UPDATE: MCG Capital Offers Response to Revised Bid from HC2 Holdings: Reaffirms Recommendation in Favor of Deal with PennantPark Floating Rate Capital(

MCG Capital Corporation

announced today that its Board of Directors, after thorough consideration and consultation with its legal and financial advisors, has determined that the proposal to acquire MCG made by HC2 Holdings, Inc., as revised by HC2 on June 2, 2015 and June 3, 2015, does not constitute, and is not reasonably likely to lead to, a superior proposal under MCG's existing merger agreement with PennantPark Floating Rate Capital Ltd.

. The Board has unanimously affirmed its commitment to the pending merger with PFLT, and its recommendation that MCG stockholders vote in favor of the PFLT transaction. Richard W. Neu, Chairman of the MCG Board of Directors, said, "Over the past several weeks we have devoted extensive time and resources to evaluating the numerous 1940 Act and SEC issues we believe are posed by the proposed transaction with HC2 Holdings. We are familiar with HC2's public statements on these topics, but do not believe they realistically address the legal and regulatory issues inherent in a transaction between MCG and HC2, and we believe these issues pose a material risk to the consummation of such a transaction." Mr. Neu continued, "This stands in contrast to the relative certainty of value we believe is offered to our shareholders by the existing transaction with PFLT if the required shareholder approvals are obtained, and the significant uncompensated harm in diminution of value that our shareholders would bear if MCG were to pursue but fail to complete a transaction with HC2. We remain committed to maximizing shareholder value and we look forward to hearing from our shareholders throughout this process." Today MCG filed with the SEC an investor presentation detailing the still unaddressed concerns around the contract that HC2 has proposed to enter into with MCG. MCG also filed materials setting forth a potential range of diminution in NAV per share if MCG were to pursue but not consummate a transaction with HC2. Additionally, MCG referred investors to its presentation of June 2, 2015, which addressed concerns as to HC2 and the valuation of its shares. Morgan Stanley & Co. LLC is serving as financial advisor to MCG, Wachtell, Lipton, Rosen & Katz is serving as legal counsel to MCG and Sutherland Asbill & Brennan LLP is serving as legal counsel to MCG with respect to the Investment Company Act of 1940.