Franklin BSP Lending Corp. (BDCA) Merger and Liquidation

How to Recover Investment Losses involving Franklin BSP Lending Corp. (Formerly BDCA)  

 The White Law Group continues to investigate potential claims involving Franklin BSP Lending Corp. a/k/a BDCA. 

Franklin BSP Lending Corp. is a non-traded business development company, formerly known as Business Development Corp. of America (BDCA). FBLC’s investment portfolio primarily consists of loans to middle-market companies.  

According to reports last week, Franklin BSP Capital Corporation and Franklin BSP Lending Corporation, both business development companies overseen by affiliates of Benefit Street Partners LLC, have officially announced their intent to merge. In this merger, Franklin BSP Capital Corporation (FBCC) will continue as the surviving entity. The merger process is contingent upon the approval of certain stockholders and the fulfillment of standard closing conditions. 

As per the proposed merger terms, stockholders of Franklin BSP Lending Corporation will receive a number of shares in the newly issued common stock of Franklin BSP Capital Corporation. This number is determined by calculating the ratio of the net asset value per share of Franklin BSP Lending Corporation divided by the NAV per share of Franklin BSP Capital Corporation. These values will be assessed shortly before the merger’s completion. 

The boards of directors of both companies have already given their approval to the merger agreement and the associated transactions. Franklin BSP Lending Corporation has specified that the parties involved in the merger aim to classify it as a “reorganization.” 

The merger is expected to take place in the first half of 2024. To proceed, it will require the consent of stockholders from both Franklin BSP Lending Corporation and Franklin BSP Capital Corporation. This also includes the approval of Franklin BSP Capital Corporation’s stockholders for the amendment and restatement of their currently effective investment advisory agreement. 

The Risks of Investing in Non-Traded BDCs 

BDCs operate much in the same way as non-traded REITs (Real Estate Investment Trusts). BDCs pool investor money and use those funds as capital to invest in various businesses. The goal of a BDC is to invest in small and medium-sized businesses and help sustain and develop growth in those underlying businesses. When those businesses are profitable, the BDC can be a strong investment. Additionally, certain BDCs offer a desirable tax structure for investors.  

However, “middle-market loans” are basically highly leveraged loans to private equity backed companies and come with a large credit risk. When rising interest rates and inflation lead to a recessionary event BDCs, such as Franklin BSP Lending Corp., may take a big hit.  

Liquidity Issues – Franklin BSP Lending Corp (formerly BDCA)

Non-traded BDCs also face several liquidity issues due to their unique characteristics and structure. They don’t trade on a public exchange like traditional stocks. As a result, if they try to sell the shares on a secondary market before the REIT’s liquidation event, it is almost always at a loss.  

According to Central Trade and Transfer, shares of Franklin BSP Lending Corp. were recently sold for $4.95 per share. The original offering price was $10 per share. The current Net Asset Value according to the company is $7.28 per share. 

Potential Lawsuits to Recover Investment Losses 

The White Law Group continues to investigate potential claims against the broker dealers that sold high risk investments such as Franklin BSP Lending Corp. (BDCA) to investors. The high commission structure of these products leads to the possibility that unscrupulous financial advisors will push these products unsuitably to maximize their own commissions.   

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Recommendations should be appropriate in light of the investor’s age, risk tolerance, net worth, and investment experience. Broker dealers that fail to adequately disclose risks or make unsuitable investment recommendations can be held liable for investment losses in a FINRA arbitration claim.   

If you have suffered losses in Franklin BSP Lending Corp. (BDCA) and would like to speak to a securities attorney about the potential to recover your investment losses, please call The White Law Group at 1-888-637-5510 for a free consultation.   

For more information on the firm’s investigation, please see: Business Development Companies BDCs – the good, the bad, and the UGLY 

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and
Seattle, Washington. To learn more about The White Law Group visit www.whitesecuritieslaw.com.