MVC Capital To Sell Its Investment In U.S. Gas & Electric

(RTTNews) - MVC Capital Inc. (MVC) announced that an agreement has been reached to sell U.S. Gas & Electric Inc. or "USG&E", MVC's largest portfolio holding, to United States Gas & Electric Holdings Inc., a holding company primarily owned by Louis Beck, Lance Shaner and members of the management of USG&E.

The transaction is expected to close by October 31, 2013. It is subject to regulatory approvals and various other closing conditions, including US Holdings successfully obtaining significant third-party financing.

Upon satisfaction of the closing conditions, including establishment of an escrow, MVC expects to receive gross proceeds of about $97.2 million for its equity investment, resulting in a realized gain of about $96.7 million based upon a $500,000 equity investment made in August 2007.

As of July 31, 2013, MVC's equity investment in USG&E was valued at $92.7 million. In addition to the equity proceeds and upon closing, USG&E will also retire an approximate $10.2 million second lien loan previously provided by MVC. Since October 2012, MVC has received distributions from USG&E of approximately $10 million.

Upon completion of the transaction, equity proceeds are expected to be paid to MVC in three installments over a 13-month period, secured by a standby letter of credit. The first installment payment is anticipated to be made by October 31, 2013. Assuming the transaction closes, MVC anticipates that its quarterly dividends, subject to Board approval, could materially increase.