Monroe Capital LLC announced that Monroe Capital Corp. and Horizon Technology Finance Corp., both business development companies managed by affiliates of Monroe Capital, have entered into an agreement under which MRCC would merge with and into HRZN, subject to the receipt of certain shareholder approvals and the satisfaction of other closing conditions. Pursuant to the Merger Agreement, HRZN will be the surviving public entity and will continue to be managed by Horizon Technology Finance Management LLC (“HTFM”) and trade on the NASDAQ under the symbol “HRZN”.

Monroe Capital Income Plus Corp. (“MCIP”), the Monroe Capital platform's privately offered BDC, has agreed that, immediately prior to the Merger, it will acquire substantially all of the assets of MRCC at fair value, as determined shortly before closing, for cash (the "Asset Sale"), subject to the satisfaction or waiver of the closing conditions in the Merger Agreement and certain other closing conditions applicable to the Asset Sale. Following the Asset Sale, MRCC’s only assets will be the net cash proceeds from the sale after giving effect to the receipt of proceeds from the Asset Sale, repayment of liabilities, transaction costs and distribution of undistributed net investment income. Pursuant to the Merger Agreement, MRCC will subsequently merge with HRZN.

Under the terms of the Merger Agreement, shareholders of MRCC will receive a number of HRZN shares with a net asset value (“NAV”) equal to the NAV of the shares that they hold in MRCC, as determined shortly before closing and after giving effect to the Asset Sale. Upon closing of the Merger, the former MRCC shareholders are expected to own approximately 37% of HRZN. The merger transaction is structured as a NAV-for-NAV exchange of shares.

“We believe this innovative, shareholder-friendly transaction unlocks shareholder value within MRCC while also placing the combined HRZN entity in a much better position to serve borrowers and execute on its key long-term strategic initiatives,” said Theodore L. Koenig, Chairman & CEO of Monroe Capital. “This transaction is expected to be accretive to both shareholders of MRCC and HRZN, while also offering compelling synergies and cost-savings that will allow us to continue to deliver attractive, sustainable risk-adjusted returns to our investors for years to come. To accelerate its next phase of growth, HRZN will have the full support and backing of Monroe Capital, an approximately $22 billion AUM, premier asset manager.”

Michael P. Balkin, CEO of Horizon Technology Finance, added, “This transaction provides HRZN with significant incremental leverageable capital, and a larger shareholder base to execute on its strategy of being a leading lender in providing both venture debt and also growth capital in the public small cap company space. We are confident that the enhanced earnings power and expanded investing opportunity set will translate into stronger long-term total returns for our shareholders.”

Key Transaction Highlights

• Enhanced Scale – The Merger will increase the size and scale of HRZN, as the combined company is expected to benefit from additional equity capital of approximately $165 million before adding allowable leverage, corresponding to a NAV of approximately $446 million based on June 30, 2025 financials, as adjusted for estimated Merger-related adjustments and expenses (the “Current Combined NAV”). Due to its increased size and scale post-closing, the combined company is expected to realize a reduction in per-share operating expenses for HRZN shareholders on a pro forma basis. Further, shareholders of the combined company are expected to benefit from improved trading liquidity through, among other things, a broader investor base.

• Return Accretion – The Merger is expected to be neutral to net investment income (“NII”) for the combined company during the first-year post-closing, and accretive over time, driven by operational savings, portfolio mix optimization, and cost savings from capital structure improvements over the long-term.

• Additional Capital to Support Next Phase of Growth – The Merger will provide HRZN with incremental capital to execute on its current investment strategy of providing venture debt to sponsor-backed private companies in technology, healthcare, life sciences and sustainability, while broadening its investment platform to lending opportunities for public small-cap growth companies.

• Increased Access to Long-Term, Lower-Cost, Flexible Debt Capital – The Merger and associated effects noted above should enable HRZN to better access a wider array of debt funding solutions, including access to structural efficiencies and potential borrowing cost reductions over time.

• Tax-Free Exchange – The Merger is structured as a tax-free reorganization under Section 368(a), allowing MRCC shareholders to exchange their shares without incurring immediate tax consequences. While the Asset Sale will be treated as a taxable transaction, MRCC is not expected to incur any tax liability resulting from realized gains from the transaction.

• Advisory Fee Waivers – In connection with and in support of the transaction, only if the Merger is consummated, HTFM has agreed to waive an aggregate amount of $4 million of base management fees and incentive fees over the first four full fiscal quarters following the closing (the “Fee Waiver”). The Fee Waiver will be implemented at a rate of up to $1 million per quarter commencing at the end of the first full fiscal quarter following the closing of the Merger. The Fee Waiver for each applicable fiscal quarter will not exceed the total amount of base management and incentive fees earned by HTFM during such fiscal quarter.

The Boards of Directors of MRCC, HRZN and MCIP — each acting on the unanimous recommendation of their respective Special Committees consisting solely of certain independent directors — have unanimously approved either or both the Merger and/or the Asset Sale (respectively, as required by each Board of Directors). In addition, the Board of Directors of MRCC will recommend that shareholders of MRCC vote in favor of the Merger and Asset Sale, and the Board of Directors of HRZN will recommend that shareholders of HRZN vote in favor of the issuance of HRZN common stock in connection with the Merger.

The parties expect to close the transactions in the fourth quarter of 2025, subject to customary regulatory approvals, certain approvals by MRCC and HRZN shareholders, and other closing conditions. Each of the Asset Sale and the Merger will be conditioned upon the substantially concurrent consummation of the other.