Western Asset Mortgage Capital Corporation (NYSE:WMC) entered into an agreement to acquire Terra Property Trust, Inc. on June 28, 2023. WMC will issue to TPT stockholders newly designated shares of WMC Class B common stock as merger consideration. The number of shares of WMC Class B common stock to be received by TPT stockholders will be based on an exchange ratio to be determined by dividing TPT's adjusted book value per share by WMC's adjusted book value per share, calculated pursuant to the terms of the Agreement.

WMC will issue new Class B shares in favor of TPT as compensation for the merger. Mavik Capital Management, LP, an external consultant to TPT, has committed to make every effort to attract a third party in order to acquire Class A shares of WMC in the amount of $4 million. The transaction has been unanimously approved by each of the Boards of Directors of TPT and WMC.

WMC has entered into a voting agreement with key stockholders of TPT under which such stockholders have committed to vote in favor of the transaction, subject to the terms and conditions of the voting agreement. After the closing of the transaction, TPT shareholders will own 76% of the shares of the combined company, and WMC 24%. The transaction is expected to be completed in the fourth quarter of 2023, subject to the approval of TPT and WMC shareholders and compliance with the usual closing conditions.

Upon completion of the merger, TPT's CEO, Vik Uppal, will serve as CEO and Chairman of the combined company, which will be headquartered in New York, New York. The Board of the combined company is expected to have eight directors and will consist of six TPT-designated directors and two WMC-designated directors. The combined company will be externally managed by a subsidiary of Mavik.

Raymond James acts as financial advisor, and Alston & Bird LLP acts as legal advisor to TPT. JMP Securities and Skadden, Arps, Slate, Meagher & Flom LLP are WMC's advisors.