PURCHASE, N.Y., June 1, 2015 (GLOBE NEWSWIRE) -- MVC Capital, Inc. (NYSE:MVC) today announced that it has sold Vestal Manufacturing Enterprises, Inc. ("Vestal"), a manufacturer and distributor of cast iron and fabricated steel specialty products based in Sweetwater, Tennessee, to Spell Capital Private Equity, based in Minneapolis, Minnesota, a private equity group engaged in the acquisition of controlling interests in industrial manufacturing businesses. Vestal's CEO, Keith Shope, will remain in his role and maintain a substantial investment in the company.
As a result of the sale, which closed on May 29, 2015, MVC received approximately $17.9 million in gross proceeds1 on its $1.85 million equity investment which generated an 11X return on its equity capital and a gross IRR of 32% over eleven years, including fees and cash distributions received from Vestal.
As part of the transaction, MVC reinvested in Vestal $250,000 in common equity and $6.25 million in the form of a partially secured loan, which matures in 6.5 years and has an interest rate of 15% (12% cash and 3% PIK). In addition, MVC received warrants that represent 4.6% of any equity above Spell Capital's purchase price.
Michael Tokarz, Chairman & Portfolio Manager of MVC Capital, said, "Vestal was the first investment MVC completed under its new management team and strategy back in 2004 and we are pleased to be able to continue our successful partnership with a company and management team we know well."
Tokarz continued, "The sale of Vestal is another step in MVC's portfolio transformation as we seek to redeploy capital into income oriented investments, leveraging our significant proprietary origination platform and recently-expanded team to increase returns and drive shareholder value."
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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. For MVC's investor relations, please call Jackie Rothchild at 914-510-9400 or Jeffrey Goldberger at 212-896-1249. All media inquiries should be directed to Nathaniel Garnick at 212-687-8080.
1The anticipated $17.9 in gross proceeds assumes the full receipt of the escrow proceeds of $308,000.
Forward-Looking Statements
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 yield investment strategy; the full realization of escrow proceeds from the sale of Vestal; the performance of MVC Capital's re-investments into Vestal (both the secured loan and the equity); the future performance of Vestal and its ability to service and repay MVC Capital's loan; the ability of MVC Capital to grow its dividend; 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 Capital disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release.