PURCHASE, N.Y., Jan. 5, 2015 (GLOBE NEWSWIRE) -- MVC Capital, Inc.(NYSE:MVC), a publicly traded business development company that makes private debt and equity investments, today announced that the family that owns Custom Alloy Corporation ("Custom Alloy" or the "Company"), determined to recapitalize the Company. As a result, MVC has redeemed its entire 20% equity stake in Custom Alloy for $23.0 million. The recapitalization was partially financed by a new $23 million second lien loan provided by MVC to the Company. The loan matures in 5.5 years and has an interest rate of 11% during the first year and a blended 10.15% rate over the 5.5 years, if not prepaid.
MVC acquired its 20% minority equity interest in Custom Alloy in October 2007 for $10.0 million, and provided $14.0 million of subordinated debt, of which $6.5 million is currently outstanding. As a result of the transaction, MVC realized a $13.0 million capital gain, which insures that MVC's distributions declared in calendar 2014, totaling $0.54 per share, will consist entirely of long-term capital gains.
Based in High Bridge, New Jersey, Custom Alloy is a leading manufacturer of time-sensitive and mission-critical butt-weld pipe fittings and forgings for customers in the natural gas pipeline, power generation, oil and gas refining and extraction, and nuclear generation markets.
"We are pleased to support the recapitalization of Custom Alloy, a long-time portfolio company that we believe is well positioned for growth," said Michael Tokarz, Chairman and Portfolio Manager of MVC. "We are encouraged by our progress in transitioning our portfolio toward yielding investments, which we believe will lead to increased shareholder value."
"We look forward to maintaining an active working relationship with Custom Alloy and its strong management team led by CEO Adam F. Ambielli. Our $23 million loan will support the Company's growth objectives and we are confident that Custom Alloy can continue to provide an excellent return for MVC shareholders," said Shivani Khurana, Director of Custom Alloy and Managing Director of TTGA, investment adviser to MVC Capital, Inc.
About MVC Capital, Inc.
MVC Capital is a Business Development Company traded on the New York Stock Exchange that provides long-term debt and equity investment capital to fund growth, acquisitions and recapitalizations of companies in a variety of industries.
Safe Harbor Statement
The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, including: MVC Capital's ability to execute its investment strategy (including the focus on more yielding investments); the performance of MVC Capital's investments; the performance of Custom Alloy; MVC Capital's ability to continue to make cash distributions to shareholders; uncertainty in the specific tax characterization of MVC Capital distributions; and changes in economic or financial market conditions and other factors that are enumerated in the Company's periodic filings with the Securities and Exchange Commission. MVC does not manage every investment to achieve tax efficiencies. MVC Capital disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release.
CONTACT: Investor Relations Inquiries: Jackie Rothchild 914-510-9400 KCSA Strategic Communications Jeffrey Goldberger / Brad Nelson 212-896-1249 / 212-896-1217 Media Inquiries: Nathaniel Garnick / Patrick Scanlan Sard Verbinnen & Co 212-687-8080