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CHICAGO - Monroe Capital Corporation (NASDAQ:MRCC), a business development company with a market capitalization of $147.33 million, announced Monday it has entered into a definitive merger agreement with Horizon Technology Finance Corporation (HRZN), with MRCC to merge into HRZN through a NAV-for-NAV structure. The announcement comes as MRCC shares have shown strong momentum, posting a 10.48% return over the past week, according to InvestingPro data.
The business development company also reported second quarter financial results, posting net investment income of $3.3 million, or $0.15 per share, down from $4.1 million, or $0.19 per share, in the first quarter. Net asset value fell to $8.29 per share from $8.63 at the end of March.
As part of the merger transaction, MRCC will sell its investment assets at fair value to Monroe Capital Income Plus Corporation immediately prior to the merger closing. Both the merger and asset sale are subject to shareholder approvals and other closing conditions.
The company maintained its quarterly dividend of $0.25 per share, paid on June 30, representing an annualized yield of approximately 14.6% based on recent share prices. InvestingPro data reveals MRCC has maintained consistent dividend payments for 14 consecutive years, demonstrating its commitment to shareholder returns.
Total investment income for the quarter was $9.9 million, a decrease from $11.6 million in the previous quarter, primarily due to lower average invested assets and effective rates. Total expenses decreased to $6.6 million from $7.6 million.
The company’s debt-to-equity ratio improved to 1.17 times as of June 30, compared to 1.45 times at the end of March, as proceeds from sales and paydowns were used to reduce outstanding debt on its revolving credit facility.
MRCC reported a net loss of $5.2 million for the quarter, compared to a $3.6 million loss in the first quarter, driven primarily by mark-to-market losses on certain portfolio investments.
According to a press release statement, CEO Theodore L. Koenig said the merger with HRZN "will unlock meaningful value for our shareholders and provide them with compelling long-term upside." InvestingPro analysis shows MRCC maintains strong financial health with a current ratio of 5.37, indicating robust liquidity position. For deeper insights into MRCC’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, which provides detailed analysis of the company’s fundamentals and future potential.
In other recent news, Monroe Capital Corporation has declared a second quarter distribution of $0.25 per share. This distribution is scheduled to be paid to shareholders on June 30, 2025, with a record date of June 16, 2025. Shareholders have the option to reinvest these distributions in additional shares through a dividend reinvestment plan. Additionally, Monroe Capital Corporation has made a significant change by appointing Grant Thornton LLP as its new independent registered public accounting firm. This decision follows the dismissal of KPMG LLP, a move linked to an acquisition involving Monroe Capital LLC’s affiliates by an affiliate of Wendel SE. KPMG’s audit report for the fiscal year ending December 31, 2024, did not contain any adverse opinions or qualifications. These developments reflect ongoing strategic adjustments within Monroe Capital Corporation.
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