Chicago Atlantic BDC (LIEN) M&A announcement summary

Deal rationale and strategic fit

• Merger creates a scaled BDC with a $771 million portfolio focused on senior secured lending to the cannabis industry and underserved lower middle markets, enhancing scale, diversification, and competitive positioning.

• Combined entity will operate as a BDC under the LIEN ticker, leveraging expanded investment scope, origination capacity, and aligned investment philosophies.

• The transaction aims to unlock value for both parties, enabling growth, enhanced risk-adjusted returns, and greater shareholder value.

• Merger responds to evolving cannabis industry dynamics and regulatory changes, positioning the combined entity for growth.

• Both boards unanimously approved the merger, citing meaningful value creation for all stockholders.

Financial terms and conditions

• All-stock, NAV-for-NAV merger; exchange ratio based on adjusted net asset value using fair value of assets at closing.

• REFI shareholders will receive LIEN shares based on adjusted NAV ratio, expected to own about 50.5% of LIEN post-merger based on March 31, 2026 NAVs.

• Combined company expected to have pro-forma NAV of $613 million, investment portfolio of $771 million, and potential total assets exceeding $1.1 billion at 0.9x debt to equity.

• Chicago Atlantic committed to pay up to $2 million in transaction expenses that would otherwise be borne by REFI.

• Merger intended to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code.

Synergies and expected cost savings

• Operating efficiencies and expanded earnings capacity from prudent leverage and elimination of overlapping expenses expected to drive NII accretion.

• Expense synergies of up to 0.18% of pro forma total assets anticipated.

• Illustrative leverage increase to 0.90x could add up to $0.42 per share in adjusted net income (+27.1%).

• Enhanced scale and diversification expected to improve access to debt and equity capital and broaden institutional investor interest.

• Combined origination platform and expanded mandate to deploy a robust pipeline more efficiently and at scale.