Horizon and Monroe Merger Approved, Creating a New Venture Debt Powerhouse

FARMINGTON, CT & CHICAGO, IL – March 16, 2026 – Shareholders of Horizon Technology Finance Corporation (NASDAQ: HRZN) and Monroe Capital Corporation (NASDAQ: MRCC) have overwhelmingly approved a strategic merger, paving the way for the creation of a more scaled and diversified player in the specialty finance market. The transaction, backed by parent asset manager Monroe Capital LLC, is designed to consolidate two of its publicly traded business development companies (BDCs) into a single, more powerful entity.

At special meetings held on March 13, shareholders delivered a strong mandate for the deal. Over 83% of voting HRZN shareholders approved the issuance of new stock to facilitate the merger, while more than 88% of MRCC's voting shareholders endorsed both the merger itself and a crucial preceding asset sale. The new, larger entity will continue to trade on the NASDAQ under the HRZN ticker and will be managed by Horizon Technology Finance Management LLC (HTFM).

The merger is expected to close within the next 30 days, subject to customary closing conditions. The move is positioned as a significant step in HRZN's growth, enhancing its capacity to finance the innovation economy.

“We appreciate our shareholders’ strong approval, which marks an important step forward as we prepare for the next phase of Horizon’s growth,” said Mike Balkin, Chief Executive Officer of Horizon Technology Finance Corporation. “Once the merger is completed, we expect the combined company will strengthen our position in the venture lending market by increasing our scale, enhancing our earnings potential, and expanding our capacity to support innovative, high growth companies.”

A Deal Sweetened for Shareholders

To secure shareholder approval and deliver immediate value, the merger was structured with several intricate financial incentives. Central to the transaction is a multi-step process beginning before the merger itself. First, MRCC will sell substantially all of its assets to Monroe Capital Income Plus Corporation (MCIP), a private BDC also managed by an affiliate of Monroe Capital. This sale will be for cash at fair value, determined shortly before closing.

The cash proceeds from this asset sale will directly fund a significant payout to MRCC’s legacy shareholders. The company intends to declare a “Pre-Merger Closing Distribution” expected to total approximately $15.9 million, or about $0.75 per MRCC share. This payment, which is contingent on the merger's closing, includes a one-time supplemental distribution of $13.0 million and an additional amount to distribute all of MRCC's remaining undistributed taxable earnings.

Following the asset sale and distribution, MRCC will merge into HRZN. MRCC shareholders will receive newly issued shares of HRZN common stock in a tax-free exchange. The exact exchange ratio will be based on the net asset value (NAV) per share of each company just prior to closing, a structure known as a NAV-for-NAV exchange. It is anticipated that former MRCC shareholders will own approximately 37% of the combined company.

Shareholders of the newly combined entity are also slated to receive benefits. HRZN's board has announced its intent to use $27.6 million of its current undistributed taxable earnings to supplement the regular monthly distributions for two full quarters after the merger closes. Further sweetening the deal, HRZN's manager, HTFM, has agreed to waive an aggregate of $4 million in base management and incentive fees over the first year, providing a direct cost saving for the combined company.

The Strategic Blueprint: Consolidation for Scale

This merger represents a significant strategic consolidation orchestrated by the parent asset manager, Monroe Capital LLC, which oversees both BDCs. By combining HRZN and MRCC, Monroe Capital is creating a single public BDC with a pro forma net asset value of approximately $446 million and a more diversified investment portfolio. The move reflects a broader trend in the BDC sector, where scale is increasingly seen as critical for accessing lower-cost capital, improving stock liquidity, and competing for larger deals.

The combined entity will blend HRZN's established expertise in providing secured loans to venture capital-backed companies in technology and life sciences with MRCC’s focus on lending to U.S. middle-market companies. This diversification is expected to create a more resilient portfolio and offer a wider range of investment opportunities.

The companies project that the transaction will be accretive to net investment income for shareholders after the first year, following a period of initial neutrality as integration costs are absorbed. The increased scale is also expected to enhance HRZN’s access to the debt capital markets, potentially lowering its overall cost of borrowing and strengthening its financial foundation.

Theodore L. Koenig, Chairman and CEO of Monroe Capital, framed the deal as a value-unlocking maneuver. “We believe this transaction is in the best interest of shareholders of both MRCC and HRZN, unlocking significant value within MRCC, while positioning the combined HRZN platform with the enhanced growth capital to advance its long-term strategic initiatives,” he stated. “We expect the merger to generate meaningful synergies, cost efficiencies and the potential for stronger, more sustainable risk-adjusted returns for shareholders.”

Market Realities and the Path Forward

While the strategic rationale and overwhelming shareholder support paint a positive picture, the merger occurs against a challenging market backdrop for HRZN. The company's stock has been trading near its 52-week low, reflecting either broader market headwinds for specialty finance companies or investor caution regarding the complexities of the integration. The deal's success will ultimately be judged by its ability to deliver on the promised synergies and reverse this stock performance trend.

However, supporters of the merger point to HRZN's long track record, including 17 consecutive years of paying dividends, as evidence of a stable and well-managed platform. The infusion of approximately $165 million in equity capital from the merger is expected to significantly bolster its balance sheet and provide the dry powder needed to capitalize on lending opportunities.

With the final shareholder hurdles cleared, the focus now shifts to execution. The two-step process of the asset sale followed by the merger is designed to streamline the integration. With HRZN's existing management team at the helm, the combined company will aim to quickly leverage its expanded capital base and diversified platform to solidify its position as a premier financing partner for growth companies, from venture-stage startups to established middle-market players. The successful integration of these two portfolios will be the key to realizing the full potential of this newly forged entity in the competitive landscape of specialty finance.