Stoneleigh Partners Acquisition Corp. enters into a Letter of Intent with Realty Finance Corporation

Stoneleigh Partners Acquisition Corp. (NYSE Alternext: SOC, SOC-U, SOC-WT), has entered into a letter of intent for a transaction with Realty Finance Corporation (“RFC”), a commercial real estate specialty finance company primarily focused on managing a portfolio of commercial real estate-related loans and securities.

The transaction is valued at approximately $242 million.

As of December 31, 2008, the net carrying value of RFC’s investments was approximately $1.2 billion and its GAAP book value was $218 million. RFC’s portfolio is comprised solely of commercial real estate debt and equity investments. RFC has long-term financing in place through the issuance of two CDO’s.

The SPAC will acquire a controlling interest in RFC. Stoneleigh will receive 31,000,000 shares of newly issued RFC common stock and a $31,250,000 principal amount senior secured note of RFC for which Stoneleigh will pay to RFC $25,000,000 in cash. Stoneleigh shall have the option to adjust its investment to any amount between $20,000,000 and $150,000,000; provided, however, that the number of shares of common stock and principal amount of notes shall be adjusted proportionately. The note will be secured by a first priority senior secured position in all of the assets of RFC, including the capital stock of RFC’s subsidiaries, and bear interest at the rate of 8%. Stoneleigh will have the right to appoint three of six members to RFC’s board of directors upon the closing of the transaction. Stoneleigh intends for the transaction to constitute a business combination as provided in its certificate of incorporation.

Read the release here