SCHEDULE 14A
(RULE 14a-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
Filed by the Registrant
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Filed by the Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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NEWTEK BUSINESS SERVICES CORP.
(Name of Registrant as Specified in its
Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6 (i) (1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1.
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Amount previously paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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NEWTEK BUSINESS SERVICES CORP.
1981 Marcus Avenue, Suite 130
Lake Success, New York 11042
(212) 356-9500
June 23, 2017
Dear Shareholder:
We invite you to attend the Special Meeting of Shareholders (the
“Meeting”) of Newtek Business Services Corp. (the “Company”) to be held at 2711 South Ocean Drive, Hollywood,
FL 33019 on July 26, 2017 at 9:00 a.m., local time.
The attached Notice of Special Meeting and Proxy Statement accompanying
this letter provide an outline of the business to be conducted at the meeting. At the meeting, you will be asked to consider and
vote upon a proposal to authorize flexibility for the Company, with approval of its Board of Directors, to sell shares of its common
stock (during the next 12 months) at a price below its then current net asset value per share subject to certain conditions as
set forth herein (including that the cumulative number of shares sold does not exceed 20% of its then outstanding common stock
immediately prior to each such sale).
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN.
On behalf of the Company’s Board of Directors, we urge you even if you plan to attend the meeting in person, to
complete, date and sign the enclosed Proxy Card and promptly return it in the envelope provided. If you prefer, you can save time
by authorizing your proxy through the Internet or by telephone as described in the Proxy Statement and on the enclosed Proxy Card.
This will not prevent you from voting in person, but will assure that your vote is counted if you are unable to attend the Meeting.
Your vote and participation in the governance of the Company is very important to us.
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Sincerely yours,
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/s/ Barry Sloane
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Barry Sloane
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Chairman, President and Chief Executive Officer
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NEWTEK BUSINESS SERVICES CORP.
1981 Marcus Avenue, Suite 130
Lake Success, New York 11042
(212) 356-9500
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on July 26, 2017
To the Shareholders of Newtek Business Services Corp.:
NOTICE IS HEREBY GIVEN
that a Special Meeting of Shareholders
(the “Meeting”) of Newtek Business Services Corp. (the “Company”) will be held at 2711 South Ocean Drive,
Hollywood, FL 33019 on July 26, 2017 at 9:00 a.m., local time.
The Meeting is for the following
purpose, which is more completely described in the accompanying Proxy Statement:
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To approve a proposal to authorize the Company to sell shares of its common stock, par value $0.02 per share, at a price below
the then current net asset value per share of such common stock in one or multiple offerings, subject to certain limitations described
in the accompanying Proxy Statement (including that the number of shares sold on any given date does not exceed 20% of its outstanding
common stock immediately prior to such sale).
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The Board of Directors is not aware of any other business to come
before the Meeting.
Shareholders of record at the close of business on June 9, 2017
are entitled to vote at the Meeting and any adjournment thereof.
We ask that you fill in and sign the enclosed Proxy Card which is
solicited by the Board of Directors and to mail it promptly in the enclosed envelope. You may also cast your vote by telephone
or Internet as shown on the Proxy Card. The proxy will not be used if you attend and vote at the Meeting in person.
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BY ORDER OF THE BOARD OF DIRECTORS
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/s/ BARRY SLOANE
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BARRY SLOANE
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CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
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Lake Success, New York
June 23, 2017
IMPORTANT
: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY
THE EXPENSE OF A FURTHER REQUEST FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES. EVEN IF YOU VOTE YOUR SHARES PRIOR TO THE MEETING. YOU MAY STILL ATTEND
THE MEETING AND VOTE YOUR SHARES IN PERSON IF YOU WISH TO CHANGE YOUR VOTE.
PROXY STATEMENT
NEWTEK BUSINESS SERVICES CORP.
1981 Marcus Avenue, Suite 130
Lake Success, New York 11042
(212) 356-9500
SPECIAL MEETING OF SHAREHOLDERS
July 26, 2017
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Newtek Business Services Corp. (the “Company”) for the Special Meeting of Shareholders
(the “Meeting”) to be held at 2711 South Ocean Drive, Hollywood, FL 33019 on July 26, 2017 at 9:00 a.m., local time.
The accompanying Notice of Special Meeting and this Proxy Statement, together with the enclosed Proxy Card (collectively, the “Proxy
Statement”), are first being mailed to shareholders on or about June 23, 2017.
We encourage you to vote your shares
, either by voting in
person at the Meeting or by granting a proxy (i.e., authorizing someone to vote your shares).
How Do You Exercise Your Rights to Vote on the Proposals?
You may vote using any of the following methods:
By Mail
– Shareholders of record may submit proxies
by completing, signing and dating each Proxy Card received and returning it in the prepaid envelope. Sign your name exactly as
it appears on the proxy. If you return your signed proxy but do not indicate your voting preferences, your shares will be voted
on your behalf “FOR” the Proposal listed in this Proxy Statement. Shareholders who hold shares beneficially in street
name may provide voting instructions by mail by completing, signing and dating the voting instruction forms provided by their brokers,
banks or other nominees.
By Telephone
– Shareholders of record may submit proxies
by following the telephone voting instructions on each Proxy Card. Most shareholders who hold shares beneficially in street name
may provide voting instructions by telephone by calling the number specified on the voting instruction form provided by their brokers,
banks or nominees. Please check the voting instruction form for telephone voting availability. Please be aware that if you submit
voting instructions by telephone, you may incur costs such as telephone access charges for which you will be responsible. The telephone
voting facilities will close at 11:59 p.m., Eastern Daylight Savings Time, the day before the meeting date.
By Internet
– Shareholders of record with internet
access may submit proxies by following the internet voting instructions on their Proxy Cards. Most shareholders who hold shares
beneficially in street name may provide voting instructions by accessing the website specified on the voting instruction form provided
by their brokers, banks or nominees.
Please check the voting instruction form for internet voting availability.
Please be aware that if you vote over the internet, you may incur costs such as internet access charges for which you will be responsible.
The internet voting facilities will close at 11:59 p.m., Eastern Daylight Time, the day before the meeting date.
In Person at the Meeting
– Shares held in your name
as the shareholder of record may be voted at the Meeting. Shares held beneficially in street name may be voted in person only if
you obtain a legal proxy from the broker, bank or nominee that holds your shares giving you the right to vote the shares.
Even if you plan to attend the Meeting, we recommend that you also submit your proxy or voting instructions or vote by telephone
or the internet so that your vote will be counted if you later decide not to attend the meeting
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Shareholders who execute the enclosed Proxy Card retain the right
to revoke such proxies at any time prior to voting. Unless so revoked, the shares represented by properly executed proxies will
be voted at the Meeting and all adjournments thereof. Proxies may be revoked at any time prior to exercise by written notice to
the Secretary of the Company or by the filing of a properly executed, later-dated proxy. A proxy will not be voted if a shareholder
attends the Meeting and votes in person. The presence of a shareholder at the Meeting alone will not revoke such shareholder’s
proxy. Shareholders have no dissenters’ or appraisal rights in connection with the Proposal described herein.
PURPOSE OF MEETING
At the Meeting, you will be asked
to vote on the following proposal:
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To approve a proposal to authorize the Company to sell shares of its common stock, par value $0.02 per share (“Common
Shares”), at a price below the then current net asset value per share of such Common Shares in one or multiple offerings,
subject to certain limitations described in this Proxy Statement (including that the number of shares sold on any given date does
not exceed 20% of its outstanding Common Shares immediately prior to such sale) (the “Proposal”).
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QUORUM REQUIRED
A quorum must be present at the Meeting for any business
to be conducted. The presence at the Meeting, in person or by proxy, of holders of a majority of the shares of Common Shares of
the Company outstanding on the Record Date will constitute a quorum. Abstentions and broker non-votes will be deemed to be present
for the purpose of determining a quorum for the Meeting.
If there are not enough votes for
a quorum, the Chairman of the Meeting may adjourn the Meeting to permit the further solicitation of proxies.
VOTE REQUIRED
Approval of the Proposal requires the affirmative vote
of: (i) a majority of outstanding Common Shares entitled to vote at the Meeting; and (ii) a majority of the outstanding
Common Shares entitled to vote at the Meeting which are not held by affiliated persons of the Company.
For purposes of this proposal, the Investment Company
Act of 1940, as amended (the “1940 Act”), defines “a majority of the outstanding shares” as: (1) 67% or
more of the voting securities present at the Meeting if the holders of more than 50% of the outstanding voting securities of the
Company are present or represented by proxy; or (2) more than 50% of the outstanding voting securities of the Company, whichever
is less. Abstentions and broker non-votes will have the effect of a vote against this proposal.
If there are not enough Common Shares represented at
the Meeting for votes to approve the proposal at the Meeting, the Chairman of the Meeting may adjourn the Meeting to permit the
further solicitation of proxies.
BROKER NON-VOTES
If a shareholder of the Company does not vote in person
at the Meeting or does not submit voting instructions to its broker, bank or nominee, the broker, bank or other nominee will not
be permitted to vote the shareholder’s shares on non-routine proposals. The Proposal is considered a non-routine proposal.
As a result, if you hold Common Shares in street name through a broker, your broker will
not be permitted to exercise voting discretion with respect to the Proposal. Thus, if you do not vote or give your broker specific
instructions on how to vote for you, your broker cannot vote with respect to the Proposal. While broker non-votes would have
the effect of a vote “against” the Proposal, we do not expect many, if any, broker non-votes at the Meeting because
there are no routine proposals to be voted on at the Meeting.
VOTING AND REVOCATION OF PROXIES
Proxies solicited by the Board of Directors of the Company will
be voted in accordance with the direction given therein. If any other matters are properly brought before the Meeting as to which
proxies confer discretionary authority, the persons named in the proxy will vote the shares represented thereby on such matters
as determined by a majority of the Board of Directors. The proxies solicited by the Board of Directors confer discretionary authority
on the persons named therein to vote with respect to matters incident to the conduct of the Meeting and with respect to any other
matter presented at the Meeting if notice of such matter has not been delivered to the Company within a reasonable time before
the date of this Proxy Statement.
Proxies
for the Meeting
The named proxies for the Meeting are Michael
A. Schwartz and Barry Sloane (or their duly authorized designees), who will follow submitted proxy voting instructions. They will
vote as the Board recommends herein as to any submitted proxies that do not direct how to vote on any item, and will vote on any
other matters properly presented at the Meeting in their judgment.
VOTING SECURITIES
The securities which can be voted at the Meeting
consist of the Company’s common stock, $0.02 par value per share (“Common Shares”). Shareholders of record as
of the close of business on June 9, 2017 (the “Record Date”) are entitled to one vote for each Common Share then held
on all matters. As of the Record Date, 17,432,330 Common Shares were issued and outstanding.
Persons and groups owning in excess of 5%
of Company’s Common Shares are required to file certain reports regarding such ownership with the Securities and Exchange
Commission (“SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table
sets forth, as of June 9, 2017, the beneficial ownership of each current director, the Company’s executive officers, each
person known to us to beneficially own 5% or more of the outstanding Common Shares, and the executive officers and directors as
a group. The percentage of beneficial ownership is based on 17,432,330 shares of
Common Shares outstanding as of June 9, 2017.
Beneficial ownership
is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Ownership
information for those persons who beneficially own 5% or more of our Common Shares is based upon filings by such persons with the
SEC and other information obtained from such persons, if available.
Unless otherwise indicated,
the Company believes that each beneficial owner set forth in the table has sole voting and investment power and has the same address
as the Company. The Company’s directors are divided into two groups—interested directors and independent directors.
Interested directors are “interested persons” of the Company as defined in Section 2(a)(19) of the Investment
Company Act of 1940, as amended (the “1940 Act”). Unless otherwise indicated, the addresses of all executive
officers and directors are c/o Newtek Business Services Corp., 1981 Marcus Avenue, Suite 130, Lake Success, New York 11042.
Name of Beneficial Owner
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Number of Shares
Beneficially Owned
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Percent of Class
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Interested Directors:
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Barry Sloane
(1)
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1,001,704
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5.8
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%
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Peter Downs
(2)
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21,644
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*
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Independent Directors:
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Gregory Zink
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7,189
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*
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Salvatore Mulia
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65,163
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*
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Richard Salute
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5,934
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*
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Executive Officers:
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Jennifer Eddelson
(3)
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36,304
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*
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Michael Schwartz
(4)
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11,037
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*
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John Raven
(5)
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3,560
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*
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Nilesh Joshi
(6)
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2,898
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All current directors and executive officers as a group (9 persons)
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1,155,433
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6.6
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%
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Less than 1% of total Common Shares outstanding as of
the Record Date.
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(1)
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Includes 28,471 shares of restricted common stock.
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(2)
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Includes 7,117 shares of restricted common stock.
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(3)
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Includes 7,117 shares of restricted common stock.
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(4)
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Includes 7,117 shares of restricted common stock.
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(5)
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Includes 3,558 shares of restricted common stock.
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(6)
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Includes 1,779 shares of restricted common stock.
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Dollar Range of Equity Securities in the Company Beneficially
Owned by Each Director:
Name of Director
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Dollar Range of
Equity Securities in Newtek
Business Services Corp. (1)(2)
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Interested
Directors:
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Barry Sloane
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Over
$100,000
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Peter Downs
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Over
$100,000
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Independent
Directors:
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Richard Salute
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$50,000
- $100,000
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Salvatore Mulia
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Over
$100,000
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Gregory Zink
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Over
$100,000
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(1)
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Dollar ranges are as follows: None, $1-10,000, $10,001-$50,000, $50,001-$100,000, or Over $100,000.
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(2)
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The dollar range of equity securities beneficially owned is
based on the closing price for our Common Shares of $16.40 on June 16, 2017 on the Nasdaq
Global Market. Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act.
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PROPOSAL – AUTHORIZATION FOR THE COMPANY
TO SELL ITS COMMON STOCK, PAR VALUE $0.02 PER SHARE, (“COMMON SHARES”) AT A PRICE BELOW THE COMPANY’S THEN CURRENT
NET ASSET VALUE PER SHARE IN ONE OR MULTIPLE OFFERINGS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THIS PROPOSAL
(including that the cumulative number of COMMON shares sold does not exceed 20% of its then outstanding common SHARES immediately
prior to each such sale)
Under the 1940 Act, the Company, as a business
development company (“BDC”), may not sell its Common Shares at a price below the then current net asset value (“NAV”),
exclusive of sales compensation, unless its shareholders approve such a sale and our Board of Directors makes certain determinations.
We are seeking the authorization of our shareholders so that we may, in one or multiple public or private offerings, sell or otherwise
issue Common Shares at a price below our then current NAV, subject to certain conditions discussed below. Our Board of Directors
believes that having the flexibility to sell our Common Shares below NAV in certain instances is in the best interests of shareholders.
While
we have been able to access the capital necessary to finance our investment activities, capital may not be available to us on favorable
terms, or at all, in light of the inherent uncertainty and volatility of the financial markets. To capitalize on these investment
opportunities as they arise, we need to be able to maintain consistent access to capital.
Flexibility to sell our Common
Shares below NAV will provide us with better access to the capital markets as attractive investment opportunities arise, and improve
our ability to grow over time and pay dividends to shareholders. Accordingly, even when our Common Shares trade at a market price
below NAV, this Proposal would permit us to offer and sell our Common Shares in accordance with pricing standards that
market conditions generally require, subject to the conditions described below in connection with any offering undertaken pursuant
to this Proposal. If approved, as required under the 1940 Act, the authorization would be effective for securities sold during
a period beginning on the date of such shareholder approval and expiring on the earlier of the one year anniversary of the date
of the Meeting, or the date of our 2018 Annual Meeting of Shareholders.
We did not sell our Common Shares below
NAV during the previous twelve months, and have no immediate plans to sell our Common Shares below NAV. However, we are seeking
shareholder approval for multiple such offerings in order to maintain access to the markets if the Board of Directors determines
that we should sell Common Shares below NAV. These sales typically must be undertaken quickly. The final terms of any such sale
will be determined by the Board of Directors at the time of sale, and it is impracticable to describe the transaction or transactions
in which our Common Shares would be sold at a price below NAV. Instead, any transaction where we sell such Common Shares, including
the nature and amount of consideration that we would receive at the time of sale and the use of any such consideration, will be
reviewed and approved by the Board of Directors at the time of sale.
Subject to the condition that the cumulative
number of Common Shares sold on any given date does not exceed 20% of its then outstanding Common Shares immediately prior to each
such sale, there will be no limit on the percentage below NAV at which our Common Shares may be sold in an offering by the Company
under this Proposal. If this Proposal is approved, no further authorization from the shareholders will be solicited prior to any
such sale in accordance with the terms of this Proposal.
THE BOARD BELIEVES THAT A VOTE “FOR”
THE PROPOSAL TO AUTHORIZE THE COMPANY TO SELL ITS COMMON SHARES AT A PRICE OR PRICES BELOW THE COMPANY’S THEN CURRENT NET
ASSET VALUE PER SHARE IN ONE OR MULTIPLE OFFERINGS AS DESCRIBED HEREIN IS IN THE BEST INTERESTS OF OUR SHAREHOLDERS AND RECOMMENDS
A VOTE “FOR” THE PROPOSAL.
Conditions for Sales below NAV
A BDC’s ability to issue shares of its
common stock at a price below NAV is governed by the 1940 Act. If shareholders approve this Proposal, we will only sell Company
Shares at a price below NAV if the following conditions are met:
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a majority of the Company’s directors who are not “interested persons” of the Company as defined in the 1940
Act, and who have no financial interest in the sale, shall have approved the sale and determined that it is in the best interests
of the Company and its shareholders;
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a majority of such directors, who are not interested persons of the Company, in consultation with the underwriter or underwriters
of the offering if it is to be underwritten, have determined in good faith, and as of a time immediately prior to the first solicitation
by or on behalf of the Company of firm commitments to purchase such securities or immediately prior to the issuance of such securities,
that the price at which such securities are to be sold is not less than a price which closely approximates the market value of
those securities, less any underwriting commission or discount; and the cumulative number of shares sold on any given date does not exceed 20% of the Company’s then outstanding Common Shares
immediately prior to each such sale.
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Board of Directors Approval
On June 7, 2017, the Company’s Board of
Directors, including a majority of the non-interested directors who have no financial interest in this Proposal, approved this
Proposal as in the best interests of the Company and its shareholders and is recommending that the Company’s shareholders
vote in favor of this Proposal to offer and sell the Company’s Common Shares at prices that may be less than NAV. In evaluating
this Proposal, the Company’s Board of Directors, including the non-interested directors, considered and evaluated factors
including the following, as discussed more fully below:
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possible long-term benefits to the Company’s shareholders; and
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possible dilution to the Company’s NAV.
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Prior to approving this Proposal, the Company’s
Board of Directors met to consider and evaluate material that our management provided on the merits of our possibly raising additional
capital and the merits of publicly offering Common Shares at a price below NAV. The Company’s Board of Directors considered
the objectives of a possible offering, the mechanics of an offering, establishing size parameters for an offering, the possible
effects of dilution, Common Shares trading volume, and other matters, including that the Company’s Common Shares have frequently
traded both above and below NAV in recent quarters. The Board of Directors evaluated a full range of offering sizes. However, the
Board of Directors has not yet drawn any definite conclusions regarding the size of the any contemplated capital raises at this
time, to the extent the Company’s Common Shares may trade below NAV. In determining whether or not to offer and sell Common
Shares, including below NAV, the Board of Directors has a duty to act in the Company’s best interests and its shareholders
and must comply with the other requirements of the 1940 Act.
Reasons to Offer Common Shares Below NAV
While the Company has not sold its Common
Shares below NAV during the previous twelve months, our Board of Directors believes that having the flexibility for the Company to
sell its Common Shares below NAV in certain instances is in the Company’s best interests and the best interests of its shareholders.
Such flexibility will enhance our ability to expand our business finance platform. After any proposed offering of Common Shares,
if we were unable to access the capital markets when attractive investment opportunities arise, our ability to grow over time
and to continue to pay dividends to shareholders could be adversely affected. In reaching that conclusion, our Board of Directors
considered the following possible benefits to its shareholders:
Current Market Conditions Have Created Attractive Opportunities
Current market opportunities have created, and
we believe will continue to create for the foreseeable future, favorable opportunities to invest, including opportunities that,
all else being equal, may increase the Company’s NAV over the longer-term, even if financed with the issuance of Common Shares
below NAV. Shareholder approval of this Proposal, subject to the conditions detailed below, is expected to provide the Company
with the flexibility to expand its business finance platform and invest in the attractive opportunities we believe are presented
by current market conditions.
Market conditions also have beneficial effects
for capital providers, including reduced competition, more favorable pricing of credit risk, more conservative capital structures
and more creditor-friendly contractual terms. Accordingly, we believe that the Company could benefit from access to capital in
this constrained credit market and that the current environment should provide attractive investment opportunities. Our ability
to take advantage of these opportunities will depend upon its continued access to capital.
Greater Investment Opportunities Due to Larger Capital Resources
Our Board of Directors believes that additional
capital raised through an offering of Common Shares may help it generate additional deal flow. Based on discussions with management,
the Company’s Board of Directors believes that greater deal flow, which may be achieved with more capital, would enable the
Company to be a more significant participant in the private debt and equity markets and to compete more effectively for attractive
investment opportunities. Management has represented to the Company’s Board of Directors that such investment opportunities
may be funded with proceeds of future offerings of Common Shares. However, management has not identified specific companies in
which to invest the proceeds of an offering given that specific investment opportunities will change depending on the timing of
any offering.
Higher Market Capitalization and Liquidity May Make the Company’s
Common Shares More Attractive to Investors
If the Company issues Common Shares, its market
capitalization and the amount of its publicly tradable Common Shares will increase, which may afford all holders of its Common
Shares greater liquidity. A larger market capitalization may make the Company’s stock more attractive to a larger number
of investors who have limitations of the size of companies in which they invest. Furthermore, a larger number of Common Shares
outstanding may increase the Company’s trading volume, which could decrease the volatility in the secondary market price
of its Common Shares.
Initiation and Possible Increase of Dividends
A larger and more diversified portfolio could provide the Company
with more consistent cash flow, which may support the growth of its dividend.
Reduced Expenses Per Share
An offering that increases the Company’s
total assets may reduce its expenses per share due to the spreading of fixed expenses over a larger asset base. The Company must
bear certain fixed expenses, such as certain administrative, governance and compliance costs that do not generally vary based on
its size. On a per share basis, these fixed expenses will be reduced when supported by a larger asset base.
Status as a BDC and RIC and Maintaining a Favorable Debt-to-Equity
Ratio
As a BDC, and as a Company that has elected
to be treated as a RIC for tax purposes beginning with our tax year ended December 31, 2015, the Company is dependent on its ability
to raise capital through the sale of Common Shares. RICs generally must distribute substantially all of their earnings from dividends,
interest and short-term gains to shareholders as dividends in order to achieve tax treatment as a RIC, which prevents the Company
from using those earnings to support new investments. Further, in order to borrow money or issue preferred stock, BDCs must maintain
a debt-to-equity ratio of not more than 1-for-2, which requires the Company to finance its investments with at least twice as much
common equity as debt and preferred stock in the aggregate. Therefore, to continue to build the Company’s investment portfolio,
and thereby support maintenance and growth of the Company’s dividends, the Company will endeavor to maintain consistent access
to capital through the public and private equity markets to enable it to take advantage of investment opportunities as they arise.
Exceeding the required 1-for-2 debt-to-equity
ratio would have severe negative consequences for a BDC, including an inability to pay dividends, possible breaches of debt covenants
and a possible failure to qualify for tax treatment as a RIC. Although the Company does not currently expect that it will exceed
the required 1-for-2 debt-to-equity ratio, the markets the Company operates in and the general economy remain volatile and uncertain.
Even though the underlying performance of a particular portfolio company may not indicate impairment or an inability to repay indebtedness
in full, the volatility in the debt capital markets may continue to impact the valuations of debt investments negatively and result
in further unrealized write-downs of debt investments. Any such asset write-downs, as well as unrealized write-downs based on
the underlying performance of the Company’s portfolio companies, if any, will negatively impact its shareholders’ equity
and the resulting debt-to-equity ratio. Issuing new equity will improve the Company’s debt-to-equity ratio. In addition to
meeting legal requirements applicable to BDCs, having a more favorable debt-to-equity ratio will also generally strengthen the
Company’s balance sheet and give it more flexibility in its operations.
As of March 31, 2017 the Company’s
asset coverage ratio was 241%.
Trading History
Shares of BDCs may trade at a market price that
is less than the value of the net assets attributable to those shares. The possibility that the Company’s Common Shares will
trade at a discount from NAV, or at premiums that are unsustainable over the long term, are separate and distinct from
the risk that the Company’s NAV will decrease. Shares of the Company’s Common Shares have traded at a price
both above and below their NAV since they began trading on the Nasdaq Global Market. It is not possible to predict whether the
Company’s Common Shares will trade at, above, or below NAV. The following table sets forth, for the two most
recent fiscal years and the current fiscal year, the range of high and low sales prices of our Common Shares as reported on the
Nasdaq Global Market, our NAV per share, the premium (discount) of high sales price to NAV and the premium (discount) of low sales
price to NAV:
|
|
Price
Range
|
|
|
|
|
|
Premium
(Discount)
of
High Sales
Price to
NAV
(2)
|
|
|
Premium
(Discount)
of
Low Sales
Price to
NAV
(2)
|
|
Period
|
|
High
|
|
|
Low
|
|
|
NAV
(1)
|
|
|
|
|
|
|
|
First Quarter: January 1, 2015
Through March 31, 2015
|
|
$
|
19.95
|
|
|
$
|
14.06
|
|
|
$
|
16.61
|
|
|
|
20
|
%
|
|
|
(15
|
)%
|
Second Quarter: April 1, 2015
Through June 30, 2015
|
|
$
|
18.85
|
|
|
$
|
16.42
|
|
|
$
|
16.62
|
|
|
|
13
|
%
|
|
|
(1
|
)%
|
Third Quarter: July 1, 2015
Through September 30, 2015
|
|
$
|
19.82
|
|
|
$
|
14.66
|
|
|
$
|
16.88
|
|
|
|
17
|
%
|
|
|
(13
|
)%
|
Fourth Quarter: October 1, 2015
Through December 31, 2015
|
|
$
|
19.18
|
|
|
$
|
12.80
|
|
|
$
|
14.60
|
|
|
|
36
|
%
|
|
|
(9
|
)%
|
First Quarter: January 1, 2016
Through March 31, 2016
|
|
$
|
14.51
|
|
|
$
|
9.37
|
|
|
$
|
14.10
|
|
|
|
3
|
%
|
|
|
(34
|
)%
|
Second Quarter: April 1, 2016
Through June 30, 2016
|
|
$
|
13.36
|
|
|
$
|
11.83
|
|
|
$
|
14.11
|
|
|
|
(5
|
)%
|
|
|
(16
|
)%
|
Third Quarter: July 1, 2016
Through September 30, 2016
|
|
$
|
14.44
|
|
|
$
|
12.26
|
|
|
$
|
14.26
|
|
|
|
1
|
%
|
|
|
(14
|
)%
|
Fourth Quarter: October 1, 2016
Through December 31, 2016
|
|
$
|
16.09
|
|
|
$
|
13.76
|
|
|
$
|
14.30
|
|
|
|
13
|
%
|
|
|
(4
|
)%
|
First Quarter: January 1, 2017
Through March 31, 2017
|
|
$
|
17.58
|
|
|
$
|
15.15
|
|
|
$
|
14.31
|
|
|
|
23
|
%
|
|
|
6
|
%
|
Second Quarter: April 1, 2017
Through June 16, 2017
|
|
$
|
18.00
|
|
|
$
|
15.68
|
|
|
$
|
*
|
|
|
|
*
|
%
|
|
|
*
|
%
|
|
(1)
|
NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the NAV
per share on the date of the high and low sales prices. The values reflect shareholders’ equity per share/NAV and are based on outstanding shares at the end of each period.
|
|
(2)
|
Calculated as the respective high or low sales price less NAV or shareholders’
equity per share, as applicable, divided by NAV or shareholders’ equity per share, as applicable and subtracting
1.
|
|
*
|
Not determinable at time of filing.
|
Key Shareholder Considerations
Dilution
Before voting on this Proposal or giving proxies with regard to
this matter, shareholders should consider the potentially dilutive effect of the issuance of the Company’s Common Shares
at a price that is less than the NAV per share and the expenses associated with such issuance on the NAV per outstanding Common
Shares. Any sale of Common Shares at a price below NAV would result in an immediate dilution to existing common shareholders. This
dilution would include reduction in the NAV per share as a result of the issuance of shares at a price below the NAV per share
and a disproportionately greater decrease in a shareholder’s interest in the earnings and assets of the Company and voting
interest in the Company than the increase in the assets of the Company resulting from such issuance. Subject to the condition that
the cumulative number of shares sold on any given date does not exceed 20% of its then outstanding Common Shares immediately prior
to each such sale, there will be no limit on the percentage below NAV at which shares may be sold in an offering by the Company
under this Proposal. The Board of Directors of the Company will consider the potential dilutive effect of the issuance of Common
Shares at a price below the NAV per share and will consider again such dilutive effect when considering whether to authorize any
specific issuance of Common Shares below NAV.
In addition, shareholders should consider the risk that the
approval of this Proposal could cause the market price of the Company’s Common Shares to decline in anticipation of
sales of its Common Shares below NAV, thus causing the Company’s Common Shares to trade at a discount to NAV. The 1940
Act establishes a connection between common share sale price and NAV because, when common shares are sold at a sale
price below NAV per share, the resulting increase in the number of outstanding shares reduces NAV per share. Shareholders
should also consider that they will have no subscription, preferential or preemptive rights to additional Common Shares
proposed to be authorized for issuance, and thus any future issuance of Common Shares will dilute such shareholders’
holdings of Common Shares as a percentage of the Company’s Common Shares outstanding to the extent shareholders do
not purchase sufficient Common Shares in the offering or otherwise to maintain their percentage interest. Further, if
current shareholders of the Company do not purchase any Common Shares to maintain their percentage interest, regardless of
whether such offering is above or below the then-current NAV, their voting power will be diluted.
The precise extent of any such dilution cannot be estimated before
the terms of a Common Share offering are set. As a general proposition, however, the amount of potential dilution will increase
as the size of the offering increases. Another factor that will influence the amount of dilution in an offering is the amount of
net proceeds that we receive from such offering. The Board of Directors would expect that the net proceeds to us will be equal
to the price that investors pay per share less the amount of any underwriting discounts and commissions.
As discussed above, it should be noted that the cumulative number
of shares sold from an offering of Company’s Common Shares will not exceed 20% of its then outstanding Common Shares immediately
prior to each such sale.
The tables below provide hypothetical examples of the impact that
an offering at a price less than NAV per share may have on the NAV per share of shareholders and investors
who do and do not participate in such an offering. However, the tables below do not show, nor are they intended to show, any potential
changes in market price that may occur from an offering at a price less than NAV per share and it is not possible to
predict any potential market price change that may occur from such an offering.
Impact on Existing Shareholders Who Do Not Participate
in an Offering of Common Shares
Our existing shareholders who do not participate in an offering
below NAV per share or who do not buy additional shares of common stock in the secondary market at the same or lower
price we obtain in the offering (after expenses and commissions) face the greatest potential risk of an immediate decrease (often
called dilution) in the NAV of the shares of common stock they hold and their NAV per share. These shareholders
will also experience a disproportionately greater decrease in their participation in our earnings and assets and their voting power
than the increase we will experience in our assets, potential earning power and voting interests due to the offering. These shareholders
may also experience a decline in the market price of their shares of common stock, which often reflects to some degree announced
or potential increases and decreases in NAV per share. This decrease could be more pronounced as the size of the offering
and level of discounts increases.
The following chart illustrates the level of NAV dilution
that would be experienced by a nonparticipating shareholder in three different hypothetical offerings of different sizes and levels
of discount from NAV per share. It is not possible to predict the level of market price decline that may occur.
The examples assume that the issuer has 17,220,166 shares
of common stock outstanding, $443,311,000 in total assets and $196,947,000 in total liabilities. The current NAV and NAV
per share are thus $246,364,000 and $14.31. The chart illustrates the dilutive effect on Shareholder A of (1) an offering of 861,008
shares of common stock (5% of the outstanding shares of common stock) at $13.59 per share after offering expenses and commission
(a 5% discount from NAV), (2) an offering of 1,722,017 shares of common stock (10% of the outstanding shares of common
stock) at $12.88 per share after offering expenses and commissions (a 10% discount from NAV), (3) an offering of 3,444,033
shares of common stock (20% of the outstanding shares of common stock) at $11.45 per share after offering expenses and commissions
(a 20% discount from NAV) and (4) an offering of 3,444,033 shares of common stock (20% of the outstanding shares of
common stock) at $0.02 per share after offering expenses and commissions (a 100% discount from NAV).
|
|
|
|
|
Example
1 5%
Offering at 5%
Discount
|
|
|
Example
2 10%
Offering at 10%
Discount
|
|
|
Example
3 20%
Offering at 20%
Discount
|
|
|
Example
4 20%
Offering at 100%
Discount
|
|
Prior to
Sale
Below NAV
|
|
Prior
to
Sale
|
|
|
Following
Sale
|
|
|
%
Change
|
|
|
Following
Sale
|
|
|
%
Change
|
|
|
Following
Sale
|
|
|
%
Change
|
|
|
Following
Sale
|
|
|
%
Change
|
|
Offering Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price per Share to Public
|
|
|
-
|
|
|
$
|
14.31
|
|
|
|
-
|
|
|
$
|
13.56
|
|
|
|
-
|
|
|
$
|
12.05
|
|
|
|
-
|
|
|
$
|
0.02
|
|
|
|
-
|
|
Net Proceeds per Share to Issuer
|
|
|
-
|
|
|
$
|
13.59
|
|
|
|
-
|
|
|
$
|
12.88
|
|
|
|
-
|
|
|
$
|
11.45
|
|
|
|
-
|
|
|
$
|
0.02
|
|
|
|
-
|
|
Decrease
to Net Asset Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shares Outstanding
|
|
|
17,220,166
|
|
|
|
18,081,174
|
|
|
|
5.00
|
%
|
|
|
18,942,183
|
|
|
|
10.00
|
%
|
|
|
20,664,199
|
|
|
|
20.00
|
%
|
|
|
20,664,199
|
|
|
|
20.00
|
%
|
Net Asset Value per Share
|
|
$
|
14.31
|
|
|
$
|
14.27
|
|
|
|
-0.26
|
%
|
|
$
|
14.18
|
|
|
|
-0.93
|
%
|
|
$
|
13.83
|
|
|
|
-3.35
|
%
|
|
$
|
11.93
|
|
|
|
-16.66
|
%
|
Dilution
to Nonparticipating Stockholder
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Held by Stockholder A
|
|
|
172,202
|
|
|
|
172,202
|
|
|
|
-
|
|
|
|
172,202
|
|
|
|
-
|
|
|
|
172,202
|
|
|
|
-
|
|
|
|
172,202
|
|
|
|
-
|
|
Percentage Held by Stockholder A
|
|
|
1.00
|
%
|
|
|
0.95
|
%
|
|
|
-4.76
|
%
|
|
|
0.91
|
%
|
|
|
-9.09
|
%
|
|
|
0.83
|
%
|
|
|
-16.67
|
%
|
|
|
0.83
|
%
|
|
|
-16.67
|
%
|
Total Net Asset Value Held by Stockholder A
|
|
$
|
2,464,206
|
|
|
$
|
2,457,800
|
|
|
|
-0.26
|
%
|
|
$
|
2,441,290
|
|
|
|
-0.93
|
%
|
|
$
|
2,381,594
|
|
|
|
-3.35
|
%
|
|
$
|
2,053,607
|
|
|
|
-16.66
|
%
|
Total Investment by Stockholder A (Assumed to be
$14.31 per Share)
|
|
$
|
2,464,206
|
|
|
$
|
2,464,206
|
|
|
|
-
|
|
|
$
|
2,464,206
|
|
|
|
-
|
|
|
$
|
2,464,206
|
|
|
|
-
|
|
|
$
|
2,464,206
|
|
|
|
-
|
|
Total Dilution to Stockholder A (Total Net Asset
Value Less Total Investment)
|
|
|
-
|
|
|
$
|
(6,406
|
)
|
|
|
-
|
|
|
$
|
(22,916
|
)
|
|
|
-
|
|
|
$
|
(82,612
|
)
|
|
|
-
|
|
|
$
|
(410,598
|
)
|
|
|
-
|
|
Net Asset Value per Share Held by Stockholder A
|
|
$
|
14.31
|
|
|
$
|
14.27
|
|
|
|
-
|
|
|
$
|
14.18
|
|
|
|
-
|
|
|
$
|
13.83
|
|
|
|
-
|
|
|
$
|
11.93
|
|
|
|
-
|
|
Investment per Share Held by Stockholder A (Assumed
to be $14.31 per Share on Shares Held Prior to Sale)
|
|
$
|
14.31
|
|
|
$
|
14.31
|
|
|
|
-
|
|
|
$
|
14.31
|
|
|
|
-
|
|
|
$
|
14.31
|
|
|
|
-
|
|
|
$
|
14.31
|
|
|
|
-
|
|
Dilution per Share Held by Stockholder A (Net Asset
Value per Share Less Investment per Share)
|
|
|
-
|
|
|
$
|
(0.03
|
)
|
|
|
-
|
|
|
$
|
(0.13
|
)
|
|
|
-
|
|
|
$
|
(0.48
|
)
|
|
|
-
|
|
|
$
|
(2.38
|
)
|
|
|
-
|
|
Percentage Dilution to Stockholder A (Dilution
per Share Divided by Investment per Share)
|
|
|
-
|
|
|
|
-
|
|
|
|
-0.26
|
%
|
|
|
|
|
|
|
-0.93
|
%
|
|
|
|
|
|
|
-3.35
|
%
|
|
|
|
|
|
|
-16.66
|
%
|
Impact on Existing Shareholders Who Do Participate
in an Offering of Common Shares
Our existing shareholders who participate in
an offering below NAV per share or who buy additional Common Shares in the secondary market at the same or
lower price as we obtain in the offering (after expenses and commissions) will experience the same types of NAV dilution
as the nonparticipating shareholders, albeit at a lower level, to the extent they purchase less than the same percentage of the
discounted offering as their interest in our Common Shares immediately prior to the offering. The level of NAV
dilution will decrease as the number of Common Shares such shareholders purchase increases. Existing shareholders who
buy more than such percentage will experience NAV dilution on their existing shares but will, in contrast to existing
shareholders who purchase less than their proportionate share of the offering, experience an increase (often called accretion)
in average NAV per share over their investment per share and will also experience a disproportionately greater increase
in their participation in our earnings and assets and their voting power than our increase in assets, potential earning power and
voting interests due to the offering. The level of accretion will increase as the excess number of Common Shares such
shareholders purchases increases. Even a shareholder who over-participates will, however, be subject to the risk that we may make
additional discounted offerings in which such shareholder does not participate, in which case such a shareholder will experience
NAV dilution as described above in such subsequent offerings. These shareholders may also experience a decline in the
market price of their Common Shares, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering and level of discounts increases.
The following chart illustrates the level
of dilution and accretion in the hypothetical 20% discount offering from the prior chart for a shareholder that acquires
Common Shares equal to (1) 50% of its proportionate share of the offering (i.e., 17,220,000 Common Shares, which is
0.5% of an offering of 3,444,033 Common Shares) rather than its 1.00% proportionate share and (2) 150% of such
percentage (i.e. 51,660 Common Shares, which is 1.5% of an offering of 3,444,033 Common Shares rather than
its 0.10% proportionate share). It is not possible to predict the level of market price decline that may occur.
|
|
|
|
|
50% Participation
|
|
|
150% Participation
|
|
Prior to Sale Below NAV
|
|
Prior to Sale
|
|
|
Following Sale
|
|
|
% Change
|
|
|
Following Sale
|
|
|
% Change
|
|
Offering Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price per Share to Public
|
|
|
-
|
|
|
$
|
12.05
|
|
|
|
-
|
|
|
$
|
12.05
|
|
|
|
-
|
|
Net Proceeds per Share to Issuer
|
|
|
-
|
|
|
$
|
11.45
|
|
|
|
-
|
|
|
$
|
11.45
|
|
|
|
-
|
|
Decrease/Increase to Net Asset Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shares Outstanding
|
|
|
17,220,166
|
|
|
|
20,664,199
|
|
|
|
20.00
|
%
|
|
|
20,664,199
|
|
|
|
20.00
|
%
|
Net Asset Value per Share
|
|
$
|
14.31
|
|
|
$
|
13.83
|
|
|
|
-3.35
|
%
|
|
$
|
13.83
|
|
|
|
-3.35
|
%
|
Dilution/Accretion to Participating Stockholder
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Held by Stockholder A
|
|
|
172,202
|
|
|
|
189,422
|
|
|
|
10.00
|
%
|
|
|
223,862
|
|
|
|
30.00
|
%
|
Percentage Held by Stockholder A
|
|
|
1.00
|
%
|
|
|
0.92
|
%
|
|
|
-8.33
|
%
|
|
|
1.08
|
%
|
|
|
8.33
|
%
|
Total Net Asset Value Held by Stockholder A
|
|
$
|
2,464,206
|
|
|
$
|
2,619,754
|
|
|
|
6.31
|
%
|
|
$
|
3,096,072
|
|
|
|
25.64
|
%
|
Total Investment by Stockholder A (Assumed to be $14.31 per Share)
|
|
|
-
|
|
|
$
|
2,671,718
|
|
|
|
-
|
|
|
$
|
3,086,742
|
|
|
|
-
|
|
Total Dilution/Accretion to Stockholder A (Total Net Asset Value Less Total Investment)
|
|
|
-
|
|
|
$
|
(51,964
|
)
|
|
|
-
|
|
|
$
|
9,330
|
|
|
|
-
|
|
Net Asset Value per Share held by Stockholder A
|
|
$
|
14.31
|
|
|
$
|
14.10
|
|
|
|
-1.44
|
%
|
|
$
|
13.79
|
|
|
|
-3.64
|
%
|
Investment per Share held by Stockholder A (Assumed to be $14.31 per Share on Shares Held Prior to Sale)
|
|
|
-
|
|
|
$
|
13.83
|
|
|
|
-
|
|
|
$
|
13.83
|
|
|
|
-
|
|
Dilution/Accretion per Share Held by Stockholder A (Net Asset Value per Share Less Investment per Share)
|
|
|
-
|
|
|
$
|
(0.27
|
)
|
|
|
-
|
|
|
$
|
0.04
|
|
|
|
-
|
|
Percentage Dilution to Stockholder A (Dilution/Accretion per Share Divided by Investment per Share)
|
|
|
-
|
|
|
|
-
|
|
|
|
-1.98
|
%
|
|
|
-
|
|
|
|
0.30
|
%
|
Impact on New Investors of Common Shares
Investors who are not
currently shareholders and who participate in an offering of our Common Shares below NAV but whose investment per share
is greater than the resulting NAV per share due to selling compensation and expenses paid by the issuer will experience an
immediate decrease, albeit small, in the NAV of their Common Shares and their NAV per share compared to the price
they pay for their Common Shares. Investors who are not currently shareholders and who participate in an offering
below net asset value per share and whose investment per share is also less than the resulting NAV per share due to selling
compensation and expenses paid by the issuer being significantly less than the discount per share will experience an
immediate increase in the NAV of their Common Shares and their NAV per share compared to the price they pay for
their Common Shares. These investors will experience a disproportionately greater participation in our earnings and
assets and their voting power than our increase in assets, potential earning power and voting interests. These investors
will, however, be subject to the risk that we may make additional discounted offerings in which such new shareholder does not
participate, in which case such new shareholder will experience dilution as described above in such subsequent offerings.
These investors may also experience a decline in the market price of their Common Shares, which often reflects to
some degree announced or potential increases and decreases in NAV per share. This decrease could be more pronounced as the
size of the offering and level of discounts increases.
The following chart illustrates the level of
dilution or accretion for new investors that would be experienced by a new investor in the same hypothetical 5%, 10% and 20% discounted
offerings as described in the first chart above. The illustration is for a new investor who purchases the same percentage (1.00%)
of the Common Shares in the offering as Shareholder A in the prior examples held immediately prior to the offering. It
is not possible to predict the level of market price decline that may occur.
|
|
|
|
|
Example
1 5% Offering at 5%
Discount
|
|
|
Example
2 10% Offering at 10%
Discount
|
|
|
Example
3 20% Offering at 20%
Discount
|
|
Prior to
Sale Below NAV
|
|
Prior
to Sale
|
|
|
Following
Sale
|
|
|
%
Change
|
|
|
Following
Sale
|
|
|
%
Change
|
|
|
Following
Sale
|
|
|
%
Change
|
|
Offering Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price per Share to Public
|
|
|
-
|
|
|
$
|
14.31
|
|
|
|
-
|
|
|
$
|
13.56
|
|
|
|
-
|
|
|
$
|
12.05
|
|
|
|
-
|
|
Net Proceeds per Share to Issuer
|
|
|
-
|
|
|
$
|
13.59
|
|
|
|
-
|
|
|
$
|
12.88
|
|
|
|
-
|
|
|
$
|
11.45
|
|
|
|
-
|
|
Decrease
to Net Asset Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shares Outstanding
|
|
|
17,220,166
|
|
|
|
18,081,174
|
|
|
|
5.00
|
%
|
|
|
18,942,183
|
|
|
|
10.00
|
%
|
|
|
20,664,199
|
|
|
|
20.00
|
%
|
Net Asset Value per Share
|
|
$
|
14.31
|
|
|
$
|
14.27
|
|
|
|
-0.26
|
%
|
|
$
|
14.18
|
|
|
|
-0.93
|
%
|
|
$
|
13.83
|
|
|
|
-3.35
|
%
|
Dilution/Accretion
to a New Investor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Held by Investor A
|
|
|
172,202
|
|
|
|
8,610
|
|
|
|
-
|
|
|
|
17,220
|
|
|
|
-
|
|
|
|
34,440
|
|
|
|
-
|
|
Percentage Held by Investor A
|
|
|
1.00
|
%
|
|
|
0.05
|
%
|
|
|
-
|
|
|
|
0.09
|
%
|
|
|
-
|
|
|
|
0.17
|
%
|
|
|
-
|
|
Total Net Asset Value Held by Investor A
|
|
$
|
2,464,206
|
|
|
$
|
122,890
|
|
|
|
-
|
|
|
$
|
244,129
|
|
|
|
-
|
|
|
$
|
476,319
|
|
|
|
-
|
|
Total Investment by Investor A (Assumed to be $14.31
per Share)
|
|
$
|
2,464,206
|
|
|
$
|
123,210
|
|
|
|
-
|
|
|
$
|
233,451
|
|
|
|
-
|
|
|
$
|
415,024
|
|
|
|
-
|
|
Total Dilution to Investor A (Total Net Asset Value
Less Total Investment)
|
|
|
-
|
|
|
$
|
(320
|
)
|
|
|
-
|
|
|
$
|
10,678
|
|
|
|
-
|
|
|
$
|
61,295
|
|
|
|
-
|
|
Net Asset Value per Share Held by Investor A
|
|
$
|
14.31
|
|
|
$
|
14.27
|
|
|
|
-
|
|
|
$
|
14.18
|
|
|
|
-
|
|
|
$
|
13.83
|
|
|
|
-
|
|
Investment per Share Held by Investor A (Assumed
to be $14.31 per Share on Shares Held Prior to Sale)
|
|
$
|
14.31
|
|
|
$
|
14.31
|
|
|
|
-
|
|
|
$
|
13.56
|
|
|
|
-
|
|
|
$
|
12.05
|
|
|
|
-
|
|
Dilution per Share Held by Investor A (Net Asset
Value per Share Less Investment per Share)
|
|
|
-
|
|
|
$
|
(0.04
|
)
|
|
|
-
|
|
|
$
|
0.62
|
|
|
|
-
|
|
|
$
|
1.78
|
|
|
|
-
|
|
Percentage Dilution to Investor A (Dilution per
Share Divided by Investment per Share)
|
|
|
-
|
|
|
|
-
|
|
|
|
-0.26
|
%
|
|
|
|
|
|
|
4.57
|
%
|
|
|
|
|
|
|
14.77
|
%
|
Other Considerations
In reaching its recommendation to the shareholders of the Company
to approve this Proposal, the Board of Directors considered the effect or the following factors:
|
·
|
the costs and benefits of a Common Share offering below NAV compared to other possible means for raising capital or concluding
not to raise capital;
|
|
·
|
the size of a Common Share offering in relation to the number of Shares outstanding;
|
|
·
|
the general condition of the securities markets; and
|
|
·
|
any impact on operating expenses associated with an increase in capital.
|
The Board of Directors, including a majority of the non-interested
directors who have no financial interest in this Proposal, concluded that the benefits to the shareholders from increasing our
capital base outweighed any detriment, including dilution to existing shareholders.
Required Vote
The authorization of the Company to sell Common
Shares at a price or prices below the Company’s then current NAV per share in one or multiple offerings will
require the affirmative vote of (1) a majority of the outstanding Common Shares entitled to vote at the Meeting; and (2) a
majority of the outstanding Common Shares entitled to vote at the Meeting that are not held by affiliated persons of us, which
includes our officers, directors, employees and 5% shareholders. Because we are regulated as a BDC under the 1940 Act, the 1940
Act definition of “a majority of the outstanding shares” must be used for purposes of this proposal. Under the 1940
Act, “a majority of the outstanding shares” is defined as the lesser of: (i) 67% or more of the voting securities present
at the Meeting if the holders of more than 50% of our outstanding voting securities are present or represented by proxy; or (ii)
more than 50% of our outstanding voting securities. Abstentions and Broker Non-Votes will have the effect of a vote against this
proposal.
THE BOARD BELIEVES THAT A VOTE “FOR” THE PROPOSAL
TO AUTHORIZE THE COMPANY TO SELL ITS COMMON SHARES AT A PRICE OR PRICES BELOW THE COMPANY’S THEN CURRENT NET ASSET
VALUE PER SHARE IN ONE OR MULTIPLE OFFERINGS AS DESCRIBED ABOVE IS IN THE BEST INTERESTS OF OUR SHAREHOLDERS AND RECOMMENDS A VOTE
“FOR” THE PROPOSAL.
OTHER MATTERS
The Board of Directors is not aware of any business to come before
the Meeting other than the matter described above in this Proxy Statement and matters incident to the conduct of the Meeting. Properly
executed proxies in the accompanying form that have not been revoked confer discretionary authority on the persons named therein
to vote at the direction of a majority of the Board of Directors on any other matters presented at the Meeting. Under SEC rules,
if a shareholder does not notify the Company within a reasonable time before the date of this Proxy Statement of such shareholder’s
intent to present a proposal at the Meeting, the persons named in the accompanying proxy may exercise such discretionary voting
authority if the proposal is raised at the Meeting, without any discussion of the matter in this Proxy Statement.
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS
FOR THE SPECIAL MEETING TO BE HELD ON JULY
26, 2017
The Proxy Statement, the Proxy Card and the
accompanying Notice of Special Meeting of Shareholders are available at the website: http://www.astproxyportal.com/ast/98633/.
ADDITIONAL INFORMATION
We file quarterly and current reports, Proxy Statements and other
information with the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may read and copy any reports, statements or other
information we file at the SEC’s Public Reference Room in Washington, D.C. 20549. Please call the SEC at (800) SEC-0330
for further information on the Public Reference Room. Our SEC filings are also available to the public from commercial document
retrieval services and on the web site maintained by the SEC at www.sec.gov. Such information will also be furnished upon written
request to Newtek Business Services Corp., 1981 Marcus Avenue, Suite 130, Lake Success, New York 11042, Attention: Secretary, and
can also be accessed through our website at www.thesba.com.
Once you have received notice from your broker or the Company that
they or the Company will be householding materials to your address, householding will continue until you are notified otherwise
or until you revoke your consent. If, at any time, you no longer wish to participate in householding, please notify your broker
if your shares are held in a brokerage account or the Company if you hold registered shares. You can notify the Company by sending
a written request to Newtek Business Services Corp., 1981 Marcus Avenue, Suite 130, Lake Success, New York 11042, Attention: Chief
Legal Officer or call (212) 356-9500. Promptly upon receipt by us of such a request from a shareholder, separate proxy materials
will be delivered to the requesting shareholder. Shareholders who currently receive multiple copies of the Proxy Statement at their
addresses and would like to request “householding” of their communications should contact their brokers or the Company
(if you hold registered shares).
CONFIDENTIALITY OF PROXIES
The Company’s policy is that proxies identifying individual
shareholders are private except as necessary to determine compliance with law, to assert or defend legal claims, in a contested
proxy solicitation or in the event that a shareholder makes a written comment on a Proxy Card or an attachment to it.
COSTS OF PROXY SOLICITATIONS; SHAREHOLDER
COMMUNICATIONS
The cost of solicitation of proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy material to the beneficial owners of Common Shares. In addition to solicitations by mail, directors, officers
and regular employees of the Company may solicit proxies personally, by telephone or by email without additional compensation.
The Company has engaged the services of Georgeson LLC to assist in the solicitation of proxies.
The Company has estimated that it will pay approximately $30,000, plus reimbursement of certain expenses and fees for additional
services requested. Please note that Georgeson LLC may solicit stockholder proxies by telephone on behalf of the Company. They
will not attempt to influence how you vote your shares, but only ask that you take the time to authorize your proxy. You may also
be asked if you would like to vote over the telephone and to have your vote transmitted to the proxy tabulation firm.
Shareholders may send written communications to the Board of Directors
to the attention of the Board of Directors, c/o Newtek Business Services Corp., 1981 Marcus Avenue, Suite 130, Lake Success, New
York 11042. Shareholder communications must be signed by the shareholder and identify the number of Common Shares held by the shareholder.
Each properly submitted shareholder communication will be provided to the Board of Directors at its next meeting or, if such communication
requires more immediate attention, it will be forwarded to the Directors promptly after receipt.
ANNUAL REPORT
We will furnish, without charge, a copy of
our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 to any stockholder upon request.
Requests should be directed to Newtek Business Services Corp., 1981 Marcus Avenue, Suite 130, Lake Success, New York 11042, Attention:
Chief Legal Officer or call (212) 356-9500 , or by emailing mschwartz@newtekone.com.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the Proxy Statement and
proxy relating to the 2018 Annual Meeting of Shareholders of the Company, which will be held on or about June 15, 2018, any shareholder
proposal to take action at such meeting must be received by the Secretary of the Company at 1981 Marcus Avenue, Suite 130, Lake
Success, New York 11042, no later than January 12, 2018. Nothing in this paragraph shall be deemed to require the Company to include
in its Proxy Statement and proxy relating to the 2017 Special Meeting of Shareholders, or to consider and vote upon at any such
meeting, any shareholder proposal which does not meet all of the requirements established by the SEC or the Company’s Restated
Certificate of Incorporation or Bylaws in effect at the time such proposal is received.
************************
WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, WE URGE YOU TO VOTE OVER THE INTERNET, BY PHONE, OR BY MARKING, SIGNING AND RETURNING YOUR
PROXY OR VOTING INSTRUCTION CARD AS SOON AS POSSIBLE. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
|
By order of the Board of Directors,
|
|
|
|
/s/
Michael A. Schwartz
|
|
Michael A. Schwartz
Secretary
|
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