<SEC-DOCUMENT>0000921895-18-003288.txt : 20181213
<SEC-HEADER>0000921895-18-003288.hdr.sgml : 20181213
<ACCEPTANCE-DATETIME>20181213131917
ACCESSION NUMBER:		0000921895-18-003288
CONFORMED SUBMISSION TYPE:	PX14A6G
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20181213
EFFECTIVENESS DATE:		20181213

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Medley Capital Corp
		CENTRAL INDEX KEY:			0001490349
		IRS NUMBER:				274576073
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		PX14A6G
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-35040
		FILM NUMBER:		181232723

	BUSINESS ADDRESS:	
		STREET 1:		280 PARK AVENUE
		STREET 2:		6TH FLOOR EAST
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10017
		BUSINESS PHONE:		212-759-0777

	MAIL ADDRESS:	
		STREET 1:		280 PARK AVENUE
		STREET 2:		6TH FLOOR EAST
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10017

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Medley Capital BDC LLC
		DATE OF NAME CHANGE:	20100426

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FrontFour Capital Group LLC
		CENTRAL INDEX KEY:			0001430308
		IRS NUMBER:				205997207
		STATE OF INCORPORATION:			DE

	FILING VALUES:
		FORM TYPE:		PX14A6G

	BUSINESS ADDRESS:	
		STREET 1:		35 MASON STREET, 4TH FLOOR
		CITY:			GREENWICH
		STATE:			CT
		ZIP:			06830
		BUSINESS PHONE:		203-274-9050

	MAIL ADDRESS:	
		STREET 1:		35 MASON STREET, 4TH FLOOR
		CITY:			GREENWICH
		STATE:			CT
		ZIP:			06830
</SEC-HEADER>
<DOCUMENT>
<TYPE>PX14A6G
<SEQUENCE>1
<FILENAME>px14a6g08016016_12122018.htm
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<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center">UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center">NOTICE OF EXEMPT SOLICITATION<BR>
<FONT STYLE="font-weight: normal">Submitted Pursuant to Rule 14a-6(g)</FONT></P>

<P STYLE="font: bold 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center">(Amendment No. ____)</P>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">1.</TD><TD>Name of the Registrant:<BR>
<BR>
Medley Capital Corporation</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">2.</TD><TD>Name of Persons Relying on Exemption:<BR>
<BR>
FrontFour Capital Group LLC<BR>
FrontFour Master Fund, Ltd.<BR>
FrontFour Opportunity Fund<BR>
FrontFour Capital Corp.<BR>
David A. Lorber<BR>
Stephen E. Loukas<BR>
Zachary R. George</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">3.</TD><TD>Address of Persons Relying on the Exemption:<BR>
<BR>
c/o FrontFour Capital Group LLC<BR>
35 Mason Street, 4th Floor<BR>
Greenwich, Connecticut 06830</TD></TR></TABLE>

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<TD STYLE="width: 0"></TD><TD STYLE="width: 0.5in">4.</TD><TD>Written Material. The following written materials are attached:<BR>
<BR>
Press release, dated December 13, 2018.</TD></TR></TABLE>

<P STYLE="font: italic 10pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center">(Written material follows on
next page)&nbsp;</P>

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<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0.1in 8pt 0; text-align: center"><B>FrontFour Issues Open
Letter to Medley Capital Shareholders</B></P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0.1in 8pt 0; text-align: center"><B><I>Announces Opposition
to Proposed Combination With Sierra Income and Medley Management and Intention to Vote Against the Transaction</I></B></P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0.1in 8pt 0; text-align: center"><B><I>Outlines Serious Concerns
With Transaction, Including:</I></B></P>

<UL STYLE="margin-top: 0in; list-style-type: disc">

<LI STYLE="margin: 0; font-size: 10pt; line-height: 107%"><B><I>Transaction Significantly Undervalues Equity of Medley Capital</I></B></LI>

<LI STYLE="margin: 0; font-size: 10pt; line-height: 107%"><B><I>Transfers Value to Medley Management Shareholders at Expense of
Medley Capital Shareholders</I></B></LI>

<LI STYLE="margin: 0; font-size: 10pt; line-height: 107%"><B><I>Apparent Failure to Pursue All M&amp;A Alternatives</I></B></LI>

<LI STYLE="margin: 0; font-size: 10pt; line-height: 107%"><B><I>Retains Management Team With Track Record of Destroying Value</I></B></LI>

</UL>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0.1in 8pt 0; text-align: justify">GREENWICH, Conn., Dec. 13, 2018 /PRNewswire/--  FrontFour Capital Group LLC, a significant
shareholder of Medley Capital Corporation (&ldquo;Medley Capital&rdquo;) (NYSE:MCC), today issued an open letter to the
Medley Capital shareholders regarding its serious concerns with the proposed combination of Medley Capital, Sierra Income
Corporation and Medley Management Inc. The full text of the letter follows:&#9;</P>

<P STYLE="font: 10pt/150% Calibri, Helvetica, Sans-Serif; margin: 0 0.1in 6pt 0">December 13, 2018</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt">Dear Fellow Shareholders,</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt; text-align: justify">FrontFour Capital Group LLC (&ldquo;FrontFour&rdquo;)
is a significant shareholder of Medley Capital Corporation (&ldquo;MCC&rdquo; or the &ldquo;Company&rdquo;) with ownership of ~2
million shares or 3.7% of the outstanding shares. We are writing to express our strong opposition to the proposed combination of
MCC, Sierra Income Corporation (&ldquo;SIC&rdquo;) and Medley Management Inc. (&ldquo;MDLY&rdquo;) that was announced on August
8, 2018. In our view, the transaction fails to maximize value for MCC shareholders and is a brazen attempt by MCC&rsquo;s external
manager and the controlling shareholders of MDLY to transfer material value in MCC to MDLY owners, including Brook and Seth Taube.</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt; text-align: justify">FrontFour believes the contemplated
transaction is the result of a highly flawed process that significantly undervalues the equity of MCC, transfers value to MDLY
shareholders at the expense of MCC shareholders and secures the position of a management team that has a track record of destroying
significant shareholder value. Our attempts to privately communicate our concerns to the independent members of MCC&rsquo;s Board
of Directors have been met with a series of inadequate, generic answers to our specific questions from Medley LLC&rsquo;s General
Counsel. Accordingly, we have been left no other choice but to publicly voice our opposition to the transaction and highlight key
issues that should concern all MCC shareholders.</P>

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<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt; text-align: justify">As fellow MCC shareholders, we
all have an important decision to make. With MCC shares currently trading at around $3.30 per share, the proposed transaction provides
no apparent path to bridge the massive ~44% discount to MCC&rsquo;s current NAV of $5.90 per share. It appears the Board of Directors
has failed to seek superior proposals, which we believe is wholly inconsistent with its fiduciary duties. It is not surprising
that the Special Committee&rsquo;s financial advisor, Sandler O&rsquo;Neill, went to great lengths in their &ldquo;fairness opinion&rdquo;
to disassociate themselves with the process and structure of the transaction. They stated, &ldquo;Our opinion&hellip;does not address
the form or structure of the Transaction or any other transactions contemplated in the Agreements, the relative merits of the Transaction
as compared to any other alternative transactions or business strategies that might exist for the Company or the effect of any
other transaction in which the Company might engage.&rdquo;</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt; text-align: justify">We believe the best course of action
is for MCC shareholders to vote down the proposed transaction and commence a process to maximize value for MCC shareholders. Upon
speaking to multiple M&amp;A advisors, we are confident that a superior outcome could be achieved as there are many precedent BDC
transactions and publicly listed portfolio wind-up processes that have successfully maximized value for shareholders. As MCC shareholders,
we have the flexibility to internalize and terminate MDLY as our manager with 60 days&rsquo; notice &ndash; a valuable strategic
option. Shareholders may legitimately ask themselves why we should continue to pay fees to a manager that has destroyed hundreds
of millions of dollars in value. We believe MCC&rsquo;s equity could be worth 0.8x to 1.0x NAV or $4.72 to $5.90 per share in an
outright sale or windup, representing a potential return of 40% &ndash; 70%. In a conservative scenario where we assume that all
4 and 5 rated credit assets are written off, we arrive at a NAV of $4.97 per share or 0.84x. In addition, it is very important
to note that either directly or indirectly precedent transactions suggest that an MCC management contract could be worth 4x to
6x revenue. As per MCC&rsquo;s latest 10K for the fiscal year ended 9/30/18, MCC paid MDLY $3.3MM or $13.2MM annualized. This could
equate to $50MM to $80MM or $0.97 to $1.45 per share of value. Simply said, through one or more creative transactions including
an outright sale, asset monetization and/or windup scenario, significant potential value of approximately $5.69 to $7.35 per share
can be realized for MCC shareholders.</P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <TD COLSPAN="5" STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>Valuation Potential of MCC Net Assets (Loan Book)</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; width: 61%; background-color: white; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">MCC 9/30/18 NAV, As Reported</FONT></TD>
    <TD STYLE="white-space: nowrap; width: 9%; background-color: white; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$5.90</FONT></TD>
    <TD STYLE="white-space: nowrap; width: 12%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$5.90</FONT></TD>
    <TD STYLE="white-space: nowrap; width: 9%; background-color: white; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$5.90</FONT></TD>
    <TD STYLE="white-space: nowrap; width: 9%; background-color: white; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$5.90</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">Assumed P/NAV Multiple</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">0.80x</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">0.84x</FONT>*</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">0.90x</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">1.00x</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>Implied MCC Value Per Share</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>$4.72</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>$4.97</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>$5.31</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>$5.90</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>% Upside From Current MCC Price</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>45.6%</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>53.2%</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>63.8%</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>82.0%</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: white">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: xx-small">*
    Assumes 4 &amp; 5 rated credit assets $0 value.</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD></TR>
</TABLE>


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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom; background-color: #3970AD">
    <TD COLSPAN="4" STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>Valuation Potential of External Management Contract </B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; width: 70%; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">Fiscal 4Q18 Mgmt Fees Paid by MCC</FONT></TD>
    <TD STYLE="white-space: nowrap; width: 10%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$3.3</FONT></TD>
    <TD STYLE="white-space: nowrap; width: 10%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$3.3</FONT></TD>
    <TD STYLE="white-space: nowrap; width: 10%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$3.3</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">Run-Rate Mgmt Fees Paid by MCC</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$13.2</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$13.2</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$13.2</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">Revenue Multiple Range </FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">4.0x</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">5.0x</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">6.0x</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">Implied Value of External Manager Contract</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$53</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$66</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">$79</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>Implied Value Per MCC Share</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>$0.97</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>$1.21</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>$1.45</B></FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt; text-align: center; text-indent: 22pt">&nbsp;</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt; text-align: justify">We are shocked that despite
the obvious conflicts of interest and overall performance of MDLY as a manager, it appears the independent members of our Board
did not even contemplate a windup or outright sale of MCC.</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt">As currently structured, we believe this transaction
is undesirable for MCC shareholders for the following reasons:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/115% Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 10pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&#183;</FONT></TD><TD STYLE="text-align: justify"><U>Transaction significantly undervalues the equity value of MCC</U> &ndash; The announced transaction
implies a transaction price to MCC&rsquo;s 6/30/18 Net Asset Value (&ldquo;NAV&rdquo;) transaction multiple of 0.55x. This valuation
is well below the midpoint of the Fairness Opinion valuation derived by the financial advisor to MDLY&rsquo;s Special Committee
disclosed in the proxy statement. Using both precedent transactions and comparable public companies, MDLY&rsquo;s own financial
advisor derived an average valuation of 0.76x and 0.93x, respectively &ndash; these values are a staggering 38% &ndash; 69% above
the valuation implied by the transaction price.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/115% Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 10pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&#183;</FONT></TD><TD STYLE="text-align: justify"><U>Transfer of value to MDLY shareholders at the expense of MCC shareholders</U> &ndash; By accepting
a below-market valuation of 0.55x for MCC shares, an excessive amount of deal consideration offered by SIC has been allocated to
holders of MDLY, the entity controlled by management. In addition, MDLY holders will receive approximately 64% of the deal consideration
in cash. Conversely, MCC holders are receiving only SIC stock in the exchange for their shares. If the individuals controlling
MDLY were truly aligned with shareholders of MCC, they would have pushed for SIC to pay a fair market value of closer to 0.8x to
1.0x NAV for MCC&rsquo;s assets while making an offer with a considerable cash component. As currently structured, the proposed
transaction leaves MCC shareholders with the prospect of holding only SIC stock without the certainty of cash consideration that
only MDLY holders are receiving &ndash; we view this as an insult to the intelligence of MCC shareholders. Again, Sandler O&rsquo;Neill
has carefully backed away from the risk of this consideration package in their &ldquo;fairness opinion&rdquo;, stating, &ldquo;We
express no opinion as to the trading values of the Company Common Stock or SIC Common Stock at any time or what the value of SIC
Common Stock will be once it is actually received by the holders of Company Common Stock.&rdquo;</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/115% Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 10pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&#183;</FONT></TD><TD STYLE="text-align: justify"><U>Apparent failure to pursue all M&amp;A alternatives by MCC and its financial advisors</U> &ndash;
The proxy statement indicates that the Company did not pursue alternative transactions to maximize value or negotiate a &ldquo;go-shop&rdquo;
provision. We believe this has had a chilling effect on the submission of superior offers for MCC, which we believe could be achieved
in a robust M&amp;A sales process. For perspective, a comparable BDC to MCC, Triangle Capital, received indications of interest
from 22 different parties during its sales process in early 2018 demonstrating significant interest in this asset class.</TD></TR></TABLE>

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<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt/115% Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 10pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><FONT STYLE="font-family: Symbol">&#183;</FONT></TD><TD STYLE="text-align: justify"><U>Retains management team that has track record of destroying value</U> &ndash; The leadership
of the MDLY and MCC complex has led to a significant destruction of value over a long period of time. We are concerned that given
this track record the new Sierra entity will trade at a significant discount given a lack of confidence in the management team.
The chart below illustrates MCC&rsquo;s stock price performance over 1, 3 and 5 year time periods versus various benchmarks.</TD></TR></TABLE>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 0 1in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom; background-color: #3970AD">
    <TD COLSPAN="4" STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>Stock Performance Comparison - Total Return</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; width: 70%; padding-right: 5.4pt; padding-left: 5.4pt">&nbsp;</TD>
    <TD STYLE="white-space: nowrap; width: 10%; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>1 Yr </B></FONT></TD>
    <TD STYLE="white-space: nowrap; width: 10%; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>3 Yr</B></FONT></TD>
    <TD STYLE="white-space: nowrap; width: 10%; border-bottom: Black 1pt solid; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>5 Yr</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>MCC</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>-32.2%</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>-34.1%</B></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt"><B>-56.3%</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">Externally Managed BDC Peers <SUP>(1)</SUP></FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">-10.2%</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">6.5%</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">0.0%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">S&amp;P 500</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">1.1%</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">39.3%</FONT></TD>
    <TD STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt; text-align: right"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: 10pt">63.9%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="4" STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: xx-small">As
    of 12/11/18.</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD COLSPAN="4" STYLE="white-space: nowrap; padding-right: 5.4pt; padding-left: 5.4pt"><FONT STYLE="font-family: Century Gothic,sans-serif; font-size: xx-small">(1)
    Peer group defined by SIC, MCC, MDLY Proxy dated 11/6/18.</FONT></TD></TR>
</TABLE>


<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt; text-align: justify"></P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt; text-align: justify">We believe the best path forward
for MCC shareholders is to vote down the proposed transaction and for MCC to commence a corporate windup or sale process on a standalone
basis. This course of action will not only ensure shareholders maximize value but also take the assets out of the hands of a management
team that has destroyed value over time. Simply put &ndash; management and the Board of Directors have failed shareholders.</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt"></P>

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<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt">Given the reasons outlined above we plan to vote against
this transaction.</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt">Sincerely,</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font-size: 10pt; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 32%; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center">Zachary R. George</P>
        <P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center">Portfolio Manager</P></TD>
    <TD STYLE="width: 35%; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center">David A. Lorber</P>
        <P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center">Portfolio Manager</P></TD>
    <TD STYLE="width: 33%; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center">Stephen E. Loukas</P>
        <P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center">Portfolio Manager</P></TD></TR>
</TABLE>
<P STYLE="font: 10pt/150% Calibri, Helvetica, Sans-Serif; margin: 0 0.1in 6pt 0; text-align: justify; color: #262626"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/150% Calibri, Helvetica, Sans-Serif; margin: 0 0.1in 6pt 0; text-align: justify; color: #262626"><B>FRONTFOUR
CAPITAL GROUP LLC</B></P>

<P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0.1in 0 0; text-indent: 0.5in; color: #262626">FrontFour
Capital Group LLC, located in the United States at 35 Mason Street, Greenwich, CT 06830, was formed in December 2006. FrontFour
Capital Group LLC is registered with the Securities &amp; Exchange Commission as an investment adviser under the Investment Advisers
Act of 1940, as amended.</P>

<P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0.1in 0 0; text-align: justify; color: #262626">&nbsp;</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt; text-align: center">*&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;*</P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt">Written materials are submitted voluntarily pursuant
to Rule 14a-6(g)(1) promulgated under the Securities Exchange Act of 1934. This is not a solicitation of authority to vote your
proxy. <FONT STYLE="color: #262626">FrontFour Capital Group LLC</FONT> (&ldquo;FrontFour Capital&rdquo;) is not asking for your
proxy card and will not accept proxy cards if sent. The cost of this filing is being borne entirely by <FONT STYLE="color: #262626">FrontFour
Capital. </FONT></P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt"><B>PLEASE NOTE: <FONT STYLE="color: #262626">FrontFour
Capital </FONT>is not asking for your proxy card and cannot accept your proxy card. Please DO NOT send us your proxy card.</B></P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt"><B>CONTACT</B></P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt"><B>Investor Contact:</B></P>

<P STYLE="font: 10pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt">David A. Lorber<BR>
FrontFour Capital Group LLC<BR>
35 Mason Street, 4th Floor<BR>
Greenwich, CT 06830<BR>
203-274-9050</P>

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