Medley Capital to Seek Buyer After Sierra Deal Collapses

(Bloomberg) -- Business development company Medley Capital Corp. has renewed its push to find a buyer after its deal with Sierra Income Corp. collapsed last month, according to people with knowledge of the matter.

Houlihan Lokey Inc., the New York-based company’s financial adviser, has canvassed potential suitors in recent weeks to gauge their interest in the lender, said the people, who asked to not be identified because the talks are private.

No final decision has been made and Medley Capital could opt to remain independent, the people said.

Medley Capital rose 19% to 78 cents per share at 10:28 a.m. in New York, giving the company a market value of about $42 million. The stock had gained as much as 22%.

Representatives for Medley Capital and Houlihan Lokey declined to comment.

Medley Capital and Sierra terminated their 2018 merger agreement in part because of the market upheaval caused by the coronavirus pandemic, according to a statement last month. Medley Capital said its special committee would remain in place and was free to explore strategic alternatives to maximize shareholder value.

Medley Capital, led by Chief Executive Officer Brook Taube, has seen its market value tumble 68% this year, faring worse than the S&P BDC Index, which has declined 26%.

BDCs are poised to be among the biggest losers in the credit market in the wake of the coronavirus pandemic. The vehicles lend to small and mid-size businesses, many of which have been hammered by shutdowns, and declining credit quality in recent years that may leave them vulnerable.

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