The New York Investment firm Prospect Capital Corp. has agreed to acquire a majority stake in specialty-finance company, First Tower Corp., for roughly $266 million.
Prospect said Tuesday that it is buying an 80.1% stake in First Tower in Flowood, Mo., for $110.2 million in cash and 14.5 million shares of common stock. First Tower shareholders would gain an 11% stake in Prospect under terms of the deal.
However, Prospect has the option to complete the transaction for cash only at a price per share based on the average trading prices prior to the closing date. Additionally, First Tower's managers are investing personal capital to purchase the remaining 19.9% stake in the company.
To pay for the deal, Prospect will issue roughly $226 million of debt. Prospect expects to generate $8 million in structuring fee income at closing, which should be within 60 to 120 days.
First Tower provides personal installment and mortgage loans, retail financing and credit-related insurance. It has 150 offices and more than 550 employees in Mississippi, Louisiana and Missouri.