Horizon Technology Finance Corporation (HRZN) Issues Supplemental Disclosures on Proposed Merger with Monroe Capital Corporation (MRCC)

Key Points from the Report

• Supplemental Disclosures Issued: HRZN released additional disclosures related to the pending asset sale by MRCC to MCIP and the proposed merger of MRCC with and into HRZN. These disclosures were made voluntarily by HRZN to reduce litigation risks and costs, without admitting any liability or wrongdoing.
• Pending Litigation: Several lawsuits (the “Merger Complaints”) have been filed by purported MRCC stockholders, alleging insufficient disclosures in the joint proxy statement for the merger. HRZN and its board believe these claims are without merit but opted to enhance disclosure to mitigate uncertainties.
• Board Recommendation: The HRZN Board, including a Special Committee of independent directors, unanimously recommends shareholders vote “FOR” the Merger Stock Issuance Proposal.
• Prospective Financial Information Released: For the first time, HRZN provided detailed prospective financial information for HRZN, MRCC, and the combined entity on a standalone and pro forma basis for investors to consider when evaluating the transaction.

Detailed Supplemental Disclosures

1. Nature and Reason for Supplemental Disclosures

In response to litigation and shareholder requests, HRZN released unaudited forecasts and prospective financial information prepared by MC Advisors and HRZN Advisor. These projections, typically not made public, were previously shared internally with the boards and their financial advisors (Oppenheimer for HRZN, Houlihan Lokey for MRCC).

The disclosed financial data is not in accordance with U.S. GAAP, not audited, and not intended as guidance for investors. The information is based on management’s assumptions as of June 30, 2025, and does not account for events after this date.

2. Standalone Projections (HRZN)

For the year ended December 31, 2030, HRZN is projected to generate \$1.06 in net investment income per share and pay \$1.00 in dividends per share, with an estimated net asset value per share of \$6.64.

3. Pro Forma Projections (Combined Company after Merger)

These pro forma figures assume the merger and asset sale close in Q4 2025 and include anticipated cost savings and transaction expenses. They suggest the combined company could realize higher net investment income and maintain a solid dividend.

4. Cautions and Limitations

• The projections are forward-looking statements and subject to significant risks, uncertainties, and assumptions. Actual results could differ materially.
• Neither HRZN nor MRCC will update these forecasts, even if conditions change or assumptions prove incorrect.
• The forecasts do not consider unforeseen future events, market changes, or regulatory impacts after June 30, 2025.

5. Forward-Looking Statements

Many statements in the report are forward-looking, including those about the timing and benefits of the merger, future operations, and financial performance. Risks include the possibility the merger may not be completed, litigation outcomes, economic conditions, interest rates, and regulatory changes.

6. Shareholder Voting and Importance

• HRZN shareholders are urged to review the joint proxy statement and registration statement (Form N-14, File No. 333-290114) for full details and vote on the merger proposal.
• The board’s unanimous recommendation in favor of the merger is a significant signal for investors, but the outcome depends on shareholder approval.
• The merger, if completed, is expected to generate cost synergies, improve market profile, and enhance potential dividend returns for the combined company.

Potential Price-Sensitive Information

• Disclosure of Financial Projections: The release of previously non-public, prospective financial data for both standalone and pro forma entities may impact investor expectations and share valuation.
• Legal and Transaction Risks: Ongoing litigation, though deemed without merit by HRZN, introduces uncertainty that could affect share price until resolved.
• Board Endorsement of Merger: The clear and public support of the HRZN board and independent committee may improve market confidence in the proposed transaction.
• Dividend and NAV Outlook: The projections for stable or increasing dividends and net asset value could be interpreted as positive for long-term holders if the merger proceeds as planned.
• Regulatory and Market Risks: The extensive forward-looking statement warnings highlight the potential for volatility based on economic, regulatory, or market events.

What Investors Should Do

• Review the joint proxy and registration statements in detail.
• Consider the risks and uncertainties described, including the potential that actual results may differ from management’s projections.
• Follow the outcome of shareholder votes and litigation developments, as these could affect the transaction’s outcome and share value.
• Monitor HRZN and MRCC filings on the SEC website for any further updates or material disclosures.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any securities. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Investors should consult the official filings and, if needed, seek advice from their financial advisor before making any investment decisions. The author does not assume any responsibility for actions taken based on this information.

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