Terra Property Trust, Inc. and Terra Income Fund 6, Inc., Terra BDC,  jointly announced that they have entered into a definitive merger agreement pursuant to which Terra REIT has agreed to acquire Terra BDC.

Each outstanding share of common stock of Terra BDC will be automatically canceled and converted into the right to receive (i) 0.595 shares (as may be adjusted in accordance with the merger agreement) of the newly designated Class B common stock, par value $0.01 per share, of Terra REIT (“Class B Common Stock”) and (ii) cash in lieu of any fractional shares of Class B Common Stock otherwise issuable. 

The combined company will continue to operate under the name Terra Property Trust, Inc. and will remain headquartered in New York, New York.  Terra REIT Advisors, LLC will continue to manage the combined company. Upon completion of the merger, Terra REIT’s current executive officers will remain in their current roles.  The board of directors of the combined company is expected to be comprised of six directors, consisting of Terra REIT’s three current directors and three directors designated by Terra BDC. 

The transaction is expected to drive increased efficiency for the combined company while expanding the scale and diversification of its portfolio. In addition to enhancing access to capital markets and increasing liquidity options for current and future stockholders, the combination positions Terra REIT for long-term, sustainable growth and success.

Upon the closing of the merger, Terra REIT’s existing stockholders are expected to own approximately 80.2% of the combined company’s common stock, while former Terra BDC stockholders are expected to own approximately 19.8% of the combined company’s common stock. In the event of a termination of the merger agreement under specified circumstances, Terra BDC will be required to pay Terra REIT a termination fee of approximately $2.6 million, with a lower fee of approximately $1.1 million payable upon a termination by Terra BDC to enter into a definitive agreement within 60 days of execution of the merger agreement with a person who owns the securities.

The merger is expected to close during the third quarter of 2022, subject to approval by the stockholders of Terra BDC and other customary closing conditions.

Keefe, Bruyette & Woods, Inc. rendered a fairness opinion to the REIT Special Committee and Alston & Bird LLP is acting as legal advisor to the REIT Special Committee.  Robert A. Stanger & Co., Inc. is acting as exclusive financial advisor and Venable LLP is acting as legal advisor to the BDC Special Committee.