HC2 Announces Revised Bid to Purchase MCG Capital

HC2 Holdings, Inc. ("HC2") (NYSE MKT:

) announced today that it has sent a letter to MCG Capital Corporation ("MCGC"), in response to MCGC's recent investor presentation, further modifying its proposed offer to purchase all of the outstanding shares of MCGC. The following is a copy of the letter sent to MCGC's Board of Directors by HC2 regarding its offer. June 23, 2015 Board of Directors MCG Capital Corporation 1001 19th Street North, 10th Floor Arlington, Virginia 22209 Attention: Richard W. Neu, Chairman of the Board Dear Ladies and Gentlemen: Reference is made to the offer letter sent to you on behalf of HC2 Holdings, Inc. ("HC2") on May 19, 2015 regarding a proposal (as subsequently modified in our June 2nd letter, June 3rd and June15th letter) (the "Proposal") to acquire all of the outstanding shares of MCG Capital Corporation ("MCG"). We were disappointed by your rejection of our latest offer and your recent presentation responding our Proposal, which we believe paints an erroneous and misleading picture of HC2 and our offer to acquire MCG. To date, we have responded to the substantive issues and questions you have raised and modified our Proposal to address your concerns. We again would like to modify our Proposal. In our June 15th letter, in response to your concerns about a failure to close the transaction due to regulatory issues, we modified and augmented our Proposal to further compensate MCG (and its stockholders) in the event a deal with HC2 is not consummated because HC2 cannot complete its registration statement or HC2 is permanently enjoined from acquiring MCG as a result of the provisions of my SEC settlement or issues arising under the Investment Advisors Act of 1940. If such situation were to occur, we had offered to, in addition to reimbursing MCG in cash for the $7 million termination fee payable to PennantPark, issue $13.35 million of HC2 common stock to MCG. We are now writing to update our Proposal to offer a $13.35 million cash payment in lieu of an issuance of HC2 common stock if a deal with HC2 is not consummated because HC2 cannot complete its registration statement or HC2 is permanently enjoined from acquiring MCG as a result of the provisions of my SEC settlement or issues arising under the Investment Advisors Act of 1940, or the transaction is not consummated due to a breach of the definitive transaction agreement by HC2. I remain confident that the proposal HC2 has presented to MCG maximizes the value of MCG for its stockholders, not only valuing the company at a substantial premium to NAV but also giving stockholders the ability to participate in the substantial future upside potential of the combined business. We respectfully request that the MCG board promptly reach a determination that our offer constitutes a "Superior Proposal" and commence discussions with HC2. Sincerely, Philip A. Falcone Chairman, President and Chief Executive Officer HC2 Holdings, Inc.