 

   

integration into a known investment portfolio;

 

   

affiliation of the management teams;

 

   

no dilution for purposes of Rule 17a-8 under the 1940 Act;

 

   

process for negotiation;

 

   

the opinion of KBW, the financial advisor to the AIF Special Committee, as more fully described in the section entitled “The Mergers—Opinion of the Financial Advisor to the AIF Special Committee”;

 

   

transaction costs of the AIF Mergers, including fees to outside advisors;

 

   

that the AIF Mergers are expected to qualify as a tax-free reorganization for U.S. federal income tax purposes, except to the extent of the special payment and cash received in lieu of fractional shares; and

 

   

the absence of an adverse impact on AIF’s regulatory obligations.

 

45


Table of Contents

The foregoing list does not include all of the factors that the AIF Special Committee and the AIF Board considered in approving the proposed AIF Mergers, the AIF Merger Agreement and the AIF Side Letter Agreement, and each member of the AIF Special Committee and of the AIF Board may have assigned different weights to different factors. In addition, the members of the AIF Special Committee and the AIF Board may have individually considered factors that are not listed here, or not individually considered certain factors that are listed here.

For a further discussion of the material factors considered by the AIF Special Committee and the AIF Board, see “The Mergers—Reasons for the Mergers.”

MFIC Stockholders, AFT Stockholders and AIF Stockholders Do Not Have Appraisal Rights

Neither the MFIC Stockholders, the AFT Stockholders nor the AIF Stockholders will be entitled to exercise appraisal rights in connection with the Mergers under the laws of the State of Maryland.

 

46


Table of Contents

RISK FACTORS

In addition to the other information included or incorporated by reference in this joint proxy statement/prospectus, stockholders should carefully consider the risks described below in determining whether to approve, in the case of MFIC Stockholders, the MFIC Share Issuance Proposal, in the case of AFT Stockholders, the AFT Merger Proposal, and in the case of AIF Stockholders, the AIF Merger Proposal. The information in “Item 1A.  Risk Factors” in Part I of MFIC’s Annual Report on Form 10-KT (file no. 814-00646) for the nine months ended December  31, 2022, “Item 1A. Risk Factors” in Part II of MFIC’s Quarterly Report on Form 10-Q (file no. 814-00646) for the quarter ended March  31, 2023, Item 1A. Risk Factors” in Part II of MFIC’s Quarterly Report on Form 10-Q (file no. 814-00646) for the quarter ended June  30, 2023 and in “Item 1A. Risk Factors” in Part II of MFIC’s Quarterly Report on Form 10-Q (file no. 814-00646) for the quarter ended September 30, 2023) is incorporated herein by reference for general risks related to MFIC. The information in Fund Investment Objectives, Policies and Risks (unaudited) – Risk Factors” in AFT’s Annual Report on Form N-CSR (file no. 811-22481) for the fiscal year ended December 31, 2022 and Fund Investment Objectives, Policies and Risks (unaudited) – Risk Factors” in AFT’s Semi-Annual Report on Form N-CSRS (file no. 811-22481) for the six months ended June  30, 2023 is incorporated herein by reference for general risks related to AFT. The information in Fund Investment Objectives, Policies and Risks (unaudited) – Risk Factors” in AIF’s Annual Report on Form N-CSR (file no. 811-22591) for the fiscal year ended December  31, 2022 and Fund Investment Objectives, Policies and Risks (unaudited) – Risk Factors” in AIF’s Semi-Annual Report on Form N-CSRS (file no. 811-22591) for the six months ended June 30, 2023 is incorporated herein by reference for general risks related to AIF. The occurrence of any of these risks could materially and adversely affect the business, prospects, financial condition, results of operations and cash flow of MFIC, AFT and AIF and, following the Mergers, the combined company and might cause you to lose all or part of your investment. The risks, as set out below and incorporated by reference herein, are not the only risks MFIC, AFT and AIF and, following the Mergers, the combined company face, and there may be additional risks that MFIC, AFT and AIF do not presently know of or that they currently consider not likely to have a significant impact. New risks may emerge at any time and MFIC, AFT and AIF cannot predict such risks or estimate the extent to which they may affect the business or financial performance of MFIC, AFT and AIF and, following the Mergers, the combined company. See also “Incorporation by Reference for MFIC,” “Incorporation by Reference for AFT,” “Incorporation by Reference for AIF” and “Where You Can Find More Information” in this joint proxy statement/prospectus.

Summary of MFIC Risk Factors

The following is only a summary of the principal risks that may materially adversely affect MFIC’s business, financial condition, results of operations and cash flows. See “—Risks Related to the Mergers” below and the information incorporated by reference in this joint proxy statement/prospectus for additional information. Since MFIC, AFT and AIF invest in similar securities, MFIC’s, AFT’s and AIF’s risks are substantially similar other than the risks disclosed in “Comparison of Certain MFIC, AFT and AIF Risk Factors” below.

Risk Relating to the Current Environment

 

   

Capital markets may experience periods of disruption and instability. Such market conditions may materially and adversely affect debt and equity capital markets in the United States and abroad, which may have a negative impact on MFIC’s business and operations.

 

   

MFIC is exposed to risks associated with changes in interest rates, including the current rising interest rate environment.

 

   

Inflation has adversely affected and may continue to adversely affect the business, results of operations and financial condition of MFIC’s portfolio companies.

 

   

The war in Ukraine and Russia may continue to have a material adverse impact on MFIC and our portfolio companies.

 

47


Table of Contents
   

Price declines and illiquidity in the corporate debt markets have adversely affected, and may in the future adversely affect, the fair value of MFIC’s portfolio investments, reducing MFIC’s net asset value through increased net unrealized depreciation.

 

   

Uncertainty with respect to the financial stability of the United States and several countries in the EU could have a significant adverse effect on MFIC’s business, financial condition, and results of operations.

 

   

The interest rates of some of MFIC’s floating-rate loans to our portfolio companies may be priced using a spread over LIBOR, which is being phased out.

 

   

Changes in existing laws or regulations, the interpretations thereof or newly enacted laws or regulations may negatively impact MFIC’s business.

 

   

The continued uncertainty relating to the U.S. and global economy could have a negative impact on MFIC’s business.

 

   

Changes to U.S. federal income tax laws could materially and adversely affect MFIC and MFIC Stockholders.

 

   

Disruptions to the global supply chain may have adverse impact on MFIC’s portfolio companies and, in turn, harm MFIC.

 

   

Certain of MFIC’s portfolio companies’ businesses could be adversely affected by the effects of health pandemics or epidemics, including the ongoing COVID-19 pandemic, which has had, and may continue to have, a negative impact on MFIC and our portfolio companies’ businesses and operations.

Risks Relating to MFIC’s Business and Structure

 

   

MFIC may suffer credit losses.

 

   

MFIC is dependent upon MFIC Adviser’s key personnel for MFIC’s future success and upon their access to AGM’s investment professionals and partners.

 

   

MFIC’s financial condition and results of operations depend on MFIC’s ability to manage future growth effectively.

 

   

MFIC operates in a highly competitive market for investment opportunities.

 

   

Any failure on MFIC’s part to maintain status as a BDC would reduce MFIC’s operating flexibility.

 

   

MFIC will be subject to corporate-level income tax if MFIC is unable to maintain its status as a RIC.

 

   

MFIC may have difficulty paying required distributions if MFIC recognizes income before or without receiving cash representing such income.

 

   

Regulations governing MFIC’s operation as a BDC affect MFIC’s ability to raise, and the way in which MFIC raises, additional capital.

 

   

MFIC’s business requires a substantial amount of capital to grow because MFIC must distribute most of its income.

 

   

Many of MFIC’s portfolio investments are recorded at fair value as determined in good faith by MFIC Advisor and under the direction of MFIC’s Board and, as a result, there is uncertainty as to the value of MFIC’s portfolio investments.

 

   

The lack of liquidity in MFIC’s investments may adversely affect MFIC’s business.

 

   

MFIC may experience fluctuations in MFIC’s periodic results.

 

   

MFIC’s ability to enter into transactions with affiliates is restricted.

 

   

There are significant potential conflicts of interest which could adversely affect MFIC’s investment returns.

 

48


Table of Contents
   

Changes in the laws or regulations governing MFIC’s business or the businesses of MFIC’s portfolio companies and any failure by MFIC or MFIC’s portfolio companies to comply with these laws or regulations, could negatively affect the profitability of MFIC’s operations or MFIC’s portfolio companies.

 

   

MFIC may choose to pay dividends in our own common stock, in which case MFIC Stockholders may be required to pay federal income taxes in excess of the cash dividends MFIC Stockholders receive.

 

   

If MFIC fails to maintain an effective system of internal control over financial reporting, MFIC may not be able to accurately report MFIC’s financial results or prevent fraud.

 

   

The failure in cyber security systems, as well as the occurrence of events unanticipated in MFIC’s disaster recovery systems and management continuity planning could impair MFIC’s ability to conduct business effectively.

 

   

MFIC and its portfolio companies may experience cyber security incidents and are subject to cyber security risks.

 

   

MFIC is dependent on information systems and systems failures could significantly disrupt MFIC’s business, which may, in turn, negatively affect the market price of MFIC Common Stock and MFIC’s ability to pay dividends.

 

   

The effect of global climate change may impact the operations of MFIC’s portfolio companies.

Risks Relating to MFIC Investments

 

   

MFIC’s investments in portfolio companies are risky, and MFIC could lose all or part of its investment.

 

   

Economic recessions or downturns could impair our portfolio companies and harm MFIC’s operating results.

 

   

MFIC’s portfolio companies may be highly leveraged and a covenant breach by MFIC’s portfolio companies may harm MFIC’s operating results.

 

   

There may be circumstances where MFIC’s debt investments could be subordinated to claims of other creditors or MFIC could be subject to, among other things, lender liability or fraudulent conveyance claims.

 

   

If MFIC does not invest a sufficient portion of its assets in qualifying assets, MFIC could fail to qualify as a BDC or be precluded from investing according to MFIC’s current business strategy.

 

   

MFIC’s portfolio contains a limited number of portfolio companies, which subjects MFIC to a greater risk of significant loss if any of these companies defaults on its obligations under any of its debt securities.

 

   

An investment strategy focused primarily on privately-held companies presents certain challenges, including the lack of available information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel and a greater vulnerability to economic downturns.

 

   

MFIC’s portfolio companies may incur debt that ranks equally with, or senior to, MFIC’s investments in such companies.

 

   

MFIC’s investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.

 

   

MFIC’s ability to enter into transactions involving derivatives and financial commitment transactions may be limited.

 

49


Table of Contents

Risks Relating to MFIC’s Debt Instruments

 

   

The trading market or market value of MFIC’s debt securities may fluctuate.

 

   

Terms relating to redemption may materially adversely affect MFIC Stockholders’ return on any debt securities that MFIC may issue.

 

   

MFIC’s credit ratings may not reflect all risks of an investment in MFIC’s debt securities.

 

   

Uncertainty related to alternative reference rates due to the phase out of London Interbank Offered Rates (“LIBOR”).

Risks Relating to an Investment in MFIC Common Stock

 

   

Investing in MFIC’s securities involves a high degree of risk and is highly speculative.

 

   

There is a risk that investors in MFIC’s equity securities may not receive distributions or that MFIC’s distributions may not grow over time and that investors in MFIC’s debt securities may not receive all of the interest income to which they are entitled.

 

   

MFIC may be unable to invest the net proceeds raised from offerings on acceptable terms, which would harm MFIC’s financial condition and operating results.

 

   

Sales of substantial amounts of MFIC’s securities may have an adverse effect on the market price of MFIC’s securities.

 

   

MFIC Stockholders may experience dilution in their ownership percentage.

Comparison of Certain MFIC, AFT and AIF Risk Factors

The following is a summary of certain material differences between the risk factors of MFIC, on the one hand, and the risk factors of AFT and AIF, on the other hand, but does not purport to be a complete description of those risks applicable in connection with each of MFIC, AFT, and AIF. Furthermore, the identification of some of these risks as material is not intended to indicate that other risks that may be equally important do not exist. Additional risks and uncertainties not currently known to MFIC, AFT and/or AIF or that are currently deemed to be immaterial also may have a material adverse effect on the business, financial condition and/or operating results of each of MFIC, AFT, and/or AIF. See “—Summary of MFIC Risk Factors”, “—Risks Relating to the Mergers” and the other information incorporated by reference in this joint proxy statement/prospectus for additional information.

Leverage Risk

 

   

As a BDC, MFIC is allowed to deploy additional leverage than AFT and AIF. AFT and AIF may not issue debt unless its asset coverage is at least 300% immediately after giving effect to the issuance, whereas MFIC is required to maintain an asset coverage ratio of at least 150%. The difference in asset coverage generally means that AIF and AFT may only incur leverage up to a debt-to-equity ratio of approximately 1:2, while MFIC can incur leverage up to a debt-to-equity ratio of approximately 2:1. Given that MFIC is allowed to maintain a lower asset coverage ratio than AFT and AIF, the leverage risks associated with an investment in MFIC are increased compared to an investment in AFT or AIF. Failure to maintain the requisite asset coverage may require MFIC to sell a portion of its investments and, depending on the nature of its leverage, repay a portion of its indebtedness at a time when such sales may be disadvantageous.

 

   

In addition, MFIC is allowed to issue multiple classes of debt, including secured and unsecured debt, unlike AFT and AIF who can only issue a single class of debt. MFIC may also in the future fund investments with preferred stock, which hold the same risks as borrowings. Moreover, some MFIC

 

50


Table of Contents
 

portfolio companies may be highly leveraged, and so may be impaired in their ability to finance their future operations and capital needs. Finally, MFIC’s portfolio companies may be permitted to incur debt that ranks equally with, or senior to, the debt securities that MFIC invests in, and such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or before the dates on which MFIC is entitled to receive payments in respect of the debt securities in which MFIC invests.

Liquidity Risk

 

   

MFIC’s investments in private company securities are subject to restrictions that render them less liquid than publicly traded securities, and this illiquidity may make these investments difficult to sell if the need arises, among other restrictions. While certain of AFT’s and AIF’s investments also are illiquid, AFT and AIF generally invest in broadly syndicated loans. As a result, MFIC’s investments tend to be less liquid than AFT’s and AIF’s investments, and this illiquidity may make these investments difficult to sell if the need arises, among other restrictions.

 

   

Relatedly, as a large percentage of MFIC’s portfolio investments are not publicly traded, the fair value of MFIC’s investments may not be readily determinable, thus MFIC’s net asset value could be adversely affected if its determinations regarding the fair value of these investments were materially higher than the values that it ultimately realizes upon the disposal of such investments. In addition, investments in middle-market companies, as well as investments in the energy sector, come with many risks.

Originated Loans Risk

 

   

Apollo received an exemptive order from the SEC (the “Order”), which permits MFIC and other regulated funds greater flexibility to negotiate the terms of co-investment transactions with certain affiliates, including investment funds managed by MFIC Adviser or its affiliates. Pursuant to the Order, MFIC invests on a side-by-side basis with one or more other Apollo funds in directly originated loans to privately held U.S. middle-market companies. As of September 30, 2023, 92% of MFIC’s portfolio consists of direct corporate lending. If Apollo is unsuccessful in originating loans, MFIC’s ability to reach its investment objectives may be adversely affected.

Key Personnel Risk

 

   

Since MFIC generally invests in originated loans, it depends on the diligence, skill and network of business contacts of the senior management of MFIC Adviser specifically and AGM generally, and any departures in key personnel or changes in relationship with MFIC Adviser or AGM may adversely affect MFIC’s investment objective. In addition, MFIC Adviser and Administrator have the right, under their investment management agreement and administration agreement, respectively, to resign at any time upon not less than 60 days’ written notice, and a replacement with similar expertise and ability to provide the same or equivalent services on acceptable terms may not be found within 60 days, or at all. Although AFT and AIF may invest in originated loans, they do not do so as much as MFIC.

Incentive Fee Risks

 

   

Unlike AFT and AIF, MFIC pays an incentive fee to its adviser, MFIC Adviser. The incentive fee that MFIC pays to MFIC Adviser may incentivize MFIC Adviser to make investments that are risky or more speculative than would be the case in the absence of such compensation arrangement, such as investing in more speculative securities that could result in higher investment losses.

 

51


Table of Contents

Senior Secured Credit Facility Risk

 

   

While MFIC intends to repay or prepay any amounts outstanding under AFT’s and AIF’s existing credit facilities if the Mergers are consummated, MFIC will still be subject to the conditions set forth in its senior secured credit facility.

Unsecured Notes Risk

 

   

MFIC has issued unsecured notes which will mature in 2025 and in 2026. If MFIC is not able to replace or repay the unsecured notes, MFIC’s liquidity and ability to fund new investments or maintain distributions to MFIC Stockholders could be adversely impacted.

Investment Policies and Restrictions

 

   

Unlike MFIC, AFT and AIF currently have various fundamental and non-fundamental investment policies and restrictions that may not be changed without the approval of the board and stockholders. These investment policies place restrictions on the types of investments AFT and AIF can make, and such restrictions may in effect limit the types of investments available to AFT and AIF. MFIC, on the other hand, does not have such fundamental investment policies, and accordingly, the MFIC Board has more discretion to change its investment policies. As a result, upon consummation of the Mergers, the former AFT Stockholders and AIF Stockholders will have fewer approval rights over the investment policies of MFIC.

Risks Relating to the Mergers

Because the market price of MFIC Common Stock and the NAV per share of MFIC Common Stock, AFT Common Stock and AIF Common Stock will fluctuate, AFT Stockholders and AIF Stockholders cannot be sure of the market value of the consideration they will receive in connection with the Mergers until the AFT Closing and AIF Closing.

At the AFT Effective Time and AIF Effective Time, each share of AFT Common Stock and AIF Common Stock issued and outstanding immediately prior to the AFT Effective Time and AIF Effective Time (other than AFT Cancelled Shares and AIF Cancelled Shares), respectively, will be converted into the right to receive a number of shares of MFIC Common Stock, equal to the AFT Exchange Ratio and AIF Exchange Ratio (cash may be paid in lieu of fractional shares). The market value of such consideration to be received by AFT Stockholders upon completion of the AFT Mergers (the “AFT Merger Consideration”) may vary from the closing price of AFT Common Stock and MFIC Common Stock, respectively, on the date the AFT Mergers were announced, on the date of the AFT Special Meeting to consider the AFT Merger Proposal and on the date the AFT Mergers are completed. The market value of such consideration to be received by AIF Stockholders upon completion of the AIF Mergers (the “AIF Merger Consideration”) may vary from the closing price of AIF Common Stock and MFIC Common Stock, respectively, on the date the AIF Mergers were announced, on the date of the AIF Special Meeting to consider the AIF Merger Proposal and on the date the AIF Mergers are completed. Any change in the market price of MFIC Common Stock prior to completion of the Mergers will affect the market value of the AFT Merger Consideration and AIF Merger Consideration that AIF Stockholders and AFT Stockholders, respectively, will receive upon completion of the Mergers. Additionally, the AFT Exchange Ratio and AIF Exchange Ratio will fluctuate as AFT’s, AIF’s and MFIC’s respective NAVs change prior to the AFT Closing and AIF Closing.

Accordingly, at the time of the AFT Special Meeting and AIF Special Meeting, AFT Stockholders and AIF Stockholders, respectively, will not know or be able to calculate the market value of the AFT Merger Consideration and AIF Merger Consideration they would receive upon completion of the Mergers, and at the closing of the Mergers, the NAVs of MFIC, AFT and AIF may be lower than their respective market prices.

 

52


Table of Contents

Neither AFT, AIF nor MFIC is permitted to terminate the Merger Agreements or resolicit the vote of their respective stockholders solely because of changes in the market price of shares of MFIC Common Stock. There will be no adjustment to the AFT Merger Consideration or AIF Merger Consideration for changes in the market price of shares of MFIC Common Stock.

Changes in the market price of MFIC Common Stock may result from a variety of factors, including, among other things:

 

   

significant volatility in the market price and trading volume of securities of Business Development Companies (“BDCs”) or other companies in MFIC’s sector, which are not necessarily related to the operating performance of these companies;

 

   

changes in regulatory policies, accounting pronouncements or tax guidelines, particularly with respect to RICs and BDCs;

 

   

loss of MFIC’s BDC or RIC status;

 

   

changes in earnings or variations in operating results or distributions that exceed MFIC’s net investment income;

 

   

increases in expenses associated with defense of litigation and responding to SEC inquiries;

 

   

changes in accounting guidelines governing valuation of MFIC’s investments;

 

   

changes in the value of MFIC’s portfolio of investments, including as a result of general economic conditions, interest rate shifts and changes in the performance of MFIC’s portfolio companies;

 

   

any shortfall in investment income or net investment income or any increase in losses from levels expected by investors or securities analysts;

 

   

departure of MFIC Adviser’s key personnel; and

 

   

general economic trends and other external factors, including those related to the COVID-19 pandemic.

These factors are generally beyond the control of MFIC. The range of high and low sales prices per share of MFIC Common Stock as reported on the NASDAQ for the three-month period ended September 30, 2023 was a low of $12.35 and a high of $14.03. However, historical trading prices are not necessarily indicative of future performance. AFT Stockholders and AIF Stockholders should obtain current market quotations for shares of MFIC Common Stock prior to the AFT Special Meeting and AIF Special Meeting, respectively.

Sales of shares of MFIC Common Stock after the completion of the Mergers may cause the trading price of MFIC Common Stock to decline.

For illustrative purposes, based on the number of shares of MFIC Common Stock issued and outstanding and the NAVs of MFIC and AFT as of September 30, 2023 (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9849 shares of MFIC Common Stock for each share of AFT Common Stock outstanding, resulting in pro forma ownership of 80.97% for current MFIC Stockholders and 19.03% for current AFT Stockholders. Likewise, based on the number of shares of MFIC Common Stock issued and outstanding and the NAVs of MFIC and AIF as of September 30, 2023 (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9577 shares of MFIC Common Stock for each share of AIF Common Stock outstanding, resulting in pro forma ownership of 82.49% for current MFIC Stockholders and 17.51% for current AIF Stockholders. These pro forma ownership percentages assume that both the AFT Mergers and AIF Mergers are consummated. Former AFT Stockholders and AIF Stockholders may be required to or decide to sell the shares of MFIC Common Stock that they receive pursuant to the Merger Agreements. In addition, MFIC Stockholders may decide not to hold their shares of MFIC Common Stock after completion of the Mergers. In each case, such sales of MFIC Common Stock could have the effect of depressing the trading price for MFIC Common Stock and may take place promptly following the completion of the Mergers. If this occurs, it could impair MFIC’s ability to raise additional capital through the sale of equity securities should MFIC desire to do so.

 

53


Table of Contents

The market prices of MFIC Common Stock, AFT Common Stock and AIF Common Stock after the Mergers may be affected by factors different from those affecting such common stock currently.

MFIC’s, AFT’s and AIF’s business differ in some respects. For example, MFIC’s investment objective is to generate current income and, to a lesser extent, long-term capital appreciation, while AFT’s and AIF’s investment objective is to seek current income with a secondary objective of preservation of capital. Accordingly, the results of operations of the combined company and the market prices of MFIC Common Stock, AFT Common Stock and AIF Common Stock after the Mergers may be affected by factors different from those currently affecting the independent results of operations and trading price of each of MFIC, AFT and AIF, such as a larger stockholder base, a different portfolio composition and a different capital structure. Accordingly, MFIC’s, AFT’s and AIF’s respective historical trading prices and financial results may not be indicative of these matters for the combined company following the Mergers.

Most MFIC Stockholders, AFT Stockholders and AIF Stockholders will experience a reduction in percentage ownership and voting power in the combined company as a result of the Mergers.

MFIC Stockholders will experience a substantial reduction in their percentage ownership interests and effective voting power in respect of the combined company relative to their percentage ownership interests in MFIC prior to the Mergers unless they hold a comparable or greater percentage ownership in AFT or AIF. Consequently, MFIC Stockholders should generally expect to exercise less influence over the management and policies of the combined company following the Mergers than they currently exercise over the management and policies of MFIC. AFT Stockholders and AIF Stockholders will experience a substantial reduction in their percentage ownership interests and effective voting power in respect of the combined company relative to their percentage ownership interests in AFT and AIF, respectively, prior to the Mergers unless they hold a comparable or greater percentage ownership in MFIC and AFT or AIF, as applicable. Consequently, AFT Stockholders and AIF Stockholders should generally expect to exercise less influence over the management and policies of the combined company following the Mergers than they currently exercise over the management and policies of AFT and AIF, respectively. In addition, prior to completion of the Mergers, subject to certain restrictions in the Merger Agreements and certain restrictions under the 1940 Act for issuances at prices below the then-current NAV per share of MFIC Common Stock, AIF Common Stock and AFT Common Stock, MFIC, AFT and AIF may issue additional shares of MFIC Common Stock, AFT Common Stock and AIF Common Stock, respectively, which would further reduce the percentage ownership of the combined company to be held by current MFIC Stockholders, AFT Stockholders and AIF Stockholders.

MFIC may be unable to realize the benefits anticipated by the Mergers, including estimated cost savings, or it may take longer than anticipated to achieve such benefits.

The realization of certain benefits anticipated as a result of the Mergers will depend in part on the integration of AFT’s and AIF’s investment portfolios with MFIC’s investment portfolio and the integration of AFT’s and AIF’s businesses with MFIC’s business. Though MFIC believes it can integrate MFIC, AFT and AIF given the significant overlap in investment portfolios, operations and governance structure, there can be no assurance that AFT’s and AIF’s investment portfolios or businesses can be operated profitably or integrated successfully into MFIC’s operations in a timely fashion or at all. The dedication of management resources to such integration may detract attention from the day-to-day business of the combined company and there can be no assurance that there will not be substantial costs associated with the transition process or there will not be other material adverse effects as a result of these integration efforts. Such effects, including incurring unexpected costs or delays in connection with such integration and failure of AFT’s and AIF’s investment portfolios to perform as expected, could have a material adverse effect on the financial results of the combined company.

MFIC also expects to achieve certain synergies and cost savings from the Mergers when the companies have fully integrated their portfolios. It is possible that the estimates of these synergies and potential cost savings could ultimately be incorrect. The cost savings estimates also assume MFIC will be able to combine its

 

54


Table of Contents

operations and AFT’s and AIF’s operations in a manner that permits those cost savings to be fully realized. If the estimates turn out to be incorrect or if MFIC is not able to successfully combine AFT’s and AIF’s investment portfolios or businesses with its operations, the anticipated synergies and cost savings may not be fully realized or realized at all or may take longer to realize than expected. Following the Mergers, AFT Stockholder and AIF Stockholder expenses will likely increase.

As a result of the Mergers, AFT Stockholder and AIF Stockholder expenses will likely increase.

AFT Stockholders and AIF Stockholders will experience significantly higher expenses, based on net asset value, and the expected increase in returns from investing in a fund that is more levered may not be realized. Therefore, AFT Stockholders and AIF Stockholders may hold shares of a fund with higher fees without the benefit of increased returns. For additional information, see “Risk Factors—Summary of MFIC Risk Factors.

The announcement and pendency of the proposed Mergers could adversely affect MFIC’s, AFT’s and AIF’s business, financial results and operations.

The announcement and pendency of the proposed Mergers could cause disruptions in and create uncertainty surrounding MFIC’s, AFT’s and AIF’s business, including affecting relationships with existing and future borrowers, which could have a significant negative impact on future revenues and results of operations, regardless of whether the Mergers are completed. In addition, MFIC, AFT and AIF have diverted, and will continue to divert, management resources towards the completion of the Mergers, which could have a negative impact on each of their future revenues and results of operations.

MFIC, AFT and AIF are also subject to restrictions on the conduct of each of their businesses prior to the completion of the Mergers as provided in the Merger Agreements, generally requiring MFIC, AFT and AIF to conduct their businesses only in the ordinary course and subject to specific limitations, including, among other things, certain restrictions on their ability to make certain investments and acquisitions, sell, transfer or dispose of their assets, amend their organizational documents and enter into or modify certain material contracts. These restrictions could prevent MFIC, AFT or AIF from pursuing otherwise attractive business opportunities, industry developments and future opportunities and may otherwise have a significant negative impact on their future investment income and results of operations.

If either or both of the Mergers does not close, MFIC, AFT and/or AIF will not benefit from the expenses incurred in pursuit of such Merger(s).

The Mergers may not be completed. If the Mergers are not completed, MFIC, AFT and AIF will have incurred substantial expenses for which no ultimate benefit will have been received. MFIC has incurred out-of-pocket expenses in connection with the Mergers for investment banking, legal and accounting fees and financial printing and other related charges, much of which will be incurred even if the Mergers are not completed. Upon the closing of each Merger, an affiliate of Apollo has agreed to reimburse MFIC, AFT and AIF for all merger-related expenses incurred and payable in connection with the transactions. If a Merger does not close, a portion of the merger-related expenses of MFIC, AFT or AIF, as applicable, will be reimbursed by an affiliate of Apollo (with the remainder to be borne by MFIC, AFT or AIF, as applicable). It is anticipated that MFIC Adviser or its affiliate will bear expenses of approximately $7,235,000 in connection with the Mergers, if consummated. It is anticipated that MFIC will bear expenses of approximately $0 if the AFT Mergers are not consummated and the AIF Mergers are consummated, and expenses of approximately $0 if the AIF Mergers are not consummated and the AFT Mergers are consummated. It is anticipated that AFT will bear expenses of approximately $478,000 if the AFT Mergers are not consummated, after taking into account MFIC Adviser’s expense reimbursement of $375,000. It is anticipated that AIF will bear expenses of approximately $420,000 if the AIF Mergers are not consummated after taking into account MFIC Adviser’s expense reimbursement of $375,000.

 

55


Table of Contents

The termination of either or both of the Merger Agreements could negatively impact MFIC, AFT and/or AIF.

If either or both of the Merger Agreements is terminated, there may be various consequences, including:

 

   

the businesses of MFIC, AFT and/or AIF may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Mergers, without realizing any of the anticipated benefits of completing the Mergers;

 

   

AFT and/or AIF may not be able to find a party willing to pay an equivalent or more attractive price than the price MFIC agreed to pay in the Mergers; and

 

   

MFIC, AFT and/or AIF will not realize the anticipated benefits of the Mergers described under “The MergersReasons for the Mergers.”

Under certain circumstances, MFIC, AFT or AIF would be obligated to pay a termination fee upon termination of the Merger Agreements.

The Mergers may not be completed. The Merger Agreements provides for the payment, subject to applicable law, by MFIC, AFT or AIF of a termination fee under certain circumstances. See “Description of the AFT Merger Agreement—Termination of the AFT Merger Agreement” and “Description of the AIF Merger Agreement—Termination of the AIF Merger Agreement” for a discussion of the circumstances that could result in the payment of a termination fee.

The Merger Agreements limit the ability of MFIC, AFT and AIF to pursue alternatives to the Mergers.

The Merger Agreements include restrictions on the ability of MFIC, AFT and AIF to solicit proposals for alternative transactions or engage in discussions regarding such proposals, subject to exceptions and termination provisions (as more fully described in the section entitled “Description of the AFT Merger Agreement—Additional Agreements” and “Description of the AIF Merger Agreement—Additional Agreements”), which could have the effect of discouraging such proposals from being made or pursued. The AFT Merger Agreement contains certain termination rights, including if the AFT Mergers are not completed on or before November 7, 2024, or if the requisite approvals of MFIC’s and AFT’s stockholders are not obtained. The AFT Merger Agreement provides that, upon the termination of the AFT Merger Agreement under certain circumstances involving entry into a definitive transaction by AFT with a third party, such third party that enters into the definitive transaction with AFT may be required to pay MFIC a termination fee of $7,029,482. The AFT Merger Agreement also provides that, upon the termination of the AFT Merger Agreement under certain circumstances involving entry into a definitive transaction by MFIC with a third party, such third party that enters into the definitive agreement with MFIC may be required to pay to AFT a termination fee of $29,905,339. The AIF Merger Agreement contains certain termination rights, including if the AIF Mergers are not completed on or before November 7, 2024, or if the requisite approvals of MFIC’s and AIF’s stockholders are not obtained. The AIF Merger Agreement provides that, upon the termination of the AIF Merger Agreement under certain circumstances involving entry into a definitive transaction by AIF with a third party, such third party that enters into the definitive transaction with AIF may be required to pay MFIC a termination fee of $6,348,267. The AIF Merger Agreement also provides that, upon the termination of the AIF Merger Agreement under certain circumstances involving entry into a definitive transaction by MFIC with a third party, such third party that enters into the definitive agreement with MFIC may be required to pay to AIF a termination fee of $29,905,339. These termination fees might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of MFIC, AFT or AIF from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the Mergers or might result in a potential competing acquirer proposing to pay a lower per share price to acquire MFIC, AFT or AIF than it might otherwise have proposed to pay.

 

56


Table of Contents

The opinions delivered to the MFIC Special Committee, the AFT Special Committee and the AIF Special Committee from their respective financial advisors prior to the signing of the Merger Agreements will not reflect changes in circumstances since the date of the opinions.

The opinion of the financial advisor to the MFIC Special Committee, was delivered to the MFIC Special Committee and the MFIC Board on, and was dated, November 6, 2023. The opinion of the financial advisor to the AFT Special Committee, was delivered to the AFT Special Committee and the AFT Board on, and was dated, November 6, 2023. The opinion of the financial advisor to the AIF Special Committee was delivered to the AIF Special Committee and the AIF Board on, and was dated, November 6, 2023. Changes in MFIC’s, AFT’s or AIF’s operations and prospects, general market and economic conditions and other factors that may be beyond the control of MFIC, AFT or AIF may significantly alter MFIC’s, AFT’s or AIF’s respective value or the respective price of shares of MFIC Common Stock, AFT Common Stock or AIF Common Stock by the time the AFT Mergers or AIF Mergers, as applicable, are completed. The opinions do not speak as of the time the AFT Mergers or the AIF Mergers, as applicable, will be completed or as of any date other than the date of such opinions. For a description of the opinion that the MFIC Special Committee received from its financial advisor, see “The Mergers — Opinion of the Financial Advisor to the MFIC Special Committee.” For a description of the opinion that the AFT Special Committee received from its financial advisor, see “The Mergers—Opinion of the Financial Advisor to the AFT Special Committee.” For a description of the opinion that the AIF Special Committee received from its financial advisor, see “The Mergers—Opinion of the Financial Advisor to the AIF Special Committee.”

The Mergers are subject to closing conditions, including stockholder approvals, that, if not satisfied or (to the extent legally allowed) waived, will result in the Mergers not being completed, which may result in material adverse consequences to the business and operations of MFIC, AFT and/or AIF.

The Mergers are subject to closing conditions, including certain approvals of MFIC Stockholders, AFT Stockholders and/or AIF Stockholders that, if not satisfied, will prevent the Mergers from being completed. The closing condition that AFT Stockholders and AIF Stockholders approve the applicable Merger Proposal may not be waived under applicable law and must be satisfied for each of the Mergers to be completed. If AFT Stockholders and/or AIF Stockholders do not approve the applicable Merger Proposal and either or both of the Mergers is not completed, the resulting failure could have a material adverse impact on MFIC’s, AFT’s and/or AIF’s respective businesses and operations. The closing of the AFT Mergers are not contingent on the closing of the AIF Mergers, and vice versa. If MFIC Stockholders do not approve the MFIC Share Issuance Proposal and the Mergers are not completed, the resulting failure of the Mergers could have a material adverse impact on MFIC’s, AFT’s and AIF’s respective businesses and operations. In addition to the required approvals of MFIC Stockholders, AFT Stockholders and AIF Stockholders, the Mergers are subject to a number of other conditions beyond the control of MFIC, AFT and AIF that may prevent, delay or otherwise materially adversely affect completion of the Mergers. MFIC, AFT and AIF cannot predict whether and when these other conditions will be satisfied. The failure to complete the Mergers would result in MFIC, AFT and AIF, and MFIC Stockholders, AFT Stockholders and AIF Stockholders, failing to realize the anticipated benefits of the Mergers described under “The Mergers—Reasons for the Mergers.”

MFIC, AFT and/or AIF may, to the extent legally allowed, waive one or more conditions to the AFT Mergers and/or the AIF Mergers, as applicable, without resoliciting stockholder approval.

Certain conditions to MFIC’s, AFT’s and AIF’s respective obligations to complete the AFT Mergers and/or the AIF Mergers, as applicable, may be waived, in whole or in part, to the extent legally allowed, either unilaterally or by mutual agreement. In the event that any such waiver does not require resolicitation of stockholders, MFIC, AFT and/or AIF will each have the discretion to complete the AFT Mergers and/or the AIF Mergers, as applicable, without seeking further stockholder approval. The conditions requiring the approval of MFIC Stockholders, AFT Stockholders and AIF Stockholders, as applicable, however, cannot be waived.

 

57


Table of Contents

MFIC, AFT and AIF will be subject to operational uncertainties and contractual restrictions while the Mergers are pending.

Uncertainty about the effect of the Mergers may have an adverse effect on MFIC, AFT and/or AIF and, consequently, on the combined company following completion of the Mergers. These uncertainties may cause those that deal with MFIC, AFT and/or AIF to seek to change their existing business relationships with them. In addition, the Merger Agreement restricts MFIC, AFT and AIF from taking actions that each might otherwise consider to be in its best interests. These restrictions may prevent MFIC, AFT and/or AIF from pursuing certain business opportunities that may arise prior to the completion of the Mergers.

Litigation filed against MFIC, AFT and/or AIF in connection with the Mergers could result in substantial costs and could delay or prevent either or both of the Mergers from being completed.

From time to time, MFIC, AFT and/or AIF may be subject to legal actions, including securities class action lawsuits and derivative lawsuits, as well as various regulatory, governmental and law enforcement inquiries, investigations and subpoenas in connection with the Mergers. These or any similar securities class action lawsuits and derivative lawsuits, regardless of their merits, may result in substantial costs and divert management time and resources. An adverse judgment in such cases could have a negative impact on the liquidity and financial condition of MFIC, AFT, AIF and/or the combined company following the Mergers or could prevent either or both of the Mergers from being completed.

The Mergers may trigger certain “change of control” provisions and other restrictions in contracts of MFIC, AFT and/or AIF or their affiliates and the failure to obtain any required consents or waivers could adversely impact the combined company.

Certain agreements of MFIC, AFT, AIF or their affiliates may require by their terms the consent or waiver of one or more counterparties in connection with the Mergers. The failure to obtain any such consent or waiver may permit such counterparties to terminate, or otherwise increase their rights or MFIC’s, AFT’s or AIF’s obligations under, any such agreement because the Mergers or other transactions contemplated by the Merger Agreements may violate an anti-assignment, change of control or similar provision relating to any of such transactions. If this occurs, MFIC may have to seek to replace that agreement with a new agreement or seek an amendment to such agreement. MFIC, AFT and AIF cannot assure you that MFIC will be able to replace or amend any such agreement on comparable terms or at all.

If any such agreement is material, the failure to obtain consents, amendments or waivers under, or to replace on similar terms or at all, any of these agreements could adversely affect the financial performance or results of operations of the combined company following the Mergers, including preventing MFIC from operating a material part of AFT’s or AIF’s businesses.

In addition, the consummation of the Mergers may violate, conflict with, result in a breach of provisions of, or the loss of any benefit under, constitute a default (or an event that, with or without notice or lapse of time or both, would constitute a default) under, or result in the termination, cancellation, acceleration or other change of any right or obligation (including any payment obligation) under, certain agreements of MFIC, AFT and AIF. Any such violation, conflict, breach, loss, default or other effect could, either individually or in the aggregate, have a material adverse effect on the financial condition, results of operations, assets or business of the combined company following completion of the Mergers.

The shares of MFIC Common Stock to be received by AFT Stockholders and AIF Stockholders as a result of the Mergers will have different rights associated with them than shares of AFT Common Stock and AIF Common Stock currently held by them.

The rights associated with AFT Common Stock and AIF Common Stock are different from the rights associated with MFIC Common Stock. See “Comparison of MFIC, AFT and AIF Stockholder Rights.

 

58


Table of Contents

COMPARATIVE FEES AND EXPENSES

Comparative Fees and Expenses Relating to the Mergers

The following table is intended to assist MFIC Stockholders, AFT Stockholders and AIF Stockholders in understanding the costs and expenses that an investor in shares of MFIC Common Stock, AFT Common Stock or AIF Common Stock bears directly or indirectly and, based on the assumptions set forth below, the pro forma costs and expenses estimated to be incurred by the combined company in the first year following completion of the Mergers based on net assets and total assets. Although there appears to be significant differences in expenses based on net assets, since AFT and AIF are levered, we believe that it is appropriate for investors to review the expenses of MFIC, AFT and AIF based on total assets as well. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this document contains a reference to fees or expenses paid or to be paid by “you,” “MFIC,” “AFT” or “AIF,” stockholders will indirectly bear such fees or expenses as investors in MFIC, AFT or AIF, as applicable. The table below is based on information as of September 30, 2023 for each party (except as noted below) and includes expenses of the applicable consolidated subsidiaries. Any footing differences are due to rounding.

 

     Actual     Pro Forma(13)  
   MFIC      AFT     AIF     MFIC/
AFT/
AIF(10)
     MFIC/
AFT(11)
     MFIC/
AIF(12)
 

Stockholder transaction expenses:

               

Sales load (as a percentage of offering price)

     —  (1)        —  (1)       —  (1)       —  (1)        —  (1)        —  (1)  

Offering expenses (as a percentage of offering price)

     —  (2)        —  (2)       —  (2)       —  (1)        —  (1)        —  (1)  

Distribution reinvestment plan fees

     —  (3)        —  (3)       —  (3)       —  (1)        —  (1)        —  (1)  

Total stockholder transaction expenses (as a percentage of offering price)

     None        None       None       None        None        None  
     Actual     Pro Forma  
   MFIC      AFT     AIF     MFIC/
AFT/
AIF (10)
     MFIC/
AFT(11)
     MFIC/
AIF(12)
 

Annual expenses (as a percentage of net assets attributable to common stock(4)):

               

Base management fees

     1.75%(5)        1.57% (5)      1.59% (5)      1.75%        1.75%        1.75%  

Incentive fees

     2.42%(6)        None           None           2.57%        2.62%        2.63%  

Interest payments on borrowed funds

     10.22%(7)        3.53% (7)      3.66% (7)      8.79%        8.79%        8.79%  

Other expenses

     1.53%(8)        0.88% (8)      0.92% (8)      1.19%        1.17%        1.17%  

Total annual expenses

     15.91%(9)        5.99%       6.16%       14.30%        14.32%        14.34%  

Annual expenses (as a percentage of total assets):

 

         

Base management fees

     0.70%(5)        0.98% (5)      0.98% (5)      0.77%        0.74%        0.74%  

Incentive fees

     0.97%(6)        None           None           1.15%        1.12%        1.12%  

Interest payments on borrowed funds

     4.12%(7)        2.19% (7)      2.26% (7)      3.93%        3.93%        3.93%  

Other expenses

     0.62%(8)        0.55% (8)      0.57% (8)      0.53%        0.52%        0.52%  

Total annual expenses

     6.40%(9)        3.71%       3.81%       6.38%        6.31%        6.31%  

 

(1)

In the event that the securities to which this joint proxy statement/prospectus relates are sold to or through underwriters, a corresponding prospectus supplement and any related free writing prospectus will disclose the applicable sales load and estimated offering expenses. Purchases of shares of MFIC’s Common Stock on the secondary market are not subject to sales charges but may be subject to brokerage commissions or other charges. The table does not include any sales load that stockholders may have paid in connection with their purchase of shares of MFIC’s Common Stock.

 

59


Table of Contents
(2)

The related prospectus supplement and any related free writing prospectus will disclose the estimated amount of offering expenses, the offering price and the offering expenses borne by MFIC, AFT and AIF, respectively, as a percentage of the offering price.

(3)

For MFIC, the expenses of the dividend reinvestment plan per share are included in “Other expenses.” For AFT and AIF, there is no charge to participants for reinvesting dividends or capital gains distributions. AFT’s and AIF’s plan agent service fee for handling the reinvestment of such dividends and capital gains distributions will be paid by AFT and AIF, respectively. AFT Stockholders and AIF Stockholders will bear a proportionate share of brokerage commissions on all open market purchases.

(4)

“Net assets attributable to common stock” equals average net assets as of September 30, 2023.

(5)

Base management fees are being calculated on average net assets for MFIC. Base management fees are being calculated for AFT and AIF based on average daily managed assets.

For MFIC, the base management fee is calculated at an annual rate of 1.75% (0.4375% per quarter) of MFIC’s net asset value as of the final business day of the prior calendar quarter; provided, however, that the base management fee shall not be greater than 1.50% (0.375% per quarter) of the lesser of (i) the average of the value of MFIC’s gross assets (excluding cash or cash equivalents but including other assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters and (ii) the average monthly value (measured as of the last day of each month) of MFIC’s gross assets (excluding cash or cash equivalents but including other assets purchased with borrowed amounts) during the most recently completed calendar quarter. The base management fee will be payable quarterly in arrears. See  Item 1. Business—Investment Advisory Management Agreement—Management and Incentive Fee” in Part I of MFIC’s Annual Report on Form 10-KT (file no. 814-00646) for the nine months ended December 31, 2022 for additional information.

For AFT, AFT/AIF Adviser receives a monthly management fee for its advisory services equal to an effective annual rate of 1.0% of the average daily value of AFT’s Managed Assets. See  Notes to Consolidated Financial Statements—Note 3. Investment Advisory, Administration and Other Agreements with Affiliates—Investment Advisory Fee” in AFT’s Annual Report on Form N-CSR (file no. 811-22591) for the fiscal year ended December 31, 2022 for additional information.

For AIF, AFT/AIF Adviser receives a monthly management fee for its advisory services equal to an effective annual rate of 1.0% of the average daily value of AIF’s Managed Assets. See  Notes to Consolidated Financial Statements—Note 3. Investment Advisory, Administration and Other Agreements with Affiliates—Investment Advisory Fee” in AIF’s Annual Report on Form N-CSR (file no. 811-22481) for the fiscal year ended December 31, 2022 for additional information.

 

(6)

The Incentive Fee payable to MFIC’s Adviser is based on MFIC’s performance and is not paid unless MFIC achieves certain goals. It consists of two components, one based on income and the other based on capital gains, that are determined independent of each other, with the result that one component may be payable even if the other is not.

Incentive Fee on Pre-Incentive Fee Net Income

The Incentive Fee on pre-incentive fee net investment income will be determined and paid quarterly in arrears by calculating the amount by which (x) the aggregate amount of the pre-incentive fee net investment income with respect of the current calendar quarter and each of the eleven preceding calendar quarters (in either case, the “Trailing Twelve Quarters”) exceeds (y) the preferred return amount in respect of the Trailing Twelve Quarters; provided, however, that the pre-incentive fee net investment income in respect of the current calendar quarter exceeds the multiple of (A) 1.75% and (B) MFIC’s net asset value at the beginning of such calendar quarter. For the purposes of the Incentive Fee calculations, each calendar quarter comprising the relevant Trailing Twelve Quarters that commenced prior to January 1, 2023 shall be known as a “Legacy Fee Quarter” while a calendar quarter that commenced on or after January 1, 2023 shall be known as a “Current Fee Quarter.”

The preferred return amount will be determined on a quarterly basis, and will be calculated by summing the amounts obtained by multiplying 1.75% by MFIC’s net asset value at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The preferred return amount will be calculated after making appropriate adjustments to MFIC’s net asset value at the beginning of each applicable calendar quarter for MFIC’s capital issuances and distributions during the applicable calendar quarter.

 

60


Table of Contents

The amount of the Incentive Fee on Income that will be paid to MFIC’s Adviser for a particular quarter will equal the excess of the incentive fee on pre-incentive fee net investment income, so calculated less the aggregate incentive fee on pre-incentive fee net investment income that were paid to MFIC’s Adviser (excluding waivers, if any) in the preceding eleven calendar quarters comprising the relevant Trailing Twelve Quarters.

MFIC will pay MFIC Adviser an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows: (1) no incentive fee in any calendar quarter in which MFIC’s pre-incentive fee net investment income for the Trailing Twelve Quarters does not exceed the preferred return amount; (2) 100% of MFIC’s pre-incentive fee net investment income for the Trailing Twelve Quarters, if any, that exceeds the preferred return amount but is less than or equal to the catch-up amount, which shall be the sum of (i) the product of 2.1875% multiplied by MFIC’s net asset value at the beginning of each applicable Legacy Fee Quarter included in the relevant Trailing Twelve Quarters and (ii) the product of 2.1212% multiplied by MFIC’s net asset value at the beginning of each applicable Current Fee Quarter included in the relevant Trailing Twelve Quarters; (3) for any quarter in which MFIC’s pre-incentive fee net investment income for the Trailing Twelve Quarters exceeds the catch-up amount, the incentive fee shall equal 20.00% for each Legacy Fee Quarter and 17.50% otherwise of the amount of MFIC’s pre-incentive fee net investment income for such Trailing Twelve Quarters, provided, however, that the incentive fee on income for any quarter shall not be greater than 20.00% or 17.50%, as applicable, of the amount of MFIC’s current quarter’s pre-incentive fee net investment income.

The Incentive Fee on Income as calculated is subject to the Incentive Fee Cap. The Incentive Fee Cap in any quarter is an amount equal to (a) 20% of the Cumulative Pre-Incentive Fee Net Return (as defined below) during the relevant Legacy Fee Quarters included in the relevant Trailing Twelve Quarters and 17.50% of the Cumulative Pre-Incentive Fee Net Return during the relevant Current Fee Quarters included in the relevant Trailing Twelve Quarters less (b) the aggregate Incentive Fees on Income that were paid to MFIC Adviser (excluding waivers, if any) in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.

For this purpose, “Cumulative Pre-Incentive Fee Net Return” during the relevant trailing twelve quarters means (x) Pre-Incentive Fee Net Investment Income in respect of the trailing twelve quarters less (y) any Net Capital Loss, since April 1, 2018, in respect of the trailing twelve quarters. If, in any quarter, the Incentive Fee Cap is zero or a negative value, MFIC shall pay no Incentive Fee on Income to MFIC Adviser in that quarter. If, in any quarter, the Incentive Fee Cap is a positive value but is less than the Incentive Fee on Income calculated in accordance with the calculation described above, MFIC shall pay MFIC Adviser the Incentive Fee Cap for such quarter. If, in any quarter, the Incentive Fee Cap is equal to or greater than the Incentive Fee on Income calculated in accordance with the calculation described above, MFIC shall pay MFIC Adviser the Incentive Fee on Income for such quarter.

“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in such period and (ii) aggregate capital gains, whether realized or unrealized, in such period.

Incentive Fee Based on Cumulative Net Realized Gains

The Incentive Fee on Capital Gains is determined and payable in arrears as of the end of each calendar year (or upon termination of MFIC’s Advisory Agreement). This fee will be equal be 17.50% of the sum of MFIC’s realized capital gains on a cumulative basis, calculated as of the end of each calendar year (or upon termination of MFIC’s Advisory Agreement), computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any Incentive Fees on Capital Gains previously paid to MFIC Adviser. The aggregate unrealized capital depreciation of MFIC shall be calculated as the sum of the differences, if negative, between (a) the valuation of each investment in MFIC’s portfolio as of the applicable calculation date and (b) the accreted or amortized cost basis of such investment.

For accounting purposes only, MFIC is required under GAAP to accrue a theoretical capital gains incentive fee based upon net realized capital gains and unrealized capital gain and loss on investments held at the end

 

61


Table of Contents

of each period. The accrual of this theoretical capital gains incentive fee assumes all unrealized capital gain and loss is realized in order to reflect a theoretical capital gains incentive fee that would be payable to MFIC Adviser at each measurement date. There was no accrual for theoretical capital gains incentive fee for the years ended December 31, 2022, March 31, 2022 and March 31, 2021. It should be noted that a fee so calculated and accrued would not be payable under the Investment Advisers Act of 1940 (the “Advisers Act”) or MFIC’s Advisory Agreement, and would not be paid based upon such computation of capital gains incentive fees in subsequent periods. Amounts actually paid to MFIC Adviser will be consistent with the Advisers Act and formula reflected in the investment advisory management agreement which specifically excludes consideration of unrealized capital gain.

See  Item 1. Business—Investment Advisory Management Agreement—Management and Incentive Fee” in Part I of MFIC’s Annual Report on Form 10-KT (file no. 814-00646) for the nine months ended December 31, 2022 for additional information.

 

(7)

For MFIC, interest and other debt expenses are based on borrowing levels and interest rates consistent with the levels during the nine months ended September 30, 2023. As of September 30, 2023, MFIC had $1,437,859,000 in borrowings outstanding, consisting of $962,859,000 outstanding under MFIC’s senior secured credit facility, $350,000,000 aggregate principal amount of its 2025 Notes and $125,000,000 aggregate principal amount of its 2026 Notes. As of September 30, 2023, MFIC had $60,590,685 in standby letters of credit issued through the senior secured credit facility. The amount available for borrowing under the senior secured credit facility is reduced by any standby letters of credit issued.

For AFT, interest and other debt expenses are based on borrowing levels and interest rates consistent with the levels during the nine months ended September 30, 2023. As of September 30, 2023, AFT had $130,000,000 of principal outstanding, which is comprised of a term loan of $121,000,000 and a revolving loan of $9,000,000. AFT can borrow up to an additional $3,000,000 on its current revolving loan. As of September 30, 2023, the annualized interest rate on the drawn balance is 6.01%. Because borrowings under the AFT Amended Credit Facility are charged at a variable interest rate of SOFR plus 0.90%, future interest payments will vary and may increase significantly if interest rates rise.

For AIF, interest and other debt expenses are based on borrowing levels and interest rates consistent with the levels during the nine months ended September 30, 2023. As of September 30, 2023, AIF had $121,000,000 of principal outstanding, which is comprised of a term loan of $110,000,000 and a revolving loan of $11,000,000. AIF can borrow up to an additional $22,000,000 on its current revolving loan. As of September 30, 2023, the annualized interest rate on the drawn balance is 6.00%. Because borrowings under the AIF Amended Credit Facility are charged at a variable interest rate of SOFR plus 0.875% to 1.25%, future interest payments will vary and may increase significantly if interest rates rise.

 

(8)

For MFIC, “Other expenses” are based upon estimated amounts for the current fiscal year. Other expenses include MFIC’s overhead expenses, including payments under the administration agreement between MFIC and Apollo Investment Administration, LLC (“AIA”) (the “MFIC Administration Agreement”).

For AFT and AIF, “Other expenses” are based upon estimated amounts for the current fiscal year.

 

(9)

“Total annual expenses” as a percentage of net assets attributable to common stock are higher than the total annual expenses percentage would be for a company that is not leveraged. MFIC borrows money to leverage its net assets and increase its total assets. The SEC requires that the “Total annual expenses” percentage be calculated as a percentage of net assets (defined as total assets less indebtedness), rather than the total assets, including assets that have been funded with borrowed monies.

(10)

Represents the pro forma costs and expenses estimated to be incurred by the combined company in the first year following completion of both the AFT Mergers and AIF Mergers. The AFT Closing is not contingent upon the AIF Closing having occurred, and the AIF Closing is not contingent upon the AFT Closing having occurred.

(11)

Represents the pro forma costs and expenses estimated to be incurred by the combined company in the first year following completion of the AFT Mergers. The AFT Closing is not contingent upon the AIF Closing having occurred, and the AIF Closing is not contingent upon the AFT Closing having occurred.

 

62


Table of Contents
(12)

Represents the pro forma costs and expenses estimated to be incurred by the combined company in the first year following completion of the AIF Mergers. The AIF Closing is not contingent upon the AFT Closing having occurred, and the AFT Closing is not contingent upon the AIF Closing having occurred.

(13)

The MFIC Special Distribution is excluded from this pro-forma calculation.

Example

The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in MFIC, AFT, AIF or the combined company’s common stock following completion of the Mergers on a pro forma basis. In calculating the following expense amounts, each of MFIC, AFT, AIF has assumed that it would have no additional leverage and that its annual operating expenses would remain at the levels set forth in the tables above. The following calculations take into account that MFIC does not expect to pay any capital gains fee assuming a 5% return because MFIC has realized and unrealized losses that would prohibit MFIC from paying any such fees based on a 5% annual return. Calculations for the pro forma combined company following the Mergers assume that the Mergers closed on September 30, 2023 and that the leverage and operating expenses of MFIC, AFT, AIF remain at the levels set forth in the tables above. Estimated transaction expenses related to the Mergers are not included in the following examples.

 

     1 year      3 years      5 years      10 years  

You would pay the following expenses on a $1,000 investment:

           

MFIC, assuming a 5% annual return (assumes no return from net realized capital gains)

   $ 150      $ 404      $ 605      $ 944  

AFT, assuming a 5% annual return (assumes no return from net realized capital gains)

   $ 60      $ 177      $ 292      $ 570  

AIF, assuming a 5% annual return (assumes no return from net realized capital gains)

   $ 61      $ 182      $ 299      $ 581  

MFIC, assuming a 5% annual return (assumes return entirely from realized capital gains)

     —          —          —       

AFT, assuming a 5% annual return (assumes return entirely from realized capital gains)

     —          —          —          —    

AIF, assuming a 5% annual return (assumes return entirely from realized capital gains)

     —          —          —          —    

Pro forma combined company following the AFT Mergers and AIF Mergers you would pay the following expenses on a $1,000 investment:

           

Assuming a 5% annual return (assumes no return from net realized capital gains)

   $ 136      $ 372      $ 566      $ 914  

Assuming a 5% annual return (assumes return entirely from realized capital gains)

     —          —          —          —    

Pro forma combined company following the AFT Mergers you would pay the following expenses on a $1,000 investment:

           

Assuming a 5% annual return (assumes no return from net realized capital gains)

   $ 137      $ 373      $ 567      $ 914  

Assuming a 5% annual return (assumes return entirely from realized capital gains)

     —          —          —          —    

Pro forma combined company following the AIF Mergers you would pay the following expenses on a $1,000 investment:

           

Assuming a 5% annual return (assumes no return from net realized capital gains)

   $ 137      $ 373      $ 567      $ 915  

Assuming a 5% annual return (assumes return entirely from realized capital gains)

     —          —          —          —    

 

 

63


Table of Contents

While the example assumes, as required by the SEC, a 5% annual return, performance of MFIC, AFT, AIF and the combined company will vary and may result in a return greater or less than 5%. If sufficient returns are achieved on investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, expenses, and returns to investors, would be higher. This example assumes, where it indicates “(assumes no return from net realized capital gains),” that MFIC, AFT and AIF will not realize any capital gains (computed net of all realized capital losses and unrealized capital depreciation). This example assumes, where it indicates “(assumes return entirely from realized capital gains),” that MFIC, AFT and AIF will realize all net realized capital gains (computed net of all realized capital losses and unrealized capital depreciation). Under certain circumstances, reinvestment of dividends and other distributions under the relevant DRIP may occur at a price per share that differs from NAV. See “Distribution Reinvestment Plan of MFIC, AFT and AIF” for additional information regarding MFIC’s, AFT’s and AIF’s DRIP, respectively.

The example and the expenses in the table above should not be considered a representation of MFIC’s, AFT’s, AIF’s, or, following completion of the Mergers, the combined company’s, future expenses, and actual expenses may be greater or less than those shown.

 

64


Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus, including the documents incorporated by reference herein, contains statements that constitute forward-looking statements, which relate to MFIC, AFT, AIF or, following the Mergers, the combined company, regarding future events or the future performance or future financial condition of MFIC, AFT, AIF or, following the Mergers, the combined company. The forward-looking statements may include statements as to: future operating results of MFIC, AFT, AIF or, following the Mergers, the combined company and net investment income projections; business prospects of MFIC, AFT, AIF or, following the Mergers, the combined company and the prospects of their portfolio companies; and the impact of the investments that MFIC, AFT, AIF or, following the Mergers, the combined company expect to make. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with:

 

   

the ability of the parties to consummate the Mergers on the expected timeline, or at all;

 

   

the expected synergies and savings associated with the Mergers;

 

   

the ability to realize the anticipated benefits of the Mergers including the expected elimination of certain expenses and costs due to the Mergers;

 

   

the percentage of MFIC Stockholders, AFT Stockholders and AIF Stockholders voting in favor of the proposals submitted for their approval;

 

   

the possibility that competing offers or acquisition proposals will be made;

 

   

the possibility that any or all of the various conditions to the consummation of the Mergers may not be satisfied or waived;

 

   

risks related to diverting management’s attention from ongoing business operations;

 

   

the combined company’s plans, expectations, objectives and intentions, as a result of the Mergers;

 

   

the potential termination of either or both of the Merger Agreements;

 

   

the future operating results and net investment income projections of MFIC, AFT, AIF or, following the Mergers, the combined company;

 

   

the ability of MFIC to implement MFIC’s future plans with respect to the combined company;

 

   

the ability of MFIC and its affiliates to attract and retain highly talented professionals;

 

   

the business prospects of MFIC, AFT, AIF or, following the Mergers, the combined company and the prospects of their portfolio companies;

 

   

the impact of the investments that MFIC, AFT, AIF or, following the Mergers, the combined company expect to make;

 

   

the ability of the portfolio companies of MFIC or, following the Mergers, the combined company to achieve their objectives;

 

   

the expected financings and investments and additional leverage that MFIC, AFT, AIF or, following the Mergers, the combined company may seek to incur in the future;

 

   

the adequacy of the cash resources and working capital of MFIC, AFT, AIF or, following the Mergers, the combined company;

 

   

the timing of cash flows, if any, from the operations of the portfolio companies of MFIC, AFT, AIF or, following the Mergers, the combined company; and

 

   

the risk that stockholder litigation in connection with the Mergers may result in significant costs of defense and liability.

 

65


Table of Contents

In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this joint proxy statement/prospectus involve risks and uncertainties. The actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Item 1A. Risk Factors” in Part I of MFIC’s Annual Report on Form 10-KT (file no. 814-00646) for the nine months ended December 31, 2022, in “Fund Investment Objectives, Policies and Risks (unaudited)—Risk Factors” in each of AFT’s and AIF’s Annual Report on Form N-CSR (file no. 811-22481 and 811-22591, respectively) for the fiscal year ended December 31, 2022, in “Item  1A. Risk Factors” in Part II of MFIC’s Quarterly Report on Form 10-Q (file no. 814-00646) for the quarter ended March 31, 2023, in “Item 1A. Risk Factors” in Part II of MFIC’s Quarterly Report on Form 10-Q (file no.  814-00646) for the quarter ended June  30, 2023 in Item 1A. Risk Factors” in Part II of MFIC’s Quarterly Report on Form 10-Q (file no. 814-00646) for the quarter ended September 30, 2023 and in “Fund Investment Objectives, Policies and Risks (unaudited)—Risk Factors” in each of AFT’s and AIF’s Semi-Annual Report on Form N-CSRS (file no. 811-22481 and 811-22591, respectively) for the six months ended June 30, 2023, as such factors may be updated from time to time in their periodic filings with the SEC, and elsewhere contained or incorporated by reference in this joint proxy statement/prospectus.

Other factors that could cause actual results to differ materially include:

 

   

changes or potential disruptions in the operations of MFIC, AFT, AIF or, following the Mergers, the combined company, the economy, financial markets or political environment;

 

   

risks associated with possible disruption in the operations of MFIC, AFT, AIF or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic;

 

   

future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in MFIC’s, AFT’s and AIF’s operating areas, particularly with respect to BDCs, RICs or closed-end funds;

 

   

general considerations associated with the COVID-19 pandemic; and

 

   

other considerations that may be disclosed from time to time in the publicly disseminated documents and filings of MFIC, AFT, AIF or, following the Mergers, the combined company.

MFIC, AFT and AIF have based the forward-looking statements included in this joint proxy statement/prospectus on information available to them on the date of this presentation, and they assume no obligation to update any such forward-looking statements. Although MFIC, AFT and AIF undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that they may make directly to you or through reports that MFIC, AFT and AIF in the future may file with the SEC, including annual reports on Form 10-K, annual reports on Form N-CSR, quarterly reports on Form 10-Q, semi-annual reports on Form N-CSRS and current reports on Form 8-K.

Any statistical and market data used in this joint proxy statement/prospectus has been obtained from governmental and independent industry sources and publications. MFIC, AFT and AIF have not independently verified the data obtained from these sources. Forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements contained in this joint proxy statement/prospectus, for which the safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act is not available.

 

66


Table of Contents

CAPITALIZATION

The following table sets forth (1) MFIC’s, AFT’s and AIF’s actual capitalization as of September 30, 2023, (2) MFIC’s pro forma capitalization as of December 31, 2023 and (3) MFIC’s pro forma capitalization as adjusted to reflect the effects of the Mergers. You should read this table together with MFIC’s, AFT’s and AIF’s financial statements incorporated by reference herein.

 

    Actual as of September 30, 2023     Pro Forma
as of
December 31,
2023 (1)(9)
    Pro Forma
Adjustments (2)(5)
    Pro Forma(10)  
    MFIC     AIF     AFT     MFIC     MFIC/AIF/
AFT(6)
    MFIC/
AIF(8)
    MFIC/
AFT(7)
    MFIC/AIF/
AFT(6)
    MFIC/AIF(8)     MFIC/
AFT(7)
 

Cash and cash equivalents(2)

    43,150       14,853       12,694       43,150       (18,889     (15,821     (16,118     94,959       42,182       39,726  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Debt less unamortized debt issuance costs(3)

    1,434,497       120,901       129,863       1,434,497                         3,119,757       1,555,398       1,564,360  

Net assets attributable to common stock

    996,845       211,609       234,316       996,845       (18,889     (15,821     (16,118     2,420,725       1,192,633       1,215,042  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total capitalization(2)(4)

    2,431,341       332,510       364,179       2,431,341       (18,889     (15,821     (16,118     5,540,483       2,748,030       2,779,402  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Number of shares of common stock outstanding(4)

    65,253,275       14,464,026       15,573,575       65,253,275       (846,989     (611,828     (235,161     94,443,887       79,105,473       80,591,689  

NAV per common share

  $ 15.28     $ 14.63     $ 15.05     $ 15.28       (0.20     (0.20     (0.20   $ 25.63     $ 15.08     $ 15.08  

 

(1)

Represents MFIC’s pro forma capitalization as adjusted as of December 31, 2023 to reflect the effects of: (a) MFIC’s $402,360,000 term debt securitization on November 2, 2023; (b) MFIC’s issuance, offer and sale of $86,250,000 aggregate principal amount of its 8.00% Notes due 2028 (inclusive of $11,250,000 aggregate principal amount pursuant to the underwriters’ overallotment option to purchase additional Notes) on December 13, 2023 and (c) the repayment of certain indebtedness under MFIC’s credit facilities.

(2)

The MFIC Board expects to declare a special distribution in connection with the consummation of the Mergers to settle outstanding stockholder distributions payable. For more information, see “Questions and Answers about the Mergers—Will there be any special distributions prior to the Mergers?”

(3)

MFIC has a higher leverage ratio as permitted under the applicable securities laws. The higher leverage ratio will apply to the surviving company.

(4)

Total capitalization equals the sum of debt less unamortized debt issuance costs, net assets attributable to common stock.

(5)

Pro forma adjustment reflects the shares of MFIC Common Stock issued to AFT Stockholders and AIF Stockholders based on an Exchange Ratio of 0.9849 shares of MFIC Common Stock for each share of AFT Common Stock and on an Exchange Ratio of 0.9577 shares of MFIC Common Stock for each share of AIF Common Stock. For purposes of calculating the Exchange Ratio, the MFIC NAV, AFT NAV and AIF NAV were adjusted by the estimated transaction expenses.

(6)

Represents MFIC’s pro forma capitalization as adjusted to reflect the effects following the completion of both the AFT Mergers and AIF Mergers. The pro forma capitalization calculations take into account the repayment of AFT’s and AIF’s debt in connection with the closings of the AFT Mergers and AIF Mergers. The pro forma adjustments corresponding to the successful merger of both entities include a $0.20 special distribution paid to the shareholders of the merged entities by the MFIC adviser, totaling $18.9 million, and adjustment to shares outstanding corresponding with the AFT/AIF exchange ratios, totaling a pro forma decrease of 846,989 shares based on exchange ratios of 98.49% and 95.77%, respectively. The AFT Closing is not contingent upon the AIF Closing having occurred, and the AIF Closing is not contingent upon the AFT Closing having occurred.

 

67


Table of Contents
(7)

Represents MFIC’s pro forma capitalization as adjusted to reflect the effects following the completion of the AFT Mergers. The pro forma capitalization calculations take into account the repayment of AFT’s and AIF’s debt in connection with the closings of the AFT Mergers and AIF Mergers. The pro forma adjustments corresponding to the successful merger of AFT only include a $0.20 special distribution paid to the shareholders of the merged entities by the MFIC adviser, totaling $16.1 million, and adjustment to shares outstanding corresponding with the AFT exchange ratio, totaling a pro forma decrease of 255,161 shares based on an exchange ratio of 98.49%. The AFT Closing is not contingent upon the AIF Closing having occurred, and the AIF Closing is not contingent upon the AFT Closing having occurred.

(8)

Represents MFIC’s pro forma capitalization as adjusted to reflect the effects following the completion of the AIF Mergers. The pro forma capitalization calculations take into account the repayment of AIF’s and AFT’s debt in connection with the closings of the AFT Mergers and AIF Mergers. The pro forma adjustments corresponding to the successful merger of AIF only include a $0.20 special distribution paid to the shareholders of the merged entities by the MFIC adviser, totaling $15.8 million, and adjustment to shares outstanding corresponding with the AFT exchange ratio, totaling a pro forma decrease of 611,828 shares based on an exchange ratio of 95.77%. The AIF Closing is not contingent upon the AFT Closing having occurred, and the AFT Closing is not contingent upon the AIF Closing having occurred.

(9)

There have been no material changes to the capitalization of AFT and AIF since September 30, 2023.

(10)

These pro forma capitalization calculations are based on the pro forma capitalization figures as of December 31, 2023 for MFIC and the actual capitalization figures as of September 30, 2023 for AFT and AIF.

 

68


Table of Contents

THE MFIC SPECIAL MEETING

Date, Time and Place of the MFIC Special Meeting

The MFIC Special Meeting will be held virtually on [            ], 2024, at [    ] a.m., Eastern Time, at [    ]. This joint proxy statement/prospectus and the accompanying materials are being mailed on or about [            ], 2024 to stockholders of record of MFIC and are available at [    ].

Purpose of the MFIC Special Meeting

At the MFIC Special Meeting, MFIC Stockholders will be asked to approve the MFIC Share Issuance Proposal.

After careful consideration, and on the recommendation of the MFIC Special Committee, the MFIC Board unanimously approved the Merger Agreements, declared the Mergers and the transactions contemplated by the Merger Agreements advisable and unanimously recommends that MFIC Stockholders vote “FOR” the MFIC Share Issuance Proposal.

Record Date

The MFIC Record Date is the close of business on [            ], 2024. The MFIC Record Date was established by the MFIC Board, and only holders of record of shares of MFIC on the MFIC Record Date are entitled to receive notice of the MFIC Special Meeting and vote at the MFIC Special Meeting. As of the MFIC Record Date, there were [            ] shares of MFIC Common Stock issued and outstanding and entitled to vote. Each share of MFIC Common Stock held by a holder of record as of the MFIC Record Date has one vote on each matter to be considered at the MFIC Special Meeting.

Quorum and Adjournments

For MFIC to conduct business at the MFIC Special Meeting, a quorum of MFIC Stockholders must be present. The presence at the MFIC Special Meeting, virtually or represented by proxy, of MFIC Stockholders entitled to cast a majority of all the votes entitled to be cast at the MFIC Special Meeting will constitute a quorum of MFIC. Abstentions will be treated as shares present for quorum purposes.

Pursuant to the MFIC Bylaws, if such quorum is not established for the MFIC Special Meeting, the chairman of the MFIC Special Meeting will have the power to adjourn the MFIC Special Meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the MFIC Special Meeting.

Vote Required

Each share of MFIC Common Stock has one vote on each matter to be considered at the MFIC Special Meeting or any adjournment or postponement thereof. Each share of MFIC Common Stock is entitled to one vote for each share of MFIC Common Stock held on the MFIC Record Date.

The MFIC Share Issuance Proposal

The affirmative vote of MFIC Stockholders representing a majority of all the votes cast at the MFIC Special Meeting is required to approve the MFIC Share Issuance Proposal.

Abstentions will have no effect on the voting outcome of the MFIC Share Issuance Proposal, although abstentions will be treated as shares present for quorum purposes. If the enclosed proxy card is signed and returned without any directions given, the shares of MFIC Common Stock will be voted “FOR” the MFIC Share Issuance Proposal.

 

69


Table of Contents

Voting of Management

On the MFIC Record Date, MFIC’s executive officers and directors owned and were entitled to vote approximately [            ] shares of MFIC’s Common Stock, representing approximately [    ]% of the outstanding shares of MFIC Common Stock on the MFIC Record Date. None of MFIC’s executive officers or directors has entered into any voting agreement relating to the Mergers.

Voting of Proxies

MFIC encourages MFIC Stockholders to vote their shares, either by voting at the MFIC Special Meeting or by authorizing a proxy to vote your shares, which means that MFIC Stockholders authorize someone else to vote their shares. Shares represented by duly executed proxies will be voted in accordance with MFIC Stockholders’ instructions. If MFIC Stockholders execute a proxy without specifying their voting instructions, such MFIC Stockholders’ shares will be voted in accordance with the MFIC Board’s recommendation. Pursuant to the MFIC Bylaws, only the matters set forth in the notice of special meeting may be brought before the MFIC Special Meeting.

An MFIC Stockholder may also authorize a proxy by telephone or through the Internet using the toll-free telephone numbers or web address printed on your proxy card. Authorizing a proxy by telephone or through the Internet requires you to input the control number located on your proxy card. After inputting the control number, you will be prompted to direct your proxy to vote on the MFIC Share Issuance Proposal. You will have an opportunity to review your directions and make any necessary changes before submitting your directions and terminating the telephone call or Internet link.

 

   

By Internet: [    ] or scanning the QR Barcode on the enclosed proxy card.

 

   

By telephone: [    ] to reach a toll-free, automated touchtone voting line, or [    ] Monday through Friday [9:00 a.m. until 9:00 p.m.] Eastern Time to reach a toll-free, live operator line.

 

   

By mail: You may also authorize a proxy to vote your shares by mail by following the directions and indicating your instructions on the enclosed proxy card, dating and signing the proxy card, and promptly returning the proxy card in the envelope provided, which requires no postage if mailed in the United States. Please allow sufficient time for your proxy card to be received on or prior to 11:59 p.m., Eastern Time, on [            ], 2024.

Important notice regarding the availability of proxy materials for the MFIC Special Meeting. MFIC’s joint proxy statement/prospectus and the proxy card are available at [    ].

Revocability of Proxies

If you are a stockholder of record of MFIC, you can revoke your proxy at any time before it is exercised by: (i) delivering a written revocation notice that is received prior to the MFIC Special Meeting to MidCap Financial Investment Corporation at 9 West 57th Street, New York, New York 10019, Attention: Secretary; (ii) submitting a later-dated proxy that MFIC receives before the conclusion of voting at the MFIC Special Meeting; or (iii) participating in the virtual MFIC Special Meeting and voting online. If you hold shares of MFIC’s Common Stock through a broker, bank, trustee or nominee, you must follow the instructions you receive from them in order to revoke your voting instructions. Participating in the virtual MFIC Special Meeting does not revoke your proxy unless you also vote online at the MFIC Special Meeting.

Solicitation of Proxies

MFIC, AFT and AIF will bear the cost of preparing, assembling and mailing this joint proxy statement/prospectus and the accompanying Notice of Special Meeting of MFIC Stockholders, Notice of Special Meeting of AFT Stockholders and Notice of Special Meeting of AIF Stockholders, as applicable, and proxy cards based

 

70


Table of Contents

on their respective NAVs as of September 30, 2023. Solely in the event that the AFT Mergers are consummated, MFIC Adviser shall reimburse each of MFIC and AFT for all fees and expenses incurred and payable by MFIC and AFT, in connection with or related to soliciting proxies. Solely in the event that the AIF Mergers are consummated, MFIC Adviser shall reimburse each of MFIC and AIF for all fees and expenses incurred and payable by MFIC and AIF, in connection with or related to soliciting proxies. If either of the Mergers is consummated, MFIC Adviser shall reimburse MFIC for all fees and expenses incurred and payable by MFIC related to the merger transactions. If both Mergers are not consummated, MFIC Adviser shall reimburse MFIC for all fees and expenses incurred and payable by MFIC up to $375,000. If the AFT Mergers are not consummated, MFIC Adviser shall reimburse AFT for all fees and expenses incurred and payable by AFT up to $375,000. If the AIF Mergers are not consummated, MFIC Adviser shall reimburse AIF for all fees and expenses incurred and payable by AIF up to $375,000. Accordingly, in the event that the specific amount is exceeded by MFIC, AFT or AIF, then MFIC Stockholders, AFT Stockholders or AIF Stockholders, as applicable, would bear the costs that exceed the amount reimbursed by MFIC Adviser. MFIC, AFT and AIF intend to use the services of Broadridge to aid in the solicitation of proxies for an estimated fee of approximately $108,000 ($50,000 for MFIC, $30,000 for AFT and $28,000 for AIF) plus pass through charges. No additional compensation will be paid to directors, officers or regular employees for such services. For more information regarding expenses related to the Mergers, see “Questions and Answers about the Mergers—Who is responsible for paying the expenses relating to completing the Mergers?

Appraisal Rights

MFIC Stockholders do not have the right to exercise appraisal rights with respect to any matter to be voted upon at the MFIC Special Meeting.

 

71


Table of Contents

THE AFT SPECIAL MEETING

Date, Time and Place of the AFT Special Meeting

The AFT Special Meeting will be held virtually on [            ], 2024, at [    ] a.m., Eastern Time, at [    ]. This joint proxy statement/prospectus and the accompanying materials are being mailed on or about [            ], 2024 to stockholders of record of AFT and are available at [    ].

Purpose of the AFT Special Meeting

At the AFT Special Meeting, AFT Stockholders will be asked to approve the AFT Merger Proposal.

After careful consideration, and on the recommendation of the AFT Special Committee, the AFT Board unanimously approved the AFT Merger Agreement, declared the AFT Mergers and the other transactions contemplated by the AFT Merger Agreement advisable and unanimously recommends that AFT Stockholders vote “FOR” the AFT Merger Proposal.

Record Date

The AFT Record Date is the close of business on [            ], 2024. The AFT Record Date was established by the AFT Board, and only holders of record of shares of AFT Common Stock on the AFT Record Date are entitled to receive notice of the AFT Special Meeting and vote at the AFT Special Meeting. As of the AFT Record Date, there were [            ] shares of AFT Common Stock outstanding. Each share of AFT Common Stock held by a holder of record as of the AFT Record Date has one vote on each matter considered at the AFT Special Meeting.

Quorum and Adjournments

For AFT to conduct business at the AFT Special Meeting, a quorum of AFT Stockholders must be present. The presence at the AFT Special Meeting, virtually or represented by proxy, of AFT Stockholders entitled to cast a majority of all the votes entitled to be cast at the AFT Special Meeting will constitute a quorum of AFT. Abstentions will be treated as shares present for quorum purposes.

Pursuant to the AFT Bylaws, if such quorum is not established for the AFT Special Meeting, the chairman of the AFT Special Meeting will have the power to adjourn the AFT Special Meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the AFT Special Meeting.

Vote Required

Each share of AFT Common Stock has one vote on each matter to be considered at the AFT Special Meeting or any adjournment or postponement thereof. Each share of AFT Common Stock is entitled to one vote for each share of AFT Common Stock held on the AFT Record Date.

The AFT Merger Proposal

The affirmative vote of a majority of the securities of AFT entitled to vote on the AFT Merger Proposal is required for approval of the AFT Merger Proposal.

Abstentions will have the same effect as votes “against” the AFT Merger Proposal. If the enclosed proxy card is signed and returned without any directions given, the shares of AFT Common Stock will be voted “FOR” the AFT Merger Proposal.

 

72


Table of Contents

Voting of Management

On the AFT Record Date, AFT’s executive officers and directors owned and were entitled to vote approximately [            ] shares of AFT Common Stock, representing approximately [    ]% of the outstanding shares of AFT Common Stock on the AFT Record Date. None of AFT’s executive officers or directors has entered into any voting agreement relating to the Mergers.

Voting of Proxies

AFT encourages AFT Stockholders to vote their shares, either by voting at the AFT Special Meeting or by authorize a proxy to vote your shares, which means that AFT Stockholders authorize someone else to vote their shares. Shares represented by duly executed proxies will be voted in accordance with AFT Stockholders’ instructions. If AFT Stockholders execute a proxy without specifying their voting instructions, such AFT Stockholders’ shares will be voted in accordance with the AFT Board’s recommendation. Pursuant to the AFT Bylaws, only the matters set forth in the notice of special meeting may be brought before the AFT Special Meeting

An AFT Stockholder may also authorize a proxy by telephone or through the Internet using the toll-free telephone numbers or web address printed on your proxy card. Authorizing a proxy by telephone or through the Internet requires you to input the control number located on your proxy card. After inputting the control number, you will be prompted to direct your proxy to vote on the AFT Merger Proposal. You will have an opportunity to review your directions and make any necessary changes before submitting your directions and terminating the telephone call or Internet link.

 

   

By Internet: [    ] or scanning the QR Barcode on the enclosed proxy card.

 

   

By telephone: [    ] to reach a toll-free, automated touchtone voting line, or [    ] Monday through Friday [9:00 a.m. until 9:00 p.m.] Eastern Time to reach a toll-free, live operator line.

 

   

By mail: You may also authorize a proxy to vote your shares by mail by following the directions and indicating your instructions on the enclosed proxy card, dating and signing the proxy card, and promptly returning the proxy card in the envelope provided, which requires no postage if mailed in the United States. Please allow sufficient time for your proxy card to be received on or prior to 11:59 p.m., Eastern Time, on [            ], 2024.

Important notice regarding the availability of proxy materials for the AFT Special Meeting. AFT’s joint proxy statement/prospectus and the proxy card are available at [    ].

Revocability of Proxies

If you are a stockholder of record of AFT, you may revoke a proxy at any time before it is exercised by notifying AFT’s Secretary in writing sufficiently in advance of the AFT Special Meeting, by submitting a properly executed later-dated proxy, or by voting electronically at the AFT Special Meeting. If you hold shares of AFT Common Stock through a broker or nominee, you must follow the instructions you receive from them in order to revoke your voting instructions. Participating in the virtual AFT Special Meeting does not revoke your proxy unless you also vote online at the AFT Special Meeting.

Solicitation of Proxies

MFIC, AFT and AIF will bear the cost of preparing, assembling and mailing this joint proxy statement/prospectus and the accompanying Notice of Special Meeting of MFIC Stockholders, Notice of Special Meeting of AFT Stockholders and Notice of Special Meeting of AIF Stockholders, as applicable, and proxy cards based on their respective NAVs as of September 30, 2023. Solely in the event that the AFT Mergers are consummated, MFIC Adviser shall reimburse each of MFIC and AFT for all fees and expenses incurred and payable by MFIC

 

73


Table of Contents

and AFT, in connection with or related to soliciting proxies. Solely in the event that the AIF Mergers are consummated, MFIC Adviser shall reimburse each of MFIC and AIF for all fees and expenses incurred and payable by MFIC and AIF, in connection with or related to soliciting proxies. If either of the Mergers is consummated, MFIC Adviser shall reimburse MFIC for all fees and expenses incurred and payable by MFIC related to the merger transactions. If both Mergers are not consummated, MFIC Adviser shall reimburse MFIC for all fees and expenses incurred and payable by MFIC up to $375,000. If the AFT Mergers are not consummated, MFIC Adviser shall reimburse AFT for all fees and expenses incurred and payable by AFT up to $375,000. If the AIF Mergers are not consummated, MFIC Adviser shall reimburse AIF for all fees and expenses incurred and payable by AIF up to $375,000. Accordingly, in the event that the specific amount is exceeded by MFIC, AFT or AIF, then MFIC Stockholders, AFT Stockholders or AIF Stockholders, as applicable, would bear the costs that exceed the amount reimbursed by MFIC Adviser. MFIC, AFT and AIF intend to use the services of Broadridge to aid in the solicitation of proxies for an estimated fee of approximately $108,000 ($50,000 for MFIC, $30,000 for AFT and $28,000 for AIF) plus pass through charges. No additional compensation will be paid to directors, officers or regular employees for such services. For more information regarding expenses related to the Mergers, see “Questions and Answers about the Mergers—Who is responsible for paying the expenses relating to completing the Mergers?

Appraisal Rights

AFT Stockholders do not have the right to exercise appraisal rights with respect to any matter to be voted upon at the AFT Special Meeting.

 

74


Table of Contents

THE AIF SPECIAL MEETING

Date, Time and Place of the AIF Special Meeting

The AIF Special Meeting will be held virtually on [            ], 2024, at [    ] a.m., Eastern Time, at [    ]. This joint proxy statement/prospectus and the accompanying materials are being mailed on or about [            ], 2024 to stockholders of record of AIF and are available at [    ].

Purpose of the AIF Special Meeting

At the AIF Special Meeting, AIF Stockholders will be asked to approve the AIF Merger Proposal.

After careful consideration, and on the recommendation of the AIF Special Committee, the AIF Board unanimously approved the AIF Merger Agreement, declared the AIF Mergers and the other transactions contemplated by the AIF Merger Agreement advisable and unanimously recommends that AIF Stockholders vote “FOR” the AIF Merger Proposal.

Record Date

The AIF Record Date is the close of business on [            ], 2024. The AIF Record Date was established by the AIF Board, and only holders of record of shares of AIF Common Stock on the AIF Record Date are entitled to receive notice of the AIF Special Meeting and vote at the AIF Special Meeting. As of the AIF Record Date, there were [            ] shares of AIF Common Stock outstanding. Each share of AIF Common Stock held by a holder of record as of the AIF Record Date has one vote on each matter considered at the AIF Special Meeting.

Quorum and Adjournments

For AIF to conduct business at the AIF Special Meeting, a quorum of AIF Stockholders must be present. The presence at the AIF Special Meeting, virtually or represented by proxy, of AIF Stockholders entitled to cast a majority of all the votes entitled to be cast at the AIF Special Meeting will constitute a quorum of AIF. Abstentions will be treated as shares present for quorum purposes.

Pursuant to the AIF Bylaws, if such quorum is not established for the AIF Special Meeting, the chairman of the AIF Special Meeting will have the power to adjourn the AIF Special Meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the AIF Special Meeting.

Vote Required

Each share of AIF Common Stock has one vote on each matter to be considered at the AIF Special Meeting or any adjournment or postponement thereof. Each share of AIF Common Stock is entitled to one vote for each share of AIF Common Stock held on the AIF Record Date.

The AIF Merger Proposal

The affirmative vote of a majority of the securities of AIF entitled to vote on the AIF Merger Proposal is required for approval of the AIF Merger Proposal.

Abstentions will have the same effect as votes “against” the AIF Merger Proposal. If the enclosed proxy card is signed and returned without any directions given, the shares of AIF Common Stock will be voted “FOR” the AIF Merger Proposal.

 

75


Table of Contents

Voting of Management

On the AIF Record Date, AIF’s executive officers and directors owned and were entitled to vote approximately [            ] shares of AIF Common Stock, representing approximately [    ]% of the outstanding shares of AIF Common Stock on the AIF Record Date. None of AIF’s executive officers or directors has entered into any voting agreement relating to the Mergers.

Voting of Proxies

AIF encourages AIF Stockholders to vote their shares, either by voting at the AIF Special Meeting or by authorize a proxy to vote your shares, which means that AIF Stockholders authorize someone else to vote their shares. Shares represented by duly executed proxies will be voted in accordance with AIF Stockholders’ instructions. If AIF Stockholders execute a proxy without specifying their voting instructions, such AIF Stockholders’ shares will be voted in accordance with the AIF Board’s recommendation. Pursuant to the AIF Bylaws, only the matters set forth in the notice of special meeting may be brought before the AIF Special Meeting

An AIF Stockholder may also authorize a proxy by telephone or through the Internet using the toll-free telephone numbers or web address printed on your proxy card. Authorizing a proxy by telephone or through the Internet requires you to input the control number located on your proxy card. After inputting the control number, you will be prompted to direct your proxy to vote on the AIF Merger Proposal. You will have an opportunity to review your directions and make any necessary changes before submitting your directions and terminating the telephone call or Internet link.

 

   

By Internet: [    ] or scanning the QR Barcode on the enclosed proxy card.

 

   

By telephone: [    ] to reach a toll-free, automated touchtone voting line, or [    ] Monday through Friday [9:00 a.m. until 9:00 p.m.] Eastern Time to reach a toll-free, live operator line.

 

   

By mail: You may also authorize a proxy to vote your shares by mail by following the directions and indicating your instructions on the enclosed proxy card, dating and signing the proxy card, and promptly returning the proxy card in the envelope provided, which requires no postage if mailed in the United States. Please allow sufficient time for your proxy card to be received on or prior to 11:59 p.m., Eastern Time, on [            ], 2024.

Important notice regarding the availability of proxy materials for the AIF Special Meeting. AIF’s joint proxy statement/prospectus and the proxy card are available at [    ].

Revocability of Proxies

If you are a stockholder of record of AIF, you may revoke a proxy at any time before it is exercised by notifying AIF’s Secretary in writing sufficiently in advance of the AIF Special Meeting, by submitting a properly executed later-dated proxy, or by voting electronically at the AIF Special Meeting. If you hold shares of AIF Common Stock through a broker or nominee, you must follow the instructions you receive from them in order to revoke your voting instructions. Participating in the virtual AIF Special Meeting does not revoke your proxy unless you also vote online at the AIF Special Meeting.

Solicitation of Proxies

MFIC, AFT and AIF will bear the cost of preparing, assembling and mailing this joint proxy statement/prospectus and the accompanying Notice of Special Meeting of MFIC Stockholders, Notice of Special Meeting of AFT Stockholders and Notice of Special Meeting of AIF Stockholders, as applicable, and proxy cards based on their respective NAVs as of September 30, 2023. Solely in the event that the AFT Mergers are consummated, MFIC Adviser shall reimburse each of MFIC and AFT for all fees and expenses incurred and payable by MFIC

 

76


Table of Contents

and AFT, in connection with or related to soliciting proxies. Solely in the event that the AIF Mergers are consummated, MFIC Adviser shall reimburse each of MFIC and AIF for all fees and expenses incurred and payable by MFIC and AIF, in connection with or related to soliciting proxies. If either of the Mergers is consummated, MFIC Adviser shall reimburse MFIC for all fees and expenses incurred and payable by MFIC related to the merger transactions. If both Mergers are not consummated, MFIC Adviser shall reimburse MFIC for all fees and expenses incurred and payable by MFIC up to $375,000. If the AFT Mergers are not consummated, MFIC Adviser shall reimburse AFT for all fees and expenses incurred and payable by AFT up to a specified amount. If the AIF Mergers are not consummated, MFIC Adviser shall reimburse AIF for all fees and expenses incurred and payable by AIF up to $375,000. Accordingly, in the event that the specific amount is exceeded by MFIC, AFT or AIF, then MFIC Stockholders, AFT Stockholders or AIF Stockholders, as applicable, would bear the costs that exceed the amount reimbursed by MFIC Adviser. MFIC, AFT and AIF intend to use the services of Broadridge to aid in the solicitation of proxies for an estimated fee of approximately $108,000 ($50,000 for MFIC, $30,000 for AFT and $28,000 for AIF) plus pass through charges. No additional compensation will be paid to directors, officers or regular employees for such services. For more information regarding expenses related to the Mergers, see “Questions and Answers about the Mergers—Who is responsible for paying the expenses relating to completing the Mergers?

Appraisal Rights

AIF Stockholders do not have the right to exercise appraisal rights with respect to any matter to be voted upon at the AIF Special Meeting.

 

77


Table of Contents

THE MERGERS

The discussion in this joint proxy statement/prospectus, which includes the material terms of the Mergers and the principal terms of the Merger Agreements, is subject to, and is qualified in its entirety by reference to, the Merger Agreements, copies of which are attached as Annex A and Annex B to this joint proxy statement/prospectus.

General Description of the Mergers

Subject to the terms and conditions of the AFT Merger Agreement and the AIF Merger Agreement, the Mergers will result in the combination of MFIC, AFT and AIF, with MFIC as the surviving company. The proposed reorganization will occur through the consummation of the Mergers.

Pursuant to the terms of the AFT Merger Agreement, at the AFT Effective Time, AFT Merger Sub will be merged with and into AFT. AFT will be the surviving company and will continue its existence as a corporation under the laws of the State of Maryland, and the separate corporate existence of AFT Merger Sub will cease. Immediately after the occurrence of the AFT Effective Time, AFT will merge with and into MFIC, with MFIC continuing as the surviving company. Subject to the terms and conditions of the AFT Merger Agreement, at the AFT Effective Time, each share of AFT Common Stock issued and outstanding immediately prior to the AFT Effective Time (other than AFT Cancelled Shares) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AFT Exchange Ratio (cash will be paid in lieu of fractional shares), in all cases without interest. Based on the number of shares of MFIC Common Stock issued and outstanding and the NAVs of MFIC and AFT as of September 30, 2023 (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9849 shares of MFIC Common Stock for each share of AFT Common Stock outstanding, resulting in pro forma ownership of 80.97% for current MFIC Stockholders and 19.03% for current AFT Stockholders.

Pursuant to the terms of the AIF Merger Agreement, at the AIF Effective Time, AIF Merger Sub will be merged with and into AIF. AIF will be the surviving company and will continue its existence as a corporation under the laws of the State of Maryland, and the separate corporate existence of AIF Merger Sub will cease. Immediately after the occurrence of the AIF Effective Time, AIF will merge with and into MFIC, with MFIC continuing as the surviving company. Subject to the terms and conditions of the AIF Merger Agreement, at the AIF Effective Time, each share of AIF Common Stock issued and outstanding immediately prior to the AIF Effective Time (other than AIF Cancelled Shares) will be converted into the right to receive a number of shares of MFIC Common Stock equal to the AIF Exchange Ratio (cash will be paid in lieu of fractional shares), in all cases without interest. Based on the number of shares of MFIC Common Stock issued and outstanding and the NAVs of MFIC and AIF as of September 30, 2023 (and adjusted for estimated transaction costs), MFIC would issue approximately 0.9577 shares of MFIC Common Stock for each share of AIF Common Stock outstanding, resulting in pro forma ownership of 82.49% for current MFIC Stockholders and 17.51% for current AIF Stockholders.

Assuming the consummation of both the AFT Mergers and the AIF Mergers, based on the number of shares of MFIC Common Stock issued and outstanding and the NAVs of MFIC, AFT and AIF as of September 30, 2023 (and adjusted for estimated transaction costs), the pro forma ownership of the combined company would equal 69.09% for current MFIC Stockholders, 16.24% for current AFT Stockholders and 14.67% for current AIF Stockholders.

Following the Mergers, MFIC will continue to be advised by MFIC Adviser and will have the same investment objectives and strategies as it had before the Mergers.

Background of the Mergers

The AFT Board, the AIF Board and the MFIC Board (each, a “Board” and together, the “Boards”) meet regularly to provide governance and oversight for the ongoing operation of AFT, AIF and MFIC, respectively,

 

78


Table of Contents

with a focus on investor protection and maximizing stockholder value. Among other items, at these meetings, the AFT Board, the AIF Board and the MFIC Board review long-term strategic plans for AFT, AIF and MFIC, respectively, as well as potential business opportunities for each of AFT, AIF and MFIC. As part of that review and the ongoing evaluation of business opportunities, the AFT Board, the AIF Board and the MFIC Board have individually periodically considered and engaged in discussions concerning feasible strategic options for each of AFT, AIF and MFIC, respectively, including potential mergers, acquisitions or other similar transactions.

On September 28, 2023, a joint special virtual meeting of the AFT Board and the AIF Board (together, the “Fund Boards”) was held, with representatives of Apollo, Simpson Thacher and Proskauer also in attendance. Representatives of Apollo presented on matters related to the Mergers, including the prospective risks and benefits of the Mergers.

The Fund Boards then discussed the possible formation of a special committee of each Board, consisting solely of the AFT Independent Directors and the AIF Independent Directors, as applicable, with the special committees having their own outside legal counsel. After such discussion, the AFT Board established the AFT Special Committee, consisting of Mr. Marchak, Ms. Coffey and Mr. Slotkin. In addition, the AIF Board established the AIF Special Committee, also consisting of Mr. Marchak, Ms. Coffey and Mr. Slotkin. Mr. Marchak was selected as chair of the AFT Special Committee and the AIF Special Committee (together, the “Fund Special Committees”). Subsequent to the meetings and after receipt of information related to Dechert’s experience representing closed-end funds and business developments companies and their special committees in affiliated merger transactions, each of the Fund Special Committees selected Dechert as their respective outside legal counsel.

On October 6, 2023, a special virtual meeting of the MFIC Board was held, with representatives of Apollo, Simpson Thacher and Proskauer also in attendance. Representatives of Apollo presented on matters related to the Mergers, including the prospective risks and benefits of the Mergers. In addition, representatives of Simpson Thacher and Proskauer discussed with the MFIC Board the fiduciary duties applicable to the members of the MFIC Board in considering the Mergers.

The MFIC Board then discussed the possible formation of a special committee of the MFIC Board, consisting solely of the MFIC Independent Directors, with the special committee having its own outside legal counsel. After such discussion, the MFIC Board established the MFIC Special Committee, consisting of Ms. Matas, Mr. Pearlman and Mr. Reinfrank. Ms. Matas was appointed as chair of the MFIC Special Committee. The MFIC Special Committee then selected Proskauer as its outside legal counsel.

On October 13, 2023, the Fund Special Committees convened separately with representatives of Dechert. Each of the Fund Special Committees received a presentation from Dechert confirming that Dechert was qualified to serve as independent legal counsel to the Fund Special Committees. At the meeting, the Fund Special Committees discussed the duties and responsibilities of the committees. Dechert described the standards of conduct applicable to the directors under state law and also reviewed the requirements of Rule 17a-8 of the 1940 Act, including the requirement that the Fund Boards, including a majority of the independent directors voting separately, must determine that the proposed transactions are in the best interests of each Fund and that the Funds’ stockholders would not be diluted by the applicable transactions. In addition, the Fund Special Committees reviewed and discussed the initial materials presented regarding the Mergers and the transactions related thereto. The Fund Special Committees considered and discussed the reasons for engaging a financial advisor. The Fund Special Committees reviewed materials regarding the separate engagement of KBW as the financial advisor to each of the Fund Special Committees. The Fund Special Committees discussed KBW’s qualifications, including its experience acting as a financial advisor to business development companies in affiliated mergers and otherwise, and its fee proposals for the separate engagements. Each of the Fund Special Committees selected KBW as their respective financial advisor pursuant to separate engagements.

On October 16, 2023, Simpson Thacher circulated initial drafts of the Merger Agreements to Dechert and Proskauer.

 

79


Table of Contents

On October 18, 2023, the MFIC Special Committee convened separately with representatives of Proskauer. At the meeting, the MFIC Special Committee reviewed and discussed the initial materials presented regarding the Mergers and the transactions related thereto. The MFIC Special Committee considered and discussed the reasons for engaging a financial advisor for purposes of evaluating the potential Mergers and related transactions. The MFIC Special Committee also discussed proposals that had been submitted by certain investment banks, including Lazard, seeking to serve as the MFIC Special Committee’s financial advisor in connection with its consideration of the Mergers. Representatives of Apollo were also present at this meeting.

On October 23, 2023, the MFIC Special Committee convened separately with representatives of Proskauer to meet with representatives of two investment banks, including Lazard, that had submitted proposals to act as the MFIC Special Committee’s financial advisor in connection with its consideration of the Mergers. The MFIC Special Committees discussed each of the investment banks’ qualifications and experience, including their relevant industry and special committee experience, their independence and the fee proposals submitted by each investment bank to serve as independent financial advisor.

On October 25, 2023, the MFIC Special Committee convened separately with representatives of Proskauer. The MFIC Special Committee further discussed the experience, qualifications and fee proposals of the investment banks with which they had previously met. Following such discussion, the MFIC Special Committee selected Lazard as its financial advisor, subject to the completion of a standard conflicts review process, which was subsequently completed, and the negotiation of a satisfactory engagement letter with Lazard, which was subsequently entered into and dated as of November 2, 2023.

On October 27, 2023, Proskauer provided comments on the Merger Agreements to Simpson Thacher and Dechert reflecting the review of the MFIC Special Committee and Proskauer.

On October 31, 2023, the Fund Special Committees held a joint special virtual meeting. Representatives of Apollo, KBW, and Dechert were also present. At the meeting, Apollo responded to questions from members of the Fund Special Committees regarding various matters regarding MFIC and the proposed transactions as well as estimates of expenses for the transactions associated with the Mergers. Apollo reviewed certain matters regarding the portfolio of investments held by MFIC and undertook to provide additional detail regarding the MFIC portfolio to the Fund Special Committees. The Fund Special Committee members also asked questions regarding valuation and audit matters of the chief compliance officer of MFIC. Following such discussions, the representatives of Apollo departed the meeting and the Fund Special Committees met with representatives of KBW. KBW reviewed various financial matters regarding each of the Funds and MFIC and responded to questions from the members of the Fund Special Committees. KBW then departed the meeting. Dechert reviewed the latest draft of the Merger Agreements with the Fund Special Committees and responded to questions from the members of the Fund Special Committees.

Later on October 31, 2023, Dechert provided comments on the Merger Agreements to Simpson Thacher and Proskauer reflecting the review of the Fund Special Committees and Dechert.

On November 2, 2023, Simpson Thacher circulated revised drafts of the Merger Agreements to Dechert and Proskauer, which were subsequently shared with the members of the Fund Special Committees and the MFIC Special Committee.

On November 2, 2023, the Fund Special Committees held a joint special virtual meeting with James Vanek, the President, Chief Executive Officer and Portfolio Manager of the Funds. Representatives of Dechert were present for the meeting. The members of the Fund Special Committees had the opportunity to ask Mr. Vanek questions regarding the proposed Mergers, including to discuss the similarities and differences between the portfolios of the Funds and MFIC as well as how the affiliated nature of the advisers to the Funds and MFIC would assist in a seamless transition of the portfolio upon closing of the Mergers. Mr. Vanek discussed with the Fund Special Committees the intended approach, subject to regulatory, tax and other considerations, for

 

80


Table of Contents

deploying the incremental leverage of the combined company and the proceeds of asset dispositions made by the combined company (including dispositions of assets held by AFT or AIF, as applicable, at the time of the AFT Closing or the AIF Closing, as applicable), and the principles that would inform the deployment of such leverage or proceeds. Following the departure of Mr. Vanek from the meeting, the members of the Fund Special Committees and representatives of Dechert discussed the latest draft of the Merger Agreements as well as the proposals for expense reimbursement by MFIC Adviser and AIF/AFT Adviser.

On November 3, 2023, the Fund Special Committees held a joint special virtual meeting, with representatives of Dechert and KBW also in attendance. Representatives of KBW preliminarily reviewed and discussed with the Fund Special Committees various financial aspects of the proposed Mergers and preliminarily discussed the opinions to be delivered by KBW with respect to the respective consideration payable in the proposed Mergers. Dechert then discussed the draft Merger Agreements with the Fund Special Committees, noting the current status of the Merger Agreements, remaining open items and the expected timeline for execution of the Merger Agreements. The Fund Special Committees discussed the proposals for expense reimbursements and requested that Dechert provide the views of the Fund Special Committees regarding the commitment to reimburse certain expenses in the event of an unsuccessful merger.

On November 3, 2023, the MFIC Special Committee convened separately with representatives of Proskauer and Lazard in attendance. At the meeting, representatives of Lazard reviewed and discussed with the MFIC Special Committee its proposed financial analysis of MFIC, each of the Funds and the proposed Mergers and related transactions. Representatives of Lazard discussed considerations regarding the strategic rationale for the proposed Mergers and described the methods that Lazard intended to use in evaluating the fairness, from a financial point of view, to MFIC of the exchange ratios in each Merger. Following Lazard’s review, Proskauer provided a detailed summary of the draft Merger Agreements to the MFIC Special Committee, noting the current status of the Merger Agreements, remaining open items and the expected timeline for execution of the Merger Agreements.

Later on November 3, 2023, the Fund Special Committees requested that the commitments of MFIC Adviser and AFT/AIF Adviser to reimburse certain fees and expenses of AFT, AIF and MFIC in connection with consummation or termination of the Mergers be memorialized in side letter agreements among (i) AFT, MFIC Adviser and AFT/AIF Adviser (the “AFT Side Letter Agreement”), (ii) AIF, MFIC Adviser and AFT/AIF Adviser (the “AIF Side Letter Agreement”) and (iii) MFIC and MFIC Adviser (the “MFIC Side Letter Agreement” and, together with the AFT Side Letter Agreement and the AIF Side Letter Agreement, the “Side Letter Agreements”). Between November 3, 2023 and November 4, 2023, Simpson Thacher and Apollo discussed the request and determined to prepare Side Letter Agreements memorializing such commitments of MFIC Adviser and AFT/AIF Adviser. On November 4, 2023, Simpson Thacher circulated initial drafts of the Side Letter Agreements to Dechert and Proskauer, copies of which were subsequently circulated to the members of the Fund Special Committees and the MFIC Special Committee. Between November 4, 2023 and November 5, 2023, Simpson Thacher, Dechert and Proskauer coordinated to finalize the Side Letter Agreements.

On November 5, 2023, the MFIC Special Committee convened separately with representatives of Proskauer and Lazard. At the meeting, representatives of Lazard reviewed and discussed its preliminary financial analysis of MFIC, each of the Funds and the proposed Mergers and related transactions. Representatives of Lazard presented to the MFIC Special Committee its preliminary findings based upon Lazard’s application of the methodologies that it had previously presented to the MFIC Special Committee and those it intended to use in evaluating the fairness, from a financial point of view, to MFIC of the exchange ratios in each Merger. During this discussion, Proskauer described certain requirements of Rule 17a-8 of the 1940 Act, including the requirement that the interests of the existing MFIC Stockholders will not be diluted within the meaning of Rule 17a-8 of the 1940 Act as a result of the proposed transactions. Proskauer then updated the MFIC Special Committee with respect to the status of the draft Merger Agreements and the Side Letter Agreements, noting the remaining open items and the expected timeline for execution of the Merger Agreements and Side Letter Agreements. Following discussion, the MFIC Special Committee instructed Proskauer to request that MFIC Adviser agree to reimburse a portion of MFIC’s expenses in the event neither Merger was completed.

 

81


Table of Contents

On November 5, 2023, Proskauer requested that MFIC Adviser agree to reimburse a portion of MFIC’s expenses in the event that neither Merger was completed. Simpson Thacher and Apollo discussed the request and determined to agree to MFIC’s request. The MFIC Side Letter Agreement was subsequently modified to reflect such agreement.

Between November 2, 2023 and November 5, 2023, Simpson Thacher, Dechert and Proskauer coordinated to finalize the Merger Agreements. On November 5, 2023, Dechert and Proskauer confirmed that the Fund Special Committees and the MFIC Special Committee, respectively, had no additional comments on the Merger Agreements and Side Letter Agreements. Afterwards, Simpson Thacher circulated final drafts of the Merger Agreements and Side Letter Agreements to Dechert and Proskauer.

On November 6, 2023, a joint special virtual meeting of the Fund Special Committees was held, with representatives of Dechert and KBW also in attendance. Representatives of Dechert reviewed the Merger Agreements, the AFT Side Letter Agreement and the AIF Side Letter Agreement with the Fund Special Committees, their fiduciary duties in connection with evaluating the proposed Mergers and the requirements for approval under Rule 17a-8 under the 1940 Act. KBW then reviewed and discussed with the AFT Special Committee the financial aspects of the proposed AFT Mergers and rendered to the AFT Special Committee its opinion (initially rendered verbally and confirmed in a written opinion dated November 6, 2023 to the AFT Special Committee and, as requested by the AFT Special Committee, the AFT Board), to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by KBW as set forth in such opinion, the AFT Merger Consideration (disregarding cash for fractional shares) and the AFT Stockholder Payment, taken together, were fair, from a financial point of view, to the holders of AFT Common Stock, as more fully described below in the section entitled “—Opinion of the Financial Advisor to the AFT Special Committee.” KBW then reviewed and discussed with the AIF Special Committee the financial aspects of the proposed AIF Mergers, and rendered to the AIF Special Committee its opinion (initially rendered verbally and confirmed in a written opinion dated November 6, 2023 to the AIF Special Committee and, as requested by the AIF Special Committee, the AIF Board), to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by KBW as set forth in such opinion, the AIF Merger Consideration (disregarding cash for fractional shares) and the AIF Stockholder Payment, taken together, were fair, from a financial point of view, to the holders of AIF Common Stock, as more fully described below in the section entitled “—Opinion of the Financial Advisor to the AIF Special Committee.” Representatives of Dechert then reviewed and discussed with the Fund Special Committees the proposed resolutions for approval and the corresponding filings and public disclosure.

Following a discussion of the foregoing matters and other matters presented, the AFT Special Committee (i) unanimously determined, and recommended that the AFT Board determine, that (1) the form, terms and provisions of the AFT Merger Agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of AFT and the AFT Stockholders, (2) the form, terms and provisions of the AFT Side Letter Agreement are advisable, fair to and in the best interests of AFT and the AFT Stockholders and (3) the interests of the existing AFT Stockholders will not be diluted within the meaning of Rule 17a-8 of the 1940 Act as a result of the proposed transactions, (ii) unanimously recommended that the AFT Board (1) approve, adopt and declare advisable the AFT Merger Agreement and the transactions contemplated thereby, (2) approve, adopt and declare advisable the AFT Side Letter Agreement, (3) direct the approval of the AFT Merger Proposal be submitted to the AFT Stockholders at a special stockholders meeting and (4) recommend that the AFT Stockholders approve the AFT Merger Proposal and (iii) requested that KBW deliver its opinion also to the AFT Board.

Subsequently, the AIF Special Committee (i) unanimously determined, and recommended that the AIF Board determine, that (1) the form, terms and provisions of the AIF Merger Agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of AIF and the AIF Stockholders, (2) the form, terms and provisions of the AIF Side Letter Agreement are advisable, fair to and in the best interests of AIF and the AIF Stockholders and (3) the interests of the existing AIF Stockholders will not be diluted within the

 

82


Table of Contents

meaning of Rule 17a-8 of the 1940 Act as a result of the proposed transactions, (ii) unanimously recommended that the AFT Board (1) approve, adopt and declare advisable the AIF Merger Agreement and the transactions contemplated thereby, (2) approve, adopt and declare advisable the AIF Side Letter Agreement, (3) direct the approval of the AIF Merger Proposal be submitted to the AIF Stockholders at a special stockholders meeting and (4) recommend that the AIF Stockholders approve the AIF Merger Proposal and (iii) requested that KBW deliver its opinion also to the AIF Board.

Later on November 6, 2023, a special in-person meeting of the Fund Boards was held, with representatives of Apollo, Simpson Thacher, Dechert and KBW also in attendance. Representatives of Apollo reviewed the terms of the Mergers, the AFT Side Letter Agreement and the AIF Side Letter Agreement and the applicable valuation analysis with the Fund Boards. Representatives of Simpson Thacher reviewed the Merger Agreements with the Fund Boards. Mr. Marchak provided an update to the Fund Boards on the determinations made by the Fund Special Committees in their November 6, 2023 meeting. Representatives of Simpson Thacher discussed with the Fund Boards the resolutions proposed for their approval. On the unanimous recommendation of the AFT Special Committee, the AFT Board, including all of the AFT Independent Directors, unanimously (i) determined that, among other things, (1) the form, terms and provisions of the AFT Merger Agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of AFT and the AFT Stockholders, (2) the form, terms and provisions of the AFT Side Letter Agreement are advisable, fair to and in the best interests of AFT and the AFT Stockholders and (3) the interests of the existing AFT Stockholders will not be diluted within the meaning of Rule 17a-8 of the 1940 Act as a result of the proposed transactions, (ii) approved, adopted and declared advisable the AFT Merger Agreement and the transactions contemplated thereby and (iii) approved, adopted and declared advisable the AFT Side Letter Agreement. The AFT Board directed that the approval of the AFT Merger Proposal be submitted to the AFT Stockholders at a special stockholders meeting and resolved to recommend that the AFT Stockholders approve the AFT Merger Proposal.

Subsequently, on the unanimous recommendation of the AIF Special Committee, the AIF Board, including all of the AIF Independent Directors, unanimously (i) determined that, among other things, (1) the form, terms and provisions of the AIF Merger Agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of AIF and the AIF Stockholders, (2) the form, terms and provisions of the AIF Side Letter Agreement are advisable, fair to and in the best interests of AIF and the AIF Stockholders and (3) the interests of the existing AIF Stockholders will not be diluted within the meaning of Rule 17a-8 of the 1940 Act as a result of the proposed transactions, (ii) approved, adopted and declared advisable the AIF Merger Agreement and the transactions contemplated thereby and (iii) approved, adopted and declared advisable the AIF Side Letter Agreement. The AIF Board directed that the approval of the AIF Merger Proposal be submitted to the AIF Stockholders at a special stockholders meeting and resolved to recommend that the AIF Stockholders approve the AIF Merger Proposal.

Later on November 6, 2023, a special in-person meeting of the MFIC Special Committee was held, with representatives of Proskauer and Lazard also in attendance. Representatives of Proskauer reviewed the Merger Agreements and the MFIC Side Letter Agreement with the MFIC Special Committee and their fiduciary duties in connection with evaluating the proposed Mergers. Lazard reviewed and discussed with the MFIC Special Committee its financial analyses with respect to the proposed Mergers, including any updates to the presentation Lazard had previously made to the MFIC Special Committee at the meeting of the MFIC Special Committee held on November 5, 2023. Thereafter, at the request of the MFIC Special Committee, Lazard rendered to the MFIC Special Committee its opinions (initially rendered verbally and subsequently confirmed in written opinions dated November 6, 2023 to the MFIC Special Committee), to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Lazard as set forth in such opinions, the fairness, from a financial point of view, of the AFT Exchange Ratio and the AIF Exchange Ratio to MFIC, in each case, as more fully described below in the section entitled “—Opinions of the Financial Advisor to the MFIC Special Committee.” Representatives of Proskauer then reviewed and discussed with the MFIC Special Committee the proposed resolutions for approval and the corresponding filings and public disclosure.

 

83


Table of Contents

Following a discussion of the foregoing matters and other matters presented, the MFIC Special Committee (i) unanimously determined, and recommended that the MFIC Board determine, that (1) the form, terms and provisions of the Merger Agreements and the transactions contemplated thereby are advisable, fair to and in the best interests of MFIC and the MFIC Stockholders, (2) the form, terms and provisions of the MFIC Side Letter Agreement are advisable, fair to and in the best interests of MFIC and the MFIC Stockholders and (3) the interests of the existing MFIC Stockholders will not be diluted within the meaning of Rule 17a-8 of the 1940 Act as a result of the proposed transactions and (ii) unanimously recommended that the MFIC Board (1) approve, adopt and declare advisable the Merger Agreements and the transactions contemplated thereby, (2) approve, adopt and declare advisable the MFIC Side Letter Agreement, (3) direct the approval of the MFIC Share Issuance Proposal be submitted to the MFIC Stockholders at a special stockholders meeting and (4) recommend that the MFIC Stockholders approve the MFIC Share Issuance Proposal.

Later on November 6, 2023, the MFIC Board held a special virtual meeting, with representatives of Apollo, Simpson Thacher, Proskauer and Lazard also in attendance. Representatives of Proskauer provided an update to the MFIC Board on the determinations made by the MFIC Special Committee in its November 6, 2023 meeting. Representatives of Simpson Thacher reviewed the Merger Agreements with the MFIC Board. On the unanimous recommendation of the MFIC Special Committee, the MFIC Board, including all of the MFIC Independent Directors, unanimously (i) determined that, among other things, (1) the form, terms and provisions of the Merger Agreements and the transactions contemplated thereby are advisable, fair to and in the best interests of MFIC and the MFIC Stockholders, (2) the form, terms and provisions of the MFIC Side Letter Agreement are advisable, fair to and in the best interests of MFIC and the MFIC Stockholders and (3) the interests of the existing MFIC Stockholders will not be diluted within the meaning of Rule 17a-8 of the 1940 Act as a result of the proposed transactions, (ii) approved, adopted and declared advisable the Merger Agreements and the transactions contemplated thereby, including the issuance of MFIC Common Stock pursuant to the Merger Agreements, and (iii) approved, adopted and declared advisable the MFIC Side Letter Agreement. The MFIC Board directed that the MFIC Share Issuance Proposal be submitted to the MFIC Stockholders at a special stockholders meeting and resolved to recommend that the MFIC Stockholders approve the MFIC Share Issuance Proposal.

Subsequently, (i) MFIC, AFT, AFT Merger Sub and MFIC Adviser executed the AFT Merger Agreement, (ii) MFIC, AIF, AIF Merger Sub and MFIC Adviser executed the AIF Merger Agreement, (iii) AFT, MFIC Adviser and AFT/AIF Adviser executed the AFT Side Letter Agreement, (iv) AIF, MFIC Adviser and AFT/AIF Adviser executed the AIF Side Letter Agreement and (v) MFIC and MFIC Adviser executed the MFIC Side Letter Agreement, in each case, effective as of November 7, 2023.

For more information concerning the terms and provisions of the Merger Agreements as negotiated by the parties, see “Description of the AFT Merger Agreement” beginning on page 119 of this joint proxy statement/prospectus, and “Description of the AIF Merger Agreement” beginning on page 140 of this joint proxy statement/prospectus. For more information concerning the terms and provisions of the Side Letter Agreements as negotiated by the parties, see “Description of the MFIC Side Letter Agreement” beginning on page 161 of this joint proxy statement prospectus, “Description of the AFT Side Letter Agreement” beginning on page 162 of this joint proxy statement/prospectus, and “Description of the AIF Side Letter Agreement” beginning on page 163 of this joint proxy statement/prospectus.

Reasons for the Mergers

MFIC

At multiple meetings, the MFIC Special Committee and the MFIC Board considered the approval of the Mergers and the terms of the Merger Agreements and the MFIC Side Letter Agreement. After careful consideration, based on the information provided, the MFIC Special Committee and the MFIC Board determined that the Mergers are in the best interests of MFIC and MFIC Stockholders. In connection with their consideration and negotiation of the transactions, MFIC Adviser, AFT Adviser and AIF Adviser provided the MFIC Special

 

84


Table of Contents

Committee and the MFIC Board with information regarding the proposed Mergers, AFT, AIF and the anticipated effects of the Mergers on MFIC and MFIC Stockholders. Throughout the process of reviewing and negotiating the transactions, the MFIC Special Committee consulted with Proskauer, legal counsel to the MFIC Special Committee, and Lazard, financial advisor to the MFIC Special Committee, while the MFIC Board consulted with Simpson Thacher in its capacity as counsel to MFIC. The MFIC Special Committee and the MFIC Board also consulted with management of MFIC Adviser, AFT Adviser and AIF Adviser. The MFIC Special Committee and the MFIC Board considered the nature and adequacy of the information provided, the terms of the Merger Agreements and the MFIC Side Letter Agreement, their duties under state and federal law in considering and ultimately approving the Merger Agreements, the MFIC Side Letter Agreement and the Mergers and the conflicts of interest presented by these transactions. The MFIC Special Committee and the MFIC Board considered numerous factors, including the ones described below. On November 6, 2023, the MFIC Special Committee and the MFIC Board unanimously determined that the Mergers are in the best interests of MFIC and MFIC Stockholders, and that existing MFIC Stockholders will not suffer any dilution for purposes of Rule 17a-8 under the 1940 Act as a result of the Mergers.

In considering the Mergers and the terms of the Merger Agreements and the MFIC Side Letter Agreement, the MFIC Special Committee and the MFIC Board reviewed comparative information about MFIC, AFT and AIF, including, among other items: (1) their respective investment objectives, strategies, policies and restrictions, size, age and NAVs, and changes that could occur as a result of the Mergers; (2) their individual holdings, including the relative risks of the investment portfolios of MFIC, AFT and AIF; (3) their existing leverage profiles and the expected future leverage profile of the combined company; (4) their short-term and long-term investment performance history and financial results; (5) the level of past distributions and expenses and the anticipated effect of the Mergers on future net investment income, distributions and expenses; and (6) their respective investment advisory agreements and expense ratios. The MFIC Special Committee and the MFIC Board also considered the anticipated reasonable expectations of MFIC Stockholders, market dynamics and regulatory and legal issues. In addition, the MFIC Special Committee and the MFIC Board reviewed comprehensive information regarding the anticipated benefits and possible risks to MFIC and MFIC Stockholders as a result of the Mergers, and the anticipated investment, market and financial synergies to be experienced by the combined company. In addition, the MFIC Special Committee considered the potential financial impacts of the Mergers.

The MFIC Special Committee and the MFIC Board, with the assistance of their legal and other advisors (and, in the case of the MFIC Special Committee, its financial advisor), weighed various benefits and risks in considering and negotiating the terms of the Mergers, both with respect to the immediate effects of the Mergers on MFIC and MFIC Stockholders and with respect to the potential benefits that could be experienced by the combined company after the Mergers. Some of the material factors considered by the MFIC Special Committee and the MFIC Board that assisted them in concluding that the Mergers are in the best interests of MFIC and MFIC Stockholders included, among others:

 

   

Increased Scale, Increased Analyst Coverage and Improved Secondary Market Liquidity. The MFIC Special Committee and the MFIC Board considered the benefits expected to accrue to the combined company as a result of its larger size. The MFIC Special Committee and the MFIC Board also considered that the larger scale of the combined company could result in enhanced liquidity for MFIC Stockholders through increased trading volume of their shares of MFIC Common Stock and potentially broader coverage of the combined company by equity research analysts. Further, the MFIC Special Committee and the MFIC Board also considered that larger BDCs are generally more attractive investment opportunities for a broader swath of institutional investors and tend to attract broader coverage by equity research analysts. The combined company would have had pro forma total assets of approximately $3.16 billion and a net asset value of approximately $1.42 billion as of September 30, 2023. By comparison, MFIC had total assets of approximately $2.46 billion and a net asset value of approximately $997 million as of September 30, 2023.

 

85


Table of Contents
   

Expected Accretion to Net Investment Income and Access to Additional Increased Investing Capacity. The MFIC Special Committee and the MFIC Board considered that the Mergers are expected to be accretive to net investment income as a result of expected expense savings (as described more fully below) and the potential to deploy incremental investing capacity in higher yielding investments and to increase leverage on the acquired investment portfolios.

 

   

MFIC’s Distribution to Stockholders of the Combined Company. The MFIC Special Committee and the MFIC Board considered that MFIC has agreed to pay the MFIC Distribution.

 

   

Expense Reimbursement by MFIC Adviser. The MFIC Special Committee and the MFIC Board considered that MFIC Adviser has agreed to reimburse certain fees and expenses incurred by MFIC in connection with the Mergers pursuant to the MFIC Side Letter Agreement, as more fully described below in the section entitled “Description of the MFIC Side Letter Agreement.”

 

   

Expected Greater Access to More Diverse and Lower-Cost Sources of Debt Capital. The MFIC Special Committee and the MFIC Board discussed how the larger scale of the combined company may provide MFIC access to more diverse and lower cost sources of debt capital compared to what MFIC would be expected to obtain without the scale provided by the Mergers.

 

   

Acquisition of Known Investment Portfolios. The MFIC Special Committee and the MFIC Board considered that MFIC Adviser’s familiarity with the investments held by AFT and AIF would result in a more straightforward and faster integration of their respective investment portfolios into MFIC’s investment portfolio than the investment portfolios of one or more third parties. The MFIC Special Committee and the MFIC Board also considered that execution and integration risk could be lower as compared to a merger with one or more unaffiliated entities.

 

   

No Dilution for Purposes of Rule 17a-8 of the 1940 Act. The MFIC Special Committee and the MFIC Board considered that the AFT Exchange Ratio and AIF Exchange Ratio (and thus the number of shares of MFIC Common Stock to be issued to AFT Stockholders and AIF Stockholders, respectively, pursuant to the Merger Agreements) will be determined on a NAV-for-NAV basis (determined shortly before the AFT Closing Date or the AIF Closing Date, as applicable, on the basis of methodologies that were considered and approved by the MFIC Board, the AFT Board and the AIF Board, as applicable) and therefore the interests of the MFIC Stockholders will not be diluted for purposes of Rule 17a-8 under the 1940 Act as a result of the Mergers.

 

   

Process for Negotiation. The MFIC Special Committee and the MFIC Board considered that the review and negotiation of the Merger Agreements and the MFIC Side Letter Agreement was conducted through a robust process under the oversight of the MFIC Special Committee, the AFT Special Committee and the AIF Special Committee, as applicable, each of which is composed solely of independent directors.

 

   

Potential Elimination of Redundant Corporate Expenses. The MFIC Special Committee and the MFIC Board also considered that, as a result of the Mergers, certain redundant professional services and other corporate expenses could be eliminated, which would reduce the potential corporate expenses of the combined company as compared to the aggregate corporate expenses that would otherwise be incurred by MFIC, AFT and AIF on a standalone basis.

 

   

Opinion of Lazard, Financial Advisor to the MFIC Special Committee. The MFIC Special Committee considered the financial presentation, dated November 6, 2023, of Lazard provided to and reviewed with the MFIC Special Committee, and Lazard’s opinion dated November 6, 2023 addressed to the MFIC Special Committee, as to, as of November 6, 2023, the fairness, from a financial point of view, to MFIC of the AFT Exchange Ratio and the AIF Exchange Ratio, as more fully described below in the section entitled “— Opinions of the Financial Advisor to the MFIC Special Committee.” Lazard is the outside financial advisor to the MFIC Special Committee and has advised only the MFIC Special Committee in connection with the Mergers.

 

86


Table of Contents
   

No Adverse Impact on Regulatory Obligations. The MFIC Special Committee and the MFIC Board noted that the Mergers are not expected to affect the ability of MFIC to comply with its regulatory obligations, including its ability to continue to operate in compliance with the asset coverage requirements set forth in the 1940 Act and to pay dividends required of RICs and that the combined company would continue to be a RIC. They also noted that as of September 30, 2023, MFIC’s portfolio consisted of 93% of qualifying assets. Based on analyses of the AFT and AIF portfolios, the Fund respectfully notes that the merged portfolios would not result in a material change in portfolios due to investment restrictions. If both the AFT Mergers and AIF Mergers were to be consummated, MFIC’s portfolio would consist of 86% of qualifying assets.

 

   

Other Considerations. In the course of their deliberations, the MFIC Special Committee and the MFIC Board also considered a variety of risks and other potentially negative factors that could cause either or both of the Mergers not to close or the anticipated benefits of the Mergers not to be realized, including the following (which are not in any relative order of importance):

 

   

Certain Expenses Associated with the Mergers. If neither the AFT Mergers nor the AIF Mergers are consummated, MFIC will be responsible for the fees and expenses incurred by MFIC in connection with the AFT Mergers and the AIF Mergers (except certain expenses that will be split proportionately with AFT and AIF, as applicable, based on the parties’ respective NAVs as of September 30, 2023) if such fees and expenses exceed MFIC Adviser’s reimbursement obligations pursuant to the MFIC Side Letter Agreement, as more fully described below in the section entitled “Description of the MFIC Side Letter Agreement.”

 

   

Risk of Interlopers or Activists. The voting process described in this joint proxy statement/prospectus may attract third-party interlopers or stockholder activists to MFIC, who could result in the failure to close of either or both of the Mergers or be disruptive to MFIC and its business.

 

   

Fluctuations in AFT Exchange Ratio and AIF Exchange Ratio. Changes in the NAVs of MFIC, AFT or AIF before the completion of the Mergers will affect the relative ownership percentages that the stockholders of MFIC, AFT and AIF hold in the combined company, and these changes could be positive or negative for MFIC Stockholders.

 

   

Conflict of Interest. MFIC, AFT and AIF have external investment advisers that are affiliated with one another. The MFIC Special Committee and the MFIC Board took this conflict of interest into account in the course of their deliberations.

 

   

Compensation Received by Members of the MFIC Special Committee. The members of the MFIC Special Committee received compensation for serving on the MFIC Special Committee. The MFIC Special Committee and the MFIC Board took the receipt of such compensation into account in the course of their deliberations.

 

   

Failure to Close. Either or both of the Mergers may not be completed, or completion may be delayed for reasons beyond the control of MFIC, including an inability to obtain the required stockholder approvals, which could have a significant adverse impact on MFIC and its business.

 

   

Management Diversion. It is possible that the attention of management may be diverted during the period prior to and following completion of the Mergers, which may adversely affect MFIC’s business.

 

   

Time and Ability to Ramp to Target Leverage Ratios. MFIC currently operates at a higher debt-to-equity ratio than AFT and AIF, and any delay in returning the combined company to the target range of MFIC could have a negative adverse impact on net investment income.

 

   

Restrictions on Conduct of Business. The restrictions on the conduct of MFIC’s business prior to completion of the Mergers, requiring MFIC to conduct its business only in the ordinary course of business in all material respects, subject to specific limitations, could delay or prevent MFIC from undertaking certain business opportunities that may arise pending completion of the Mergers.

 

87


Table of Contents
   

Restrictions on Superior Proposals; Termination Fees. The Merger Agreements include restrictions on the ability of MFIC to solicit proposals for alternative transactions or engage in discussions regarding such proposals, subject to exceptions and termination provisions (as more fully described in the sections entitled “Description of the AFT Merger Agreement—Additional Agreements” and “Description of the AIF Merger Agreement—Additional Agreements”), which could have the effect of discouraging such proposals from being made or pursued. In addition, a third party acquiring MFIC may be required to pay a termination fee of $29,905,339 to AFT and/or a termination fee of $29,905,339 to AIF, which might discourage a potential acquirer that might have an interest in acquiring all or a significant part of MFIC from considering or proposing that acquisition.

 

   

Litigation Risk. Mergers of publicly held companies are frequently the subject of litigation. If any litigation arises in connection with the Mergers, even if any plaintiff’s claims are without merit, it could divert management time and resources away from MFIC’s business, and cause MFIC to incur expenses in defense of such claim.

 

   

Absence of Appraisal Rights. MFIC Stockholders are not entitled to appraisal rights under applicable law in connection with the Mergers.

 

   

Other Risks. There are various other risks associated with the Mergers and the business of MFIC and the combined company described in the section entitled “Risk Factors” beginning on page 40 and in the section entitled “Special Note Regarding Forward-Looking Statements” beginning on page 52.

This discussion of the information and factors that the MFIC Special Committee and the MFIC Board considered in making their decisions is not intended to be exhaustive but includes the material benefits, risks and other factors considered by the MFIC Special Committee and the MFIC Board. Because of the wide variety of factors considered in connection with the evaluation and negotiation of the Mergers, the Merger Agreements and the MFIC Side Letter Agreement and the complexity of those matters, the MFIC Special Committee and the MFIC Board did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to these factors. In addition, the individual members of the MFIC Special Committee and the MFIC Board may have given different weights to different factors, or may have individually considered factors that are not listed here, or not individually considered certain factors that are listed here.

AFT

At multiple meetings, the AFT Special Committee and the AFT Board considered the approval of the AFT Mergers and the terms of the AFT Merger Agreement and the AFT Side Letter Agreement. The AFT Special Committee and the AFT Board also considered alternatives to the AFT Mergers, including maintaining the status quo, a potential merger of AFT and AIF, a potential merger with an unaffiliated entity and liquidation. After careful consideration of the alternatives, including the feasibility, benefits and risks of each one, based on the information provided, the AFT Special Committee and the AFT Board determined that the AFT Mergers are in the best interests of AFT and in the best interests of AFT Stockholders. In connection with their consideration and negotiation of the transaction, MFIC Adviser and AFT Adviser provided the AFT Special Committee and the AFT Board with information regarding the proposed AFT Mergers, MFIC, the anticipated effects of the AFT Mergers on AFT and AFT Stockholders and the anticipated effects of the AIF Mergers on MFIC. Throughout the process of reviewing and negotiating the transactions, the AFT Special Committee consulted with Dechert, legal counsel to the AFT Special Committee, and KBW, financial advisor to the AFT Special Committee, while the AFT Board consulted with Simpson Thacher in its capacity as counsel to AFT. The AFT Special Committee and the AFT Board also consulted with management of MFIC Adviser and AFT Adviser. The AFT Special Committee and the AFT Board considered the nature and adequacy of the information provided, the terms of the AFT Merger Agreement and the AFT Side Letter Agreement, their duties under state and federal law in considering and ultimately approving the AFT Merger Agreement, the AFT Side Letter Agreement and the AFT Mergers and the conflicts of interest presented by this transaction. The AFT Special Committee and the AFT Board considered numerous factors, including the ones described below. On November 6, 2023, the AFT Special

 

88


Table of Contents

Committee and the AFT Board unanimously determined that the AFT Mergers are in the best interests of AFT and in the best interests of AFT Stockholders, and that existing AFT Stockholders will not suffer any dilution for purposes of Rule 17a-8 under the 1940 Act as a result of the AFT Mergers.

In considering the AFT Mergers and the terms of the AFT Merger Agreement and the AFT Side Letter Agreement, the AFT Special Committee and the AFT Board reviewed comparative information about MFIC and AFT, including, among other items: (1) their respective investment objectives, strategies, policies and restrictions, size, age and NAVs, and changes that could occur as a result of the AFT Mergers; (2) their holdings, including, in particular, the relative risks of the investment portfolios of MFIC and AFT; (3) their existing leverage profiles and the expected future leverage profile of the combined company; (4) their short-term and long-term investment performance history and financial results; (5) the level of past distributions and expenses and the anticipated effect of the AFT Mergers on future net investment income, distributions and expenses; (6) the U.S. federal income tax consequences of the AFT Mergers; (7) their respective investment advisory agreements and expense ratios; and (8) changes to the foregoing factors that could occur following the closing of the AIF Mergers. The AFT Special Committee and the AFT Board also considered the anticipated reasonable expectations of AFT Stockholders, market dynamics and regulatory and legal issues, including the higher limitations on leverage available to BDCs and a BDC’s ability to invest 30% of its assets in assets that are not “qualifying assets” as defined in the 1940 Act. In addition, the AFT Special Committee and the AFT Board reviewed comprehensive information regarding the anticipated benefits and possible risks to AFT and AFT Stockholders as a result of the AFT Mergers, and the anticipated investment, market and financial synergies to be experienced by the combined company. In addition, the AFT Special Committee considered the potential financial impacts of the AFT Mergers.

The AFT Special Committee and the AFT Board, with the assistance of their legal and other advisors (and, in the case of the AFT Special Committee, its financial advisor), weighed various benefits and risks in considering and negotiating the terms of the AFT Mergers, both with respect to the immediate effects of the AFT Mergers on AFT and AFT Stockholders and with respect to the potential benefits that could be experienced by the combined company after the AFT Mergers. Some of the material factors considered by the AFT Special Committee and the AFT Board that assisted them in concluding that the AFT Mergers are in the best interests of AFT and in the best interests of AFT Stockholders included, among others:

 

   

Increased Scale, Increased Analyst Coverage and Improved Secondary Market Liquidity. The AFT Special Committee and the AFT Board considered the benefits expected to accrue to the combined company as a result of its larger size. The AFT Special Committee and the AFT Board also considered that the larger scale of the combined company could result in enhanced liquidity for AFT Stockholders through increased trading volume of their newly-issued shares of MFIC Common Stock and potentially broader coverage of the combined company by equity research analysts. Further, the AFT Special Committee and the AFT Board also considered that larger BDCs are generally more attractive investment opportunities for a broader swath of institutional investors and tend to attract broader coverage by equity research analysts. The combined company (assuming the closings of both the AFT Mergers and the AIF Mergers occur) would have had pro forma total assets of approximately $3.16 billion and a net asset value of approximately $1.42 billion as of September 30, 2023. By comparison, AFT had total assets of approximately $368,273,239 and a net asset value of approximately $234,316,061 as of September 30, 2023.

 

   

Expected Changes Accretive to Net Investment Income and Access to Additional Increased Investing Capacity. The AFT Special Committee and the AFT Board considered that the AFT Mergers are expected to result in certain changes that could be accretive to net investment income, including expected expense savings (as described more fully below) and the potential of the combined company to deploy incremental investing capacity in higher yielding investments and to increase leverage on the acquired investment portfolio.

 

89


Table of Contents
   

MFIC Adviser’s Payment to AFT Stockholders. The AFT Special Committee and the AFT Board considered that MFIC Adviser or one of its affiliates has agreed to pay to AFT Stockholders the AFT Stockholder Payment in connection with the consummation of the AFT Mergers.

 

   

MFIC’s Distribution to Stockholders of the Combined Company. The AFT Special Committee and the AFT Board considered that MFIC has agreed to pay the MFIC Distribution.

 

   

Expense Reimbursement by MFIC Adviser and AFT Adviser. The AFT Special Committee and the AFT Board considered that MFIC Adviser and AFT Adviser have agreed to reimburse certain fees and expenses incurred by AFT in connection with the AFT Mergers pursuant to the AFT Side Letter Agreement, as more fully described below in the section entitled “Description of the AFT Side Letter Agreement.”

 

   

Expected Increased Portfolio Yield. The AFT Special Committee and the AFT Board considered that, as of September 30, 2023, the weighted average yield on investments in AFT’s and MFIC’s portfolios was 11.2% and 12.0%, respectively, and that as a result of the AFT Mergers, AFT Stockholders would be invested in a combined company with a higher weighted average portfolio yield.

 

   

Integration into a Known Investment Portfolio. The AFT Special Committee and the AFT Board considered that the MFIC management team’s familiarity with the investments held by AFT would result in a more straightforward and faster integration of AFT’s investment portfolio into MFIC’s investment portfolio than an investment portfolio of a third party, with reduced execution risk.

 

   

Affiliation of the Management Teams. The AFT Special Committee and the AFT Board considered that the combined company would have an investment adviser that is affiliated with AFT’s current investment adviser. The AFT Special Committee and the AFT Board considered that, in light of the foregoing, the combined company and AFT Stockholders would be expected to receive the same nature, quality and extent of services from MFIC Adviser that they are currently receiving from AFT Adviser and would continue to benefit from the experience and expertise of its current management team, including familiarity with its investment portfolio.

 

   

No Dilution for Purposes of Rule 17a-8 of the 1940 Act. The AFT Special Committee and the AFT Board considered that the AFT Exchange Ratio (and thus the number of shares of MFIC Common Stock to be issued to AFT Stockholders pursuant to the AFT Merger Agreement) will be determined on a NAV-for-NAV basis (determined shortly before the AFT Closing Date on the basis of methodologies that were considered and approved by the AFT Board and the MFIC Board) and therefore the interests of the AFT Stockholders will not be diluted for purposes of Rule 17a-8 under the 1940 Act as a result of the AFT Mergers.

 

   

Process for Negotiation. The AFT Special Committee and the AFT Board considered that the review and negotiation of the AFT Merger Agreement and the AFT Side Letter Agreement was conducted through a robust process under the oversight of the MFIC Special Committee and the AFT Special Committee, each of which is composed solely of independent directors.

 

   

Potential Elimination of Redundant Corporate Expenses. The AFT Special Committee and the AFT Board also considered that, as a result of the AFT Mergers, certain redundant professional services and other corporate expenses could be eliminated, which would reduce the potential corporate expenses of the combined company as compared to the aggregate corporate expenses that would otherwise be incurred by AFT and MFIC on a standalone basis.

 

   

Opinion of KBW, Financial Advisor to the AFT Special Committee. The AFT Special Committee considered the financial presentation, dated November 6, 2023, of KBW provided to and reviewed with the AFT Special Committee, and KBW’s opinion dated November 6, 2023 addressed to the AFT Special Committee and, as requested by the AFT Special Committee, the AFT Board, as to, as of November 6, 2023, the fairness, from a financial point of view, to the holders of AFT Common Stock of the AFT Merger Consideration (disregarding cash paid for fractional shares) and the AFT

 

90


Table of Contents
 

Stockholder Payment, taken together, as more fully described below in the section entitled “— Opinion of the Financial Advisor to the AFT Special Committee.” KBW is the outside financial advisor to the AFT Special Committee and the outside financial advisor to the AIF Special Committee pursuant to separate engagements and has advised the AFT Special Committee in connection with the AFT Mergers and the AIF Special Committee in connection with the AIF Mergers.

 

   

Tax Consequences of the AFT Mergers. The AFT Special Committee and the AFT Board considered that the AFT Mergers are expected to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The AFT Mergers are anticipated to be treated as a tax-free reorganization for U.S. federal income tax purposes and AFT Stockholders are not expected to recognize any gain or loss for U.S. federal income tax purposes, except to the extent of the special payment, as a result of the AFT Mergers, and except for any gain or loss that may result from the receipt of cash in lieu of fractional shares of MFIC Common Stock.

 

   

No Adverse Impact on Regulatory Obligations. The AFT Special Committee and the AFT Board noted that the AFT Mergers are not expected to affect the ability of AFT to comply with its regulatory obligations, including its ability to continue to operate in compliance with the asset coverage requirements set forth in the 1940 Act and to pay dividends required of RICs and that the combined company would continue to be a RIC.

 

   

Other Considerations. In the course of their deliberations, the AFT Special Committee and the AFT Board also considered a variety of risks and other potentially negative factors that could cause the AFT Mergers not to close or the anticipated benefits of the AFT Mergers not to be realized, including the following (which are not in any relative order of importance):

 

   

Certain Expenses Associated with the AFT Mergers. If the AFT Mergers are not consummated, AFT will be responsible for the fees and expenses incurred by AFT in connection with the AFT Merger (except certain expenses that will be split proportionately with MFIC based on the parties’ respective NAVs as of September 30, 2023) if such fees and expenses exceed AFT Adviser’s reimbursement obligations pursuant to the AFT Side Letter Agreement, as more fully described below in the section entitled “Description of the AFT Side Letter Agreement.”

 

   

Risk of Interlopers or Activists. The voting process described in this joint proxy statement/prospectus may attract third-party interlopers or stockholder activists to AFT, who could result in the failure to close of the AFT Mergers or be disruptive to AFT and its business.

 

   

Higher Leverage. The AFT Special Committee and the AFT Board considered that the combined company is expected to have higher leverage than AFT does today. This higher leverage could increase the downside risks to AFT Stockholders by magnifying portfolio losses. In addition, this higher leverage is expected to result in higher total expenses per share for AFT Stockholders.

 

   

Potentially Higher Total Adviser Fees. The AFT Special Committee and the AFT Board considered that the MFIC Advisory Agreement includes a 1.75% base management fee (calculated on MFIC’s net asset value) and an incentive fee of 17.50%, while the AFT Advisory Agreement includes a 1.00% base management fee (calculated on the average daily value of AFT’s Managed Assets) and no incentive fee. As a result, the total fees to be paid by the combined company under the MFIC Advisory Agreement could potentially be higher than total fees currently payable by AFT under the AFT Advisory Agreement.

 

   

Fluctuations in AFT Exchange Ratio. Changes in the NAVs of AFT, AIF and MFIC before the completion of the AFT Mergers and/or the AIF Mergers will affect the relative ownership percentages that the stockholders of AFT, AIF and MFIC hold in the combined company, and these changes could be positive or negative for stockholders of AFT.

 

   

Conflict of Interest. AFT and MFIC have external investment advisers that are affiliated with one another. The AFT Special Committee and the AFT Board took this conflict of interest into account in the course of their deliberations.

 

91


Table of Contents
   

Compensation Received by Members of the AFT Special Committee. The members of the AFT Special Committee received compensation for serving on the AFT Special Committee. The AFT Special Committee and the AFT Board took the receipt of such compensation into account in the course of their deliberations.

 

   

Tax Consequences of MFIC Adviser’s Payment to AFT Stockholders. The receipt of the AFT Stockholder Payment is expected to be taxable for AFT Stockholders.

 

   

Failure to Close. The AFT Mergers may not be completed, or completion may be delayed for reasons beyond the control of AFT, including an inability to obtain the required stockholder approvals, which could have a significant adverse impact on AFT and its business.

 

   

Management Diversion. It is possible that the attention of management may be diverted during the period prior to completion of the AFT Mergers, which may adversely affect AFT’s business.

 

   

Restrictions on Conduct of Business. The restrictions on the conduct of AFT’s business prior to completion of the AFT Mergers, requiring AFT to conduct its business only in the ordinary course of business in all material respects, subject to specific limitations, could delay or prevent AFT from undertaking certain business opportunities that may arise pending completion of the AFT Mergers.

 

   

Restrictions on Superior Proposals; Termination Fee. The AFT Merger Agreement includes restrictions on the ability of AFT to solicit proposals for alternative transactions or engage in discussions regarding such proposals, subject to exceptions and termination provisions (as more fully described in the section entitled “Description of the AFT Merger Agreement — Additional Agreements”), which could have the effect of discouraging such proposals from being made or pursued. In addition, a third party acquiring AFT may be required to pay a termination fee of $7,029,482 to MFIC, which might discourage a potential acquirer that might have an interest in acquiring all or a significant part of AFT from considering or proposing that acquisition.

 

   

Absence of Appraisal Rights. AFT Stockholders are not entitled to appraisal rights under applicable law in connection with the AFT Mergers.

 

   

Litigation Risk. Mergers of publicly held companies are frequently the subject of litigation. If any litigation arises in connection with the AFT Mergers, even if any plaintiff’s claims are without merit, it could divert management time and resources away from AFT’s business, and cause AFT to incur expenses in defense of such claim.

 

   

Other Risks. There are various other risks associated with the AFT Mergers and the business of AFT and the combined company described in the section entitled “Risk Factors” beginning on page 40 and in the section entitled “Special Note Regarding Forward-Looking Statements” beginning on page 52.

This discussion of the information and factors that the AFT Special Committee and the AFT Board considered in making their decisions is not intended to be exhaustive but includes the material benefits, risks and other factors considered by the AFT Special Committee and the AFT Board. Because of the wide variety of factors considered in connection with the evaluation and negotiation of the AFT Mergers, the AFT Merger Agreement and the AFT Side Letter Agreement and the complexity of those matters, the AFT Special Committee and the AFT Board did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to these factors. In addition, the individual members of the AFT Special Committee and the AFT Board may have given different weights to different factors, or may have individually considered factors that are not listed here, or not individually considered certain factors that are listed here.

 

92


Table of Contents

AIF

At multiple meetings, the AIF Special Committee and the AIF Board considered the approval of the AIF Mergers and the terms of the AIF Merger Agreement and the AIF Side Letter Agreement. The AIF Special Committee and the AIF Board also considered alternatives to the AIF Mergers, including maintaining the status quo, a potential merger of AFT and AIF, a potential merger with an unaffiliated entity and liquidation. After careful consideration of the alternatives, including the feasibility, benefits and risks of each one, based on the information provided, the AIF Special Committee and the AIF Board determined that the AIF Mergers are in the best interests of AIF and in the best interests of AIF Stockholders. In connection with their consideration and negotiation of the transaction, MFIC Adviser and AIF Adviser provided the AIF Special Committee and the AIF Board with information regarding the proposed AIF Mergers, MFIC, the anticipated effects of the AIF Mergers on AIF and AIF Stockholders and the anticipated effects of the AFT Mergers on MFIC. Throughout the process of reviewing and negotiating the transactions, the AIF Special Committee consulted with Dechert, legal counsel to the AIF Special Committee, and KBW, financial advisor to the AIF Special Committee, while the AIF Board consulted with Simpson Thacher in its capacity as counsel to AIF. The AIF Special Committee and the AIF Board also consulted with management of MFIC Adviser and AIF Adviser. The AIF Special Committee and the AIF Board considered the nature and adequacy of the information provided, the terms of the AIF Merger Agreement and the AIF Side Letter Agreement, their duties under state and federal law in considering and ultimately approving the AIF Merger Agreement, the AIF Side Letter Agreement and the AIF Mergers and the conflicts of interest presented by this transaction. The AIF Special Committee and the AIF Board considered numerous factors, including the ones described below. On November 6, 2023, the AIF Special Committee and the AIF Board unanimously determined that the AIF Mergers are in the best interests of AIF and in the best interests of AIF Stockholders, and that existing AIF Stockholders will not suffer any dilution for purposes of Rule 17a-8 under the 1940 Act as a result of the AIF Mergers.

In considering the AIF Mergers and the terms of the AIF Merger Agreement and the AIF Side Letter Agreement, the AIF Special Committee and the AIF Board reviewed comparative information about MFIC and AIF, including, among other items: (1) their respective investment objectives, strategies, policies and restrictions, size, age and NAVs, and changes that could occur as a result of the AIF Mergers; (2) their holdings, including, in particular, the relative risks of the investment portfolios of MFIC and AIF; (3) their existing leverage profiles and the expected future leverage profile of the combined company; (4) their short-term and long-term investment performance history and financial results; (5) the level of past distributions and expenses and the anticipated effect of the AIF Mergers on future net investment income, distributions and expenses; (6) the U.S. federal income tax consequences of the AIF Mergers; (7) their respective investment advisory agreements and expense ratios; and (8) changes to the foregoing factors that could occur following the closing of the AFT Mergers. The AIF Special Committee and the AIF Board also considered the anticipated reasonable expectations of AIF Stockholders, market dynamics and regulatory and legal issues, including the higher limitations on leverage available to BDCs and a BDC’s ability to invest 30% of its assets in assets that are not “qualifying assets” as defined in the 1940 Act. In addition, the AIF Special Committee and the AIF Board reviewed comprehensive information regarding the anticipated benefits and possible risks to AIF and AIF Stockholders as a result of the AIF Mergers, and the anticipated investment, market and financial synergies to be experienced by the combined company. In addition, the AIF Special Committee considered the potential financial impacts of the AIF Mergers.

The AIF Special Committee and the AIF Board, with the assistance of their legal and other advisors (and, in the case of the AIF Special Committee, its financial advisor), weighed various benefits and risks in considering and negotiating the terms of the AIF Mergers, both with respect to the immediate effects of the AIF Mergers on AIF and AIF Stockholders and with respect to the potential benefits that could be experienced by the combined company after the AIF Mergers. Some of the material factors considered by the AIF Special Committee and the AIF Board that assisted them in concluding that the AIF Mergers are in the best interests of AIF and in the best interests of AIF Stockholders included, among others:

 

   

Increased Scale, Increased Analyst Coverage and Improved Secondary Market Liquidity. The AIF Special Committee and the AIF Board considered the benefits expected to accrue to the combined company as a result of its larger size. The AIF Special Committee and the AIF Board also considered

 

93


Table of Contents
 

that the larger scale of the combined company could result in enhanced liquidity for AIF Stockholders through increased trading volume of their newly-issued shares of MFIC Common Stock and potentially broader coverage of the combined company by equity research analysts. Further, the AIF Special Committee and the AIF Board also considered that larger BDCs are generally more attractive investment opportunities for a broader swath of institutional investors and tend to attract broader coverage by equity research analysts. The combined company (assuming the closings of both the AIF Mergers and the AFT Mergers occur) would have had pro forma total assets of approximately $3.16 billion and a net asset value of approximately $1.42 billion as of September 30, 2023. By comparison, AIF had total assets of approximately $334,529,059 and a net asset value of approximately $211,608,913 as of September 30, 2023.

 

   

Expected Changes Accretive to Net Investment Income and Access to Additional Increased Investing Capacity. The AIF Special Committee and the AIF Board considered that the AIF Mergers are expected to result in certain changes that could be accretive to net investment income, including expected expense savings (as described more fully below) and the potential of the combined company to deploy incremental investing capacity in higher yielding investments and to increase leverage on the acquired investment portfolio.

 

   

MFIC Adviser’s Payment to AIF Stockholders. The AIF Special Committee and the AIF Board considered that MFIC Adviser or one of its affiliates has agreed to pay to AIF Stockholders the AIF Stockholder Payment in connection with the consummation of the AIF Mergers.

 

   

MFIC’s Distribution to Stockholders of the Combined Company. The AIF Special Committee and the AIF Board considered that MFIC has agreed to pay the MFIC Distribution.

 

   

Expense Reimbursement by MFIC Adviser and AIF Adviser. The AIF Special Committee and the AIF Board considered that MFIC Adviser and AIF Adviser have agreed to reimburse certain fees and expenses incurred by AIF in connection with the AIF Mergers pursuant to the AIF Side Letter Agreement, as more fully described below in the section entitled “Description of the AIF Side Letter Agreement.”

 

   

Expected Increased Portfolio Yield. The AIF Special Committee and the AIF Board considered that, as of September 30, 2023, the weighted average yield on investments in AIF’s and MFIC’s portfolios was 11.0% and 12.0%, respectively, and that as a result of the AIF Mergers, AIF Stockholders would be invested in a combined company with a higher weighted average portfolio yield.

 

   

Integration into a Known Investment Portfolio. The AIF Special Committee and the AIF Board considered that the MFIC management team’s familiarity with the investments held by AIF would result in a more straightforward and faster integration of AIF’s investment portfolio into MFIC’s investment portfolio than an investment portfolio of a third party, with reduced execution risk.

 

   

Affiliation of the Management Teams. The AIF Special Committee and the AIF Board considered that the combined company would have an investment adviser that is affiliated with AIF’s current investment adviser. The AIF Special Committee and the AIF Board considered that, in light of the foregoing, the combined company and AIF Stockholders would be expected to receive the same nature, quality and extent of services from MFIC Adviser that they are currently receiving from AIF Adviser and would continue to benefit from the experience and expertise of its current management team, including familiarity with its investment portfolio.

 

   

No Dilution for Purposes of Rule 17a-8 of the 1940 Act. The AIF Special Committee and the AIF Board considered that the AIF Exchange Ratio (and thus the number of shares of MFIC Common Stock to be issued to AIF Stockholders pursuant to the AIF Merger Agreement) will be determined on a NAV-for-NAV basis (determined shortly before the AIF Closing Date on the basis of methodologies that were considered and approved by the AIF Board and the MFIC Board) and therefore the interests of the AIF Stockholders will not be diluted for purposes of Rule 17a-8 under the 1940 Act as a result of the AIF Mergers.

 

94


Table of Contents
   

Process for Negotiation. The AIF Special Committee and the AIF Board considered that the review and negotiation of the AIF Merger Agreement and the AIF Side Letter Agreement was conducted through a robust process under the oversight of the MFIC Special Committee and the AIF Special Committee, each of which is composed solely of independent directors.

 

   

Potential Elimination of Redundant Corporate Expenses. The AIF Special Committee and the AIF Board also considered that, as a result of the AIF Mergers, certain redundant professional services and other corporate expenses could be eliminated, which would reduce the potential corporate expenses of the combined company as compared to the aggregate corporate expenses that would otherwise be incurred by AIF and MFIC on a standalone basis.

 

   

Opinion of KBW, Financial Advisor to the AIF Special Committee. The AIF Special Committee considered the financial presentation, dated November 6, 2023, of KBW provided to and reviewed with the AIF Special Committee, and KBW’s opinion dated November 6, 2023 addressed to the AIF Special Committee and, as requested by the AIF Special Committee, the AIF Board, as to, as of November 6, 2023, the fairness, from a financial point of view, to the holders of AIF Common Stock of the AIF Merger Consideration (disregarding cash paid for fractional shares) and the AIF Stockholder Payment, taken together, as more fully described below in the section entitled “—Opinion of the Financial Advisor to the AIF Special Committee.” KBW is the outside financial advisor to the AIF Special Committee and the outside financial advisor to the AIF Special Committee pursuant to separate engagements and has advised the AIF Special Committee in connection with the AIF Mergers and the AFT Special Committee in connection with the AFT Mergers.

 

   

Tax Consequences of the AIF Mergers. The AIF Special Committee and the AIF Board considered that the AIF Mergers are expected to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The AIF Mergers are anticipated to be treated as a tax-free reorganization for U.S. federal income tax purposes, except to the extent of the special payment, and AIF Stockholders are not expected to recognize any gain or loss for U.S. federal income tax purposes as a result of the AIF Mergers, and except for any gain or loss that may result from the receipt of cash in lieu of fractional shares of MFIC Common Stock.

 

   

No Adverse Impact on Regulatory Obligations. The AIF Special Committee and the AIF Board noted that the AIF Mergers are not expected to affect the ability of AIF to comply with its regulatory obligations, including its ability to continue to operate in compliance with the asset coverage requirements set forth in the 1940 Act and to pay dividends required of RICs and that the combined company would continue to be a RIC.

 

   

Other Considerations. In the course of their deliberations, the AIF Special Committee and the AIF Board also considered a variety of risks and other potentially negative factors that could cause the AIF Mergers not to close or the anticipated benefits of the AIF Mergers not to be realized, including the following (which are not in any relative order of importance):

 

   

Certain Expenses Associated with the AIF Mergers. If the AIF Mergers are not consummated, AIF will be responsible for the fees and expenses incurred by AIF in connection with the AIF Mergers (except certain expenses that will be split proportionately with MFIC based on the parties’ respective NAVs as of September 30, 2023) if such fees and expenses exceed AIF Adviser’s reimbursement obligations pursuant to the AIF Side Letter Agreement, as more fully described below in the section entitled “Description of the AIF Side Letter Agreement.”

 

   

Risk of Interlopers or Activists. The voting process described in this joint proxy statement/prospectus may attract third-party interlopers or stockholder activists to AIF, who could result in the failure to close of the AIF Mergers or be disruptive to AIF and its business.

 

   

Higher Leverage. The AIF Special Committee and the AIF Board considered that the combined company is expected to have higher leverage than AIF does today. This higher leverage could increase the downside risks to AIF Stockholders by magnifying portfolio losses. In addition, this higher leverage is expected to result in higher total expenses per share for AIF Stockholders.

 

95


Table of Contents
   

Potentially Higher Total Adviser Fees. The AIF Special Committee and the AIF Board considered that the MFIC Advisory Agreement includes a 1.75% base management fee (calculated on MFIC’s net asset value) and an incentive fee of 17.50%, while the AIF Advisory Agreement includes a 1.00% base management fee (calculated on the average daily value of AIF’s Managed Assets) and no incentive fee. As a result, the total fees to be paid by the combined company under the MFIC Advisory Agreement could potentially be higher than total fees currently payable by AIF under the AIF Advisory Agreement.

 

   

Fluctuations in AIF Exchange Ratio. Changes in the NAVs of AFT, AIF and MFIC before the completion of the AIF Merger and/or the AFT Mergers will affect the relative ownership percentages that the stockholders of AFT, AIF and MFIC hold in the combined company, and these changes could be positive or negative for stockholders of AIF.

 

   

Conflict of Interest. AIF and MFIC have external investment advisers that are affiliated with one another. The AIF Special Committee and the AIF Board took this conflict of interest into account in the course of their deliberations.

 

   

Compensation Received by Members of the AIF Special Committee. The members of the AIF Special Committee received compensation for serving on the AIF Special Committee. The AIF Special Committee and the AIF Board took the receipt of such compensation into account in the course of their deliberations.

 

   

Tax Consequences of MFIC Adviser’s Payment to AIF Stockholders. The receipt of the AIF Stockholder Payment is expected to be taxable for AIF Stockholders.

 

   

Failure to Close. The AIF Mergers may not be completed, or completion may be delayed for reasons beyond the control of AIF, including an inability to obtain the required stockholder approvals, which could have a significant adverse impact on AIF and its business.

 

   

Management Diversion. It is possible that the attention of management may be diverted during the period prior to completion of the AIF Mergers, which may adversely affect AIF’s business.

 

   

Restrictions on Conduct of Business. The restrictions on the conduct of AIF’s business prior to completion of the AIF Mergers, requiring AIF to conduct its business only in the ordinary course of business in all material respects, subject to specific limitations, could delay or prevent AIF from undertaking certain business opportunities that may arise pending completion of the AIF Mergers.

 

   

Restrictions on Superior Proposals; Termination Fee. The AIF Merger Agreement includes restrictions on the ability of AIF to solicit proposals for alternative transactions or engage in discussions regarding such proposals, subject to exceptions and termination provisions (as more fully described in the section entitled “Description of the AIF Merger Agreement—Additional Agreements”), which could have the effect of discouraging such proposals from being made or pursued. In addition, a third party acquiring AIF may be required to pay a termination fee of $6,348,267 to MFIC, which might discourage a potential acquirer that might have an interest in acquiring all or a significant part of AIF from considering or proposing that acquisition.

 

   

Absence of Appraisal Rights. AIF Stockholders are not entitled to appraisal rights under applicable law in connection with the AIF Mergers.

 

   

Litigation Risk. Mergers of publicly held companies are frequently the subject of litigation. If any litigation arises in connection with the AIF Mergers, even if any plaintiff’s claims are without merit, it could divert management time and resources away from AIF’s business, and cause AIF to incur expenses in defense of such claim.

 

   

Other Risks. There are various other risks associated with the AIF Mergers and the business of AIF and the combined company described in the section entitled “Risk Factors” beginning on page 40 and in the section entitled “Special Note Regarding Forward-Looking Statements” beginning on page 52.

 

96


Table of Contents

This discussion of the information and factors that the AIF Special Committee and the AIF Board considered in making their decisions is not intended to be exhaustive but includes the material benefits, risks and other factors considered by the AIF Special Committee and the AIF Board. Because of the wide variety of factors considered in connection with the evaluation and negotiation of the AIF Mergers, the AIF Merger Agreement and the AIF Side Letter Agreement and the complexity of those matters, the AIF Special Committee and the AIF Board did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to these factors. In addition, the individual members of the AIF Special Committee and the AIF Board may have given different weights to different factors, or may have individually considered factors that are not listed here, or not individually considered certain factors that are listed here.

MFIC Board Recommendation

After careful consideration, and on the recommendation of the MFIC Special Committee, the MFIC Board unanimously approved the Merger Agreements, declared the Mergers and the transactions contemplated by the Merger Agreements advisable and unanimously recommends that MFIC Stockholders vote “FOR” the MFIC Share Issuance Proposal.

AFT Board Recommendation

After careful consideration, and on the recommendation of the AFT Special Committee, the AFT Board unanimously approved the AFT Merger Agreement, declared the AFT Mergers and the other transactions contemplated by the AFT Merger Agreement advisable and unanimously recommends that AFT Stockholders vote “FOR” the AFT Merger Proposal.

AIF Board Recommendation

After careful consideration, and on the recommendation of the AIF Special Committee, the AIF Board unanimously approved the AIF Merger Agreement, declared the AIF Mergers and the other transactions contemplated by the AIF Merger Agreement advisable and unanimously recommends that AIF Stockholders vote “FOR” the AIF Merger Proposal.

Certain Prospective Financial Information Provided by MFIC Adviser and AFT/AIF Adviser

MFIC, AFT and AIF (and MFIC Adviser and AFT/AIF Adviser (together, the “Advisers”) on their behalf), as a matter of course, do not make public long-term projections as to their respective future investment income, net investment income or other results due to, among other reasons, the inherent uncertainty of the underlying assumptions and estimates. However, the Advisers prepared certain unaudited forecasted financial information, which was made available to the Special Committees and the Boards in connection with their evaluation of the proposed Mergers and to KBW and Lazard, who were authorized and directed to use and rely upon such information for purposes of the financial analyses performed in connection with their respective opinions. The prospective financial information contained in this joint proxy statement/prospectus was prepared for internal use and not with a view to public disclosure and is being included in this joint proxy statement/prospectus only because the prospective financial information was provided to the Special Committees and the Boards in connection with their evaluation of the proposed Mergers. The summaries of the projections and prospective financial information included in this joint proxy statement/prospectus are not being provided to influence the decision of MFIC Stockholders to vote for the MFIC Share Issuance Proposal, AFT Stockholders to vote for the AFT Merger Proposal or AIF Stockholders to vote for the AIF Merger Proposal.

The prospective financial information was not prepared with a view to compliance with the published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The prospective financial information does not purport to present operations in accordance with U.S. generally accepted accounting principles, and MFIC’s, AFT’s and AIF’s registered

 

97


Table of Contents

public accounting firms have not examined, compiled or otherwise applied procedures to the prospective financial information and accordingly assume no responsibility for such information.

The prospective financial information provided by the Advisers on behalf of MFIC, AFT and AIF, as applicable, was based solely on the information available to their management at that time. The inclusion of the prospective financial information in this joint proxy statement/prospectus should not be regarded as an indication that the prospective financial information will be necessarily predictive of actual future results, and the forecasts should not be relied upon as such. None of MFIC, AFT, AIF, the Advisers or any other person makes any representation to any security holders regarding the ultimate performance of MFIC, AFT or AIF, as applicable, compared to the prospective financial information set forth in this joint proxy statement/prospectus.

Although presented with numerical specificity, the prospective financial information is not fact and reflects numerous assumptions and estimates as to future events made by the Advisers of MFIC, AFT or AIF, as applicable, that were believed to be reasonable at the time the prospective financial information was prepared and other factors such as industry performance and general business, economic, regulatory, market and financial conditions, as well as factors specific to the businesses of MFIC, AFT and AIF, all of which are difficult to predict and many of which are beyond the control of MFIC, AFT and AIF. Other persons attempting to project the future results of MFIC, AFT and AIF will make their own assumptions that could result in projections materially different than those presented in this joint proxy statement/prospectus. In addition, the prospective financial information does not take into account any circumstances or events occurring after the date that they were prepared. Further, the prospective financial information does not take into account the effect of any failure to occur of both the AFT Mergers and the AIF Mergers. Accordingly, there can be no assurance that the prospective financial information will be realized, and actual results could vary significantly from those reflected in the prospective financial information.

MFIC, AFT and AIF do not intend to update or otherwise revise the prospective financial information to reflect circumstances existing after the date when made or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the prospective financial information are shown to be in error.

The prospective financial information included in this document has been prepared by, and is the responsibility of, MFIC’s, AFT’s and AFT’s management. Deloitte & Touche LLP (“Deloitte”) and PricewaterhouseCoopers LLP have not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information and, accordingly, Deloitte and PricewaterhouseCoopers LLP do not express an opinion or any other form of assurance with respect thereto. The reports of Deloitte and PricewaterhouseCoopers LLP incorporated by reference in this document relate to MFIC’s, AFT’s and AIF’s previously issued financial statements. It does not extend to the prospective financial information and should not be read to do so.

The projections and prospective financial information in this joint proxy statement/prospectus are forward-looking statements. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. See “Special Note Regarding Forward-Looking Statements.”

Standalone Projections

The following is a summary of the standalone forecasts. The standalone forecasts were prepared by the Advisers’ management based solely on the information available to such management at that time. The standalone forecasts were finalized in November 2023.

 

98


Table of Contents

MFIC Projections

 

     12/31/24      12/31/25      12/31/26      12/31/27      12/31/28  

Estimated Net Investment Income Per Share

   $ 1.69      $ 1.64      $ 1.60      $ 1.58      $ 1.58  

Estimated Dividend Distributions Per Share

   $ 1.69      $ 1.64      $ 1.60    $ 1.58      $ 1.58  

AFT Projections

 

     12/31/24      12/31/25      12/31/26      12/31/27      12/31/28  

Estimated Net Investment Income Per Share

   $ 1.51      $ 1.51      $ 1.51      $ 1.51      $ 1.52  

Estimated Dividend Distributions Per Share

   $ 1.51      $ 1.51      $ 1.51      $ 1.51      $ 1.52  

AIF Projections

 

     12/31/24      12/31/25      12/31/26      12/31/27      12/31/28  

Estimated Net Investment Income Per Share

   $ 1.52      $ 1.52      $ 1.52      $ 1.52      $ 1.53  

Estimated Dividend Distributions Per Share

   $ 1.52      $ 1.52      $ 1.52    $ 1.52      $ 1.53  

Pro Forma Projections

The following is a summary of information made available by the Advisers with respect to the combined company on a pro forma basis after giving effect to the completion of either or both of the Mergers, assuming the Merger(s) had closed on March 31, 2024 and reflecting, among other things, assumptions regarding the cost savings expected to result from the Merger(s) and the expected timeline to reposition AFT’s and/or AIF’s investment portfolios into investments with similar characteristics as MFIC’s standalone investment portfolio in the ordinary course, and the future yields of those investments.

MFIC Pro Forma for Closing of AFT Mergers

 

     12/31/24      12/31/25      12/31/26      12/31/27      12/31/28  

Estimated Net Investment Income Per Share

   $ 1.69      $ 1.70      $ 1.66      $ 1.65      $ 1.65  

Estimated Dividend Distributions Per Share

   $ 1.69      $ 1.70      $ 1.66      $ 1.65      $ 1.65  

MFIC Pro Forma for Closing of AIF Mergers

 

     12/31/24      12/31/25      12/31/26      12/31/27      12/31/28  

Estimated Net Investment Income Per Share

   $ 1.69      $ 1.69      $ 1.65      $ 1.64      $ 1.64  

Estimated Dividend Distributions Per Share

   $ 1.69      $ 1.69      $ 1.65      $ 1.64      $ 1.64  

MFIC Pro Forma for Closing of AFT Mergers and AIF Mergers

 

     12/31/24      12/31/25      12/31/26      12/31/27      12/31/28  

Estimated Net Investment Income Per Share

   $ 1.68      $ 1.75      $ 1.71    $ 1.68      $ 1.68  

Estimated Dividend Distributions Per Share

   $ 1.68      $ 1.75