Monroe Capital Corporation

Greetings and welcome to the Horizon Technology Finance Corporation second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Megan Bacon, Director of Investor Relations and Marketing. Please go ahead.

Thank you, and welcome to our call announcing the merger of Horizon Technology Finance Corporation and Monroe Capital Corporation, as well as Horizon's second quarter 2025 conference call. In addition to the press release related to the transactions issued earlier today, each of Monroe Capital Corporation and Horizon Technology Finance Corporation have posted a joint investor presentation on MonroeBDC.com and HorizonTechFinance.com, respectively. We will be referencing this presentation during the call. I would also like to point out that Horizon's Q2 earnings press release and Form 10-Q are available on Horizon's website at HorizonTechFinance.com. Please note that this call will contain forward-looking statements which are subject to risks and uncertainties. All statements other than historical facts including statements related to the expected closing of the transaction, the ability of the parties to complete the proposed transactions based on the various closing conditions and certain aspects of the proposed transactions, such as Monroe Capital Corporation selling its existing investment portfolio for cash and immediately thereafter completing the merger between Monroe Capital Corporation and Horizon Technology Finance Corporation are forward-looking statements. These statements are subject to risks, and our actual future results may differ materially from those expressed on this call. Monroe Capital Corporation, Verizon Technology Finance Corporation, and their respective affiliates assume no obligation to update any forward-looking statements. Please see slide two of the joint investor presentation for more information. At this time, I would like to turn the call over to Ted Koenig.

Good afternoon, and welcome, everyone. Thank you for joining today's call. I am Ted Koenig, Chairman and CEO of Monroe Capital Corporation, and I'm pleased to be joined by Michael Balkan, CEO of Horizon Technology Finance Corporation. We are also joined by Nick Salamini, Chief Financial Officer and Chief Investment Officer of Monroe Capital Corporation, and Dan Trollio, Chief Financial Officer of Horizon Technology Finance Corporation. Today marks a significant milestone for Monroe's BDC platform, which is currently comprised of Monroe Capital Corporation, or MRCC, Horizon Technology Finance Corporation, or Horizon, and Monroe Capital Income Plus Corporation, or MCIP. We are excited to announce a strategic transaction that will culminate in the merger of Monroe Capital Corporation and Horizon Technology Finance Corporation. our two publicly traded BDCs. We believe that this is a unique opportunity to unlock shareholder value in MRCC, establish Horizon as a leading, well-capitalized venture debt and growth capital provider to small cap companies, and to optimize our platform's direct lending capabilities in a market that increasingly rewards BDCs with both reach and specialization. We will walk you through the key details of the proposed transaction and what it means for both MRCC and Horizon shareholders and share insight into the key value creation drivers that we believe will result from the combination of these companies as the potential to generate. Highlighted by enhanced scale, operating efficiencies, cost savings, and accelerated growth. Importantly, we believe we've carefully constructed and structured this transaction to be accretive to all parties and preserve net asset value or NAV integrity while creating compelling long-term upside for our shareholders. As a leading venture debt platform, The proposed merger will provide the Combined Horizon Company with an estimated $165 million of incremental equity capital based on MRCC's June 30, 2025 preliminary NAV range estimate, net of estimated transaction expenses, and related NAV adjustments, as well as the distribution of all undistributed net investment income. We believe this additional equity capital will provide the scale, resources, and flexibility to execute Horizon's next phase of growth while capturing operational efficiencies. This strengthened platform is expected to deliver accretive net investment income as compared to the standalone forecast and create meaningful long-term value for shareholders. Turning to slide four, this is a tri-party transaction that will be executed in two concurrent steps, which have received unanimous approval from the applicable boards of directors of MRCC, MCIP, and Horizon. including each of their respective special committees of independent directors. First, MRCC will sell substantially all of its assets at fair value to MCIP, our privately offered BDC. Based on the closing price of MRCC's share price on August 5th, 2025, the sale represents an estimated 33% premium to the share price, unlocking shareholder value for all stakeholders in MRCC. The final NAV used to determine the sale price of the assets will be established shortly before the transaction closes. MRCC will use those cash proceeds, net of transaction expenses, to repay liabilities and declare and pay a distribution to its shareholders equal to any remaining undistributed net investment income. This sale will result in MRCC holding only cash, ensuring that the shareholders immediately realize significant value. MCIP is acquiring a highly familiar portfolio of high-quality assets that will enable continued growth and be accretive to its shareholder returns. Nearly 80% of the assets acquired by MCIP from MRCC are already owned and in the existing loan portfolio of MCIP. In the second transaction, the all-cash MRCC entity will merge with and into Horizon through a NAV for NAV share exchange based on the net asset values of each entity determined shortly before the closing date. We believe the merger creates a true win-win for both sets of shareholders. MRCC shareholders will receive shares of common stock in Horizon, with Horizon receiving a corresponding estimated $165 million cash infusion in exchange for those shares. Horizon will be the surviving public entity and will continue to both be managed by Horizon Technology Finance Management, or HTFM, a Monroe-affiliated investment advisor, and trade on the NASDAQ under its ticker symbol HRZM. It is important to note that the transactions, which we expect to close in December 2025, will be conditioned on the concurrent closing of both the asset sale and the merger, as well as receipt of the necessary regulatory approvals and applicable approvals of both the MRCC and Horizon shareholders. Slide five summarizes the key elements of the transaction, which focus on shareholder alignment and protection. In connection with and in support of the transaction, HTFM, the external advisor, and the investment advisor of the combined HRZN company has agreed to waive an aggregate amount up to $4 million in advisory fees over the first four full fiscal quarters following the closing, up to $1 million per quarter. These advisory fee waivers are meant to support core net investment income while Horizon focuses on selectively and efficiently deploying the incremental capital to execute its strategic growth initiatives. The fee waivers will not exceed the total amount of fees earned during the applicable quarter. Additionally, Horizon's existing stock repurchase program will remain available for open market repurchases of shares of its common stock following closing. an aggregate of up to 2% of the then outstanding shares at then current market prices at any time the Horizon stock is trading below 90% of the then most recently disclosed NAV per share. Prior to the closing of the merger, both MRCC and Horizon intend to declare and pay ordinary course distributions subject to their respective board's approval. In addition, MRCC intends to declare a distribution to its shareholders equal to any undistributed income estimated to be remaining as of the closing of the merger, subject to its board approval. Finally, Horizon and MRCC have agreed to a balanced board structure post-close, with the combined board expected to be comprised of two current independent Horizon directors, one current MRCC independent director, and Mike Balkin, the CEO of the combined company. We believe this transaction unlocks immediate tangible value to MRCC shareholders while offering tax efficiency and a compelling long-term upside. By selling the MRCC investment portfolio to MCIP at fair value, MRCC shareholders are expected to realize approximately a 33% premium to the market trading price as of August 5th, 2025 based on MRC's estimated preliminary June 30th, 2025 NAV. As the merger is structured, As a tax-free reorganization, this enables MRCC shareholders to defer taxes and maintain their investments in a larger, more scalable platform that will benefit from a significant capital infusion to propel its next phase of growth. The larger combined platform presents MRCC shareholders with a greater potential to realize upside through enhanced scale and liquidity, stronger earnings power bolstered by synergies and other operational savings, and accelerated growth. With that, I will now turn the call over to Mike Balkan, Horizon's Chief Executive Officer, who will provide color around the benefits to Horizon's existing shareholders as well as to elaborate on the next phase of Horizon's growth strategy.