Enterprising Investor
8 years ago
TPG Specialty Lending, Inc. Comments on Voting Results of the TICC Capital Corp. 2016 Annual Meeting of Stockholders (9/07/16)
TSLX Believes Outcome Demonstrates Stockholders’ Desire for Change and Sets Expectations for Rigorous Review by TICC Board of Adviser’s Contract in Coming Year
NEW YORK--(BUSINESS WIRE)--TPG Specialty Lending, Inc. (“TSLX”; NYSE:TSLX), a specialty finance company focused on lending to middle-market companies, today issued the following statement from Joshua Easterly, Chairman and Co-Chief Executive Officer of TSLX, regarding the outcome of the TICC Capital Corp. (“TICC” or the “Company”; NASDAQ:TICC) annual meeting of stockholders held on September 2, 2016:
“While we are disappointed in the results of the vote at TICC’s 2016 annual meeting of stockholders, we are encouraged by the substantial support TSLX’s proposals received from TICC’s stockholders. We believe these results make clear, particularly when you exclude shares held by insiders, that TICC stockholders without a financial interest in the adviser are demanding real change. Of the shares represented in person or by proxy at the annual meeting and held by unaffiliated stockholders1, 56.0% were voted in favor of our independent nominee, T. Kelley Millet, excluding abstentions. We hope this resonates with the TICC Board and its independent directors.
“Although TSLX’s proposal to terminate the advisory contract of TICC’s external adviser did not achieve the statutory threshold required for approval by stockholders under the Investment Company Act of 1940, as amended (the “1940 Act”), the inspector’s final tabulation indicated that, of the shares represented in person or by proxy at the annual meeting, 56.1% of shares held by unaffiliated stockholders2, and 50.3% of all shares represented at the meeting, were voted in favor of terminating the adviser’s contract. We hope that the TICC Board will recognize the clear intent expressed by its unaffiliated stockholders in this vote.
“We continue to be disappointed in what we view as the troubling share accumulation by TICC’s management in 2016, which occurred concurrently with a significant delay in TICC’s schedule for the annual meeting compared to prior years. Without this share accumulation, the TICC Board would have benefitted from its first new independent director in 13 years.
“Given the close votes on these matters, we expect the TICC Board to conduct a robust and transparent review of the external adviser’s contract in the coming year, consistent with its obligations under the 1940 Act. Other stockholders should demand the same. This review should involve a rigorous examination of TICC’s drastic underperformance, which has been 183%3 below the BDC Composite since the Company’s IPO in 2003, and careful consideration of TICC’s fees, which are 265%4 higher than its most comparable peer. We continue to believe TICC stockholders deserve – and more importantly are demanding – real change.
“The BDC industry can play a critical role in providing financing for mid-sized companies and we believe that the push for change at TICC and across the industry will support meaningful growth in this sector. From our initial offer to buy TICC in 2015 to this effort to force change, our focus has always been on creating value for TSLX and TICC stockholders. We thank our fellow TICC stockholders for their support in this effort.”
About TPG Specialty Lending
TPG Specialty Lending, Inc. (“TSLX” or the “Company”) is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities. The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940 and the rules and regulations promulgated thereunder. TSLX is externally managed by TSL Advisers, LLC, a Securities and Exchange Commission registered investment adviser. TSLX leverages the deep investment, sector, and operating resources of TPG Special Situations Partners, the dedicated special situations and credit platform of TPG, with over $16 billion of assets under management as of March 31, 2016, and the broader TPG platform, a global private investment firm with over $74 billion of assets under management as of March 31, 2016. For more information, visit the Company’s website at www.tpgspecialtylending.com.
http://www.businesswire.com/news/home/20160907006782/en/TPG-Specialty-Lending-Comments-Voting-Results-TICC
Enterprising Investor
8 years ago
ISS Recommends TICC Capital Corp. Stockholders Vote FOR TPG Specialty Lending, Inc.'s Proposal to Terminate the Existing External Adviser and FOR the Election of TSLX’s Nominee, T. Kelley Millet, to TICC’s Board of Directors (8/18/16)
Leading Independent Adviser to Stockholders Determines That Terminating the Existing External Adviser Is In the Best Interest of TICC’s Stockholders
ISS Agrees That T. Kelley Millet Will Provide a Highly Qualified, Independent Perspective to TICC’s Board and Will Advocate for Stockholders to Effect Change at TICC
TSLX Urges TICC Stockholders to Vote the GOLD Proxy Card to Terminate TICC’s External Adviser’s Advisory Contract and to Elect T. Kelley Millet to the TICC Board
NEW YORK--(BUSINESS WIRE)--TPG Specialty Lending, Inc. (“TSLX”; NYSE: TSLX), a specialty finance company focused on lending to middle-market companies, today announced that Institutional Shareholder Services Inc. (“ISS”), the leading independent proxy advisory firm for stockholders, has issued a report recommending that TICC Capital Corp. (“TICC”; NASDAQ: TICC) stockholders vote FOR TSLX’s proposal to terminate TICC’s external adviser’s advisory contract and FOR the election of T. Kelley Millet to the TICC Board at the upcoming annual meeting of stockholders, scheduled for September 2, 2016.
Joshua Easterly, Chairman and Co-Chief Executive Officer of TSLX, commented: “Today ISS, the leading independent proxy advisory firm for stockholders, has joined numerous independent analysts and fellow stockholders in demanding change for TICC’s long-suffering stockholders. TICC’s existing external adviser and Board have delivered more than a decade of failure and repeatedly demonstrated that they cannot be trusted to independently implement changes that benefit all stockholders. TICC stockholders deserve the opportunity to unlock significant value with a new external adviser and the appointment of a truly independent director to the Board. Put simply, ISS has seen through management’s misleading arguments. TICC’s stockholders should follow the recommendation of ISS and vote the GOLD card to terminate the existing external adviser and elect our independent nominee, T. Kelley Millet, to the TICC Board in order to set TICC on the path toward true value creation.”
In support of TSLX’s proposal to terminate TICC’s existing advisory contract, the ISS report states:
• “As a result of the current advisor's investment strategy, TICC has delivered negative TSR and underperformed peers and the index over the past five years . . . As such, terminating the current advisor appears to be in the best interest of TICC shareholders.”
• “The concerns raised by the board relative to the potential default under the CLO securitization notes amount to an argument that if, following approval of this proposal (and therefore the termination of the advisor), the board takes no additional action – and thus fails to select a new advisor and replace the collateral manager – TICC shareholders might face negative outcomes such as a default. This appears to be true; it also, however, appears to be utterly within the board's control to eliminate this risk, literally by identifying a new advisor and replacing the CLO collateral manager.”
• “To the extent shareholders have a risk here, therefore, it would appear the root cause of the risk would be the current director's unwillingness to fulfil (sic) their responsibilities to shareholders by taking any action at all. Put another way, the root cause of the risk the board posits would have to be. . . the board itself.”
• ”[I]t is not, however, a compelling reason for shareholders to resign themselves to perpetuating the core problem: continuing with an advisor whose performance over half a decade has been demonstrably disappointing.”
In support of the election of T. Kelley Millet to the TICC Board of Directors, the ISS report states:
• “As [TSLX] has made a compelling case that change in the board level is warranted, a vote FOR the [TSLX] nominee is warranted.”
• “The board's point that most of the decline in NAV per share was a result of ‘short-term’ volatility in its investments represents a very weak argument as the recent three-year decline in the value of its NAV per share can hardly be called ‘short-term’.”
• “The overriding fact facing shareholders is that the board failed to take action while overseeing five years of TICC underperformance, which by itself signals that change is needed at the board level. Moreover, the long tenure of this board, with each of its five members having served for 13 years as directors, suggests that the company should welcome fresh perspectives to the board. As such, there seems to be a compelling case that change is warranted at this time.”
• "[A]s an outsider [Millet] will be able to bring new perspectives to this long tenured board. Moreover, Millet's experience as a board member at Investment Technology Group during the process of replacing its senior leadership should become valuable to TICC in case its shareholders vote to terminate the current advisor agreement.”
In line with ISS’s recommendations, TSLX urges stockholders to sign and return the GOLD proxy card FOR the termination of TICC’s investment advisory agreement and FOR the election of TSLX’s highly-qualified and independent nominee, T. Kelley Millet, to TICC’s Board of Directors.
TSLX’s proxy materials are also available through the SEC’s website and at www.changeTICCnow.com.
About TPG Specialty Lending
TPG Specialty Lending, Inc. (“TSLX” or the “Company”) is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities. The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940 and the rules and regulations promulgated thereunder. TSLX is externally managed by TSL Advisers, LLC, a Securities and Exchange Commission registered investment adviser. TSLX leverages the deep investment, sector, and operating resources of TPG Special Situations Partners, the dedicated special situations and credit platform of TPG, with over $16 billion of assets under management as of March 31, 2016, and the broader TPG platform, a global private investment firm with over $74 billion of assets under management as of March 31, 2016. For more information, visit the Company’s website at www.tpgspecialtylending.com.
Forward-Looking Statements
Information set forth herein may contain forward-looking statements, including, but not limited to, statements with regard to the expected future financial position, results of operations, cash flows, dividends, portfolio, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management of TICC Capital Corp. (“TICC”), statements with regard to the expected future financial position, results of operations, cash flows, dividends, portfolio, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management of TPG Specialty Lending, Inc. (“TSLX”), and statements with regard to TSLX’s proposed business combination transaction with TICC (including any financing required in connection with a possible transaction and the benefits, results, effects and timing of a possible transaction). Statements set forth herein concerning the business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, and product or services line growth of TSLX, TICC and/or the combined businesses of TSLX and TICC, including, but not limited to, statements containing words such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,” “would,” “should,” “will,” “intend,” “may,” “potential,” “upside” and other similar expressions, together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of TSLX based upon currently available information.
Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from TSLX’s expectations as a result of a variety of factors including, without limitation, those discussed below. Such forward-looking statements are based upon TSLX’s current expectations and include known and unknown risks, uncertainties and other factors, many of which TSLX is unable to predict or control, that may cause TSLX’s plans with respect to TICC or the actual results or performance of TICC, TSLX or TICC and TSLX on a combined basis to differ materially from any plans, future results or performance expressed or implied by such forward-looking statements. These statements involve risks, uncertainties and other factors discussed below and detailed from time to time in TSLX’s filings with the Securities and Exchange Commission (“SEC”).
Risks and uncertainties related to a possible transaction include, among others, uncertainty as to whether TSLX will further pursue, enter into or consummate a transaction on the terms set forth in its proposal or on other terms, uncertainty as to whether TICC’s board of directors will engage in good faith, substantive discussions or negotiations with TSLX concerning its proposal or any other possible transaction, potential adverse reactions or changes to business relationships resulting from the announcement or completion of a transaction, uncertainties as to the timing of a transaction, adverse effects on TSLX’s stock price resulting from the announcement or consummation of a transaction or any failure to complete a transaction, competitive responses to the announcement or consummation of a transaction, the risk that regulatory or other approvals and any financing required in connection with the consummation of a transaction are not obtained or are obtained subject to terms and conditions that are not anticipated, costs and difficulties related to a potential integration of TICC’s businesses and operations with TSLX’s businesses and operations, the inability to obtain, or delays in obtaining, cost savings and synergies from a transaction, unexpected costs, liabilities, charges or expenses resulting from a transaction, litigation relating to a transaction, the inability to retain key personnel, and any changes in general economic and/or industry specific conditions.
In addition to these factors, other factors that may affect TSLX’s plans, results or stock price are set forth in TSLX’s Annual Report on Form 10-K and in its reports on Forms 10-Q and 8-K.
Many of these factors are beyond TSLX’s control. TSLX cautions investors that any forward-looking statements made by TSLX are not guarantees of future performance. TSLX disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.
Third Party-Sourced Statements and Information
Certain statements and information included herein have been sourced from third parties. TSLX does not make any representations regarding the accuracy, completeness or timeliness of such third party statements or information. Except as expressly set forth herein, permission to cite such statements or information has neither been sought nor obtained from such third parties. Any such statements or information should not be viewed as an indication of support from such third parties for the views expressed herein. All information in this communication regarding TICC, including its businesses, operations and financial results, was obtained from public sources. While TSLX has no knowledge that any such information is inaccurate or incomplete, TSLX has not verified any of that information. TSLX reserves the right to change any of its opinions expressed herein at any time as it deems appropriate. TSLX disclaims any obligation to update the data, information or opinions contained herein.
Proxy Solicitation Information
In connection with TSLX’s solicitation of proxies for the 2016 annual meeting of TICC stockholders in favor of (a) the election of TSLX’s nominee to serve as a director of TICC and (b) TSLX’s proposal to terminate the Investment Advisory Agreement, dated as of July 1, 2011, by and between TICC and TICC Management, LLC, as contemplated by Section 15(a) of the Investment Company Act of 1940, as amended, TSLX filed an amended definitive proxy statement in connection therewith on Schedule 14A with the SEC on July 14, 2016 (the “TSLX Proxy Statement”). TSLX has mailed the TSLX Proxy Statement and accompanying GOLD proxy card to stockholders of TICC. This communication is not a substitute for the TSLX Proxy Statement.
TSLX STRONGLY ADVISES ALL STOCKHOLDERS OF TICC TO READ THE TSLX PROXY STATEMENT AND THE OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION. SUCH TSLX PROXY MATERIALS ARE AND WILL BECOME AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV AND ON TSLX’S WEBSITE AT HTTP://WWW.TPGSPECIALTYLENDING.COM. IN ADDITION, TSLX WILL PROVIDE COPIES OF THE TSLX PROXY STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO TSLX’S PROXY SOLICITOR AT TPG@MACKENZIEPARTNERS.COM.
The participants in the solicitation are TSLX and T. Kelley Millet, and certain of TSLX’s directors and executive officers may also be deemed to be participants in the solicitation. As of the date hereof, TSLX beneficially owned 1,633,719 shares of common stock of TICC. As of the date hereof, Mr. Millet did not directly or indirectly beneficially own any shares of common stock of TICC.
Security holders may obtain information regarding the names, affiliations and interests of TSLX’s directors and executive officers in TSLX’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on February 24, 2016, its proxy statement for the 2016 annual meeting of TSLX stockholders, which was filed with the SEC on April 8, 2016, and certain of its Current Reports on Form 8-K. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the interests of these participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is available in the TSLX Proxy Statement and other relevant materials to be filed with the SEC (if and when available).
This document shall not constitute an offer to sell, buy or exchange or the solicitation of an offer to sell, buy or exchange any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Contacts
Investors:
TPG Specialty Lending
Lucy Lu, 212-601-4753
llu@tpg.com
or
MacKenzie Partners, Inc.
Charlie Koons, 800-322-2885
tpg@mackenziepartners.com
or
Media:
TPG Specialty Lending
Luke Barrett, 212-601-4752
lbarrett@tpg.com
or
Abernathy MacGregor
Tom Johnson or Dan Scorpio, 212-371-5999
tbj@abmac.com / dps@abmac.com
http://www.businesswire.com/news/home/20160818005521/en/ISS-Recommends-TICC-Capital-Corp.-Stockholders-Vote
Enterprising Investor
8 years ago
TPG Specialty Lending, Inc. Sends Letter to TICC Capital Corp. Chairman of the Board Highlighting Board’s Self-Serving Actions and Lack of Alignment with Stockholders (8/02/16)
TICC Board Prioritizes Own Interests Over Those of Stockholders by Collecting Oversized Fees, Defending a Failing External Adviser, Delivering Poor Financial Results and Refusing to Engage with Largest Single Stockholder
TSLX Remains Committed to Effecting Change and Advocates for a More Sustainable Dividend Policy to Provide Greater Value to Stockholders
TSLX Encourages TICC Stockholders to Vote the GOLD Proxy Card to Terminate TICC’s External Adviser’s Contract and Elect T. Kelley Millet to the TICC Board
NEW YORK--(BUSINESS WIRE)--TPG Specialty Lending, Inc. (“TSLX”; NYSE:TSLX), a specialty finance company focused on lending to middle-market companies, today issued a letter to TICC Capital Corp.’s (“TICC”; NASDAQ:TICC) Chairman of the Board, Mr. Steven Novak, calling out the self-serving actions of the Board and its lack of alignment with stockholders’ best interests. In the letter, TSLX outlines how the Board has failed TICC stockholders and how stockholders would benefit from a new, best-in-class external adviser.
A copy of the letter follows:
Mr. Steven Novak
Chairman of the Board
TICC Capital Corp.
8 Sound Shore Drive, Suite 255
Greenwich, CT 06830
Dear Mr. Novak,
We are writing as the largest single stockholder of TICC Capital Corp (“TICC” or the “Company) in response to your latest public letter of July 28, 2016, in which we believe that, once again, you are blatantly misleading stockholders. We think it’s time to finally set the record straight and end the fear tactics you continue to wield against your stockholders.
We simply reject that you are a true representative of stockholder interests. We note that your purchase of 5,000 shares in May 2016, following our public letters, for an investment of $26,401, was the first time you acquired shares in almost eight years. Only under threat of proxy contest did you hold your nose and break a near decade of avoiding the very stockholders you now purport to represent.
TPG Specialty Lending (“TSLX”) has never once indicated that we encourage or support the reduction of TICC’s dividend. In fact, we have advocated for a more sustainable dividend policy, one that would provide stockholders with greater value and a true return. We believe the clearest path forward is to replace the current management team with one that can source and manage assets that earn a return to meet its dividend.
Your leadership has overseen investment returns for stockholders that are so poor it is almost incomprehensible. However, you and the TICC Board have clung to the life raft of false promises about the future of a clearly unsustainable dividend.
The fact is that your Board has shown a shocking misunderstanding of investment fundamentals mixed with a craven focus on personal interests. You have delivered abysmal total returns, halved the core of your stockholders’ investment (net asset value) and are now paying a dividend independent analysts almost universally call unsustainable. 1
How can you claim this disguised liquidation is a sustainable or fair way to deliver value to stockholders?
The stockholders of TICC deserve directors that will put them first, and an external adviser that will create true value. Last fall, you delivered a “teach-in” session for stockholders on your phony dividend. Let us return the favor on the basics of investing.
The facts are clear: in the first quarter of 2016, TICC management generated net investment income (“NII”) equivalent to 5% of net asset value (“NAV”), but TICC has paid out a dividend equal to 20% of NAV.
Your materials have consistently ignored the underlying nature of the assets TICC owns, which are primarily broadly syndicated securities. This creates a distortion when comparing TICC to BDCs that instead focus on bespoke, directly originated investments. For example, even though we expect to see an increase in the fair value of the broadly syndicated and readily accessible assets held in TICC’s portfolio during the quarter, this has no influence on the future earning power of TICC. The fact is the existing portfolio of assets does not generate sufficient income to support the current dividend policy. We are confident that you will attempt to use any fictional gain to further confuse stockholders with arcane and misleading references to accounting rules.
We are equally confident that stockholders will continue to recognize the simple facts. NAV is directly impacted by TICC’s ability to earn its dividend – something TICC has yet to prove it is capable of doing in a sustainable manner.
We regret to state that we have lost all confidence in the Board and the management team’s ability to either protect our investment or generate significant future returns. In our eyes, you are no longer a credible adviser and we believe other stockholders feel similarly.
Your reputation and the reputations of the other directors at TICC are on the line in this fight. It is clear that you and other “independent” board members are more than willing to throw that away to desperately protect a failing adviser given the Company has paid the Board in excess of $2.8 million in fees while stockholder returns have been less than treasuries2.
Let us remind you of the indefensible actions the Board and management team have taken, all at the expense of their stockholders:
• Collection of Oversized Fees
The external adviser has collected over $141.4 million in management and incentive fees from stockholders’ investment over the past 12+ years. Mr. Novak, you personally collected more than $1 million in Board-related compensation, all while NAV decreased by 57% since TICC’s IPO in 2003. The Board and management team continue to benefit from stockholders’ investment while TICC has delivered abysmal returns, underperforming the BDC Composite by 192% since 20033. How can you defend lining your own pockets like this while stockholders’ investments suffer?
• Defense of the Failing External Adviser
For the first time in its history, TICC’s annual meeting was not held in June. As a result of this delay, management insiders have been permitted to accumulate TICC shares at record low prices, which they presumably will vote in their own self-interest. How can you and the rest of the Board justify this? How can you defend an external adviser that has ignored the lack of earning power of TICC’s portfolio and subsequently delivered such terrible returns for stockholders? You cannot.
• Likely Violation of Federal Securities Laws
It is nearly impossible for us to trust that the Board and management team can act independently following their role in the flawed and failed transaction in 2015 that led a federal judge to find TICC to have misled stockholders and to have likely violated federal securities laws.
• Facilitation of a Value Transfer from Stockholders to the Board
Mr. Novak, in the failed 2015 transaction, you and TICC led a campaign to sell the external adviser to a third party and advocated the reduction of management fees, authorization of a share buyback program, and reconstitution of the Board. Although in that solicitation, the Special Committee of the Board indicated it believed “[n]o alternative currently exists that the Special Committee would approve or recommend because no current proposal is preferable to the status quo other than the approval of BSP as the new manager,” we do not believe that to be the case and we note that, as part of its advocacy in favor of that solicitation, the Company told Stockholders that failing to approve the BSP transaction would result in Stockholders being left with the “[s]tatus quo: higher fee structure . . . [the] same advisor, and [the] same Board.” What has changed? To us, the difference is clear. You will only support change that results in millions of dollars being paid to fellow Board members.
• Refusal to Engage with Largest Single Stockholder
In February of 2016, TSLX made it clear that we wished to avoid a costly and drawn-out proxy contest and encouraged a productive meeting with TICC to evaluate the Company’s options for a brighter future. However, TICC refused to engage with us in any meaningful way and instead left TSLX with no choice but to pursue a campaign at the annual meeting to effect real change. TICC’s unwillingness to consider terminating the external adviser to avoid a burdensome proxy contest again demonstrates its lack of interest in doing what’s best for stockholders. If you won’t listen to us, your largest single stockholder, what makes us believe you would listen to the rest of your stockholder base?
Your lack of leadership has led to terrible financial performance and an astounding decline in NAV of 57% since 2003. In our eyes, you are unfit to manage stockholders’ investment given past performance. You have destroyed substantial value at the expense of stockholders and you continue to misrepresent what a change in the external adviser could mean for stockholders. Stop lying to your stockholders! There is a promising future for TICC under new management.
TICC stockholders deserve more. TSLX intends to continue advocating for TICC stockholders’ best interests, including the pursuit of the following reforms:
• The implementation of a sustainable dividend policy
• Greater total returns for stockholders, rather than the adviser
• The authorization of a meaningful share repurchase program
• The election of new independent directors
• No restrictions on value-creating opportunities
• The appointment of a new best-in-class external adviser that prioritizes stockholders’ best interests and their investment
Stockholders deserve both a refreshed and independent Board and a capable management team and external adviser to drive growth, generate value and deliver true meaningful change. The time for a new path forward is now.
Very truly yours,
TPG SPECIALTY LENDING, INC.
Joshua Easterly
Chairman and Co-Chief Executive Officer
Michael Fishman
Co-Chief Executive Officer
TSLX’s proxy materials are also available through the SEC’s website and at www.changeTICCnow.com.
About TPG Specialty Lending
TPG Specialty Lending, Inc. (“TSLX” or the “Company”) is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities. The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940 and the rules and regulations promulgated thereunder. TSLX is externally managed by TSL Advisers, LLC, a Securities and Exchange Commission registered investment adviser. TSLX leverages the deep investment, sector, and operating resources of TPG Special Situations Partners, the dedicated special situations and credit platform of TPG, with approximately $16 billion of assets under management as of March 31, 2016, and the broader TPG platform, a global private investment firm with approximately $74 billion of assets under management as of March 31, 2016. For more information, visit the Company’s website at www.tpgspecialtylending.com.
http://www.businesswire.com/news/home/20160802006086/en/TPG-Specialty-Lending-Sends-Letter-TICC-Capital
Enterprising Investor
8 years ago
TPG Specialty Lending, Inc. Corrects Misleading Statements from TICC Capital Corp. in Letter to Stockholders (7/19/16)
Outlines TICC’s Long History of Underperformance, Questionable Governance and Misalignment with TICC Stockholders
Demonstrates That There is Significant Interest in Managing TICC and That Terminating the Existing External Adviser Will Give TICC Stockholders the Opportunity to Achieve Improved Returns
Reminds TICC Stockholders That They Have the Right to Terminate the External Adviser’s Contract AT NO COST To Stockholders
Urges TICC Stockholders to Vote the GOLD Proxy Card to Terminate TICC’s External Adviser Contract and Elect T. Kelley Millet to the TICC Board
NEW YORK--(BUSINESS WIRE)--TPG Specialty Lending, Inc. (“TSLX”; NYSE: TSLX), a specialty finance company focused on lending to middle-market companies, today issued a letter to TICC Capital Corp. (“TICC”) stockholders outlining TICC’s long history of underperformance, questionable governance and misalignment with TICC stockholders. TSLX notes that there is already significant interest in managing TICC’s assets to generate value for stockholders, as at least three independent advisers have already expressed such an interest, and that terminating the existing external adviser will give TICC stockholders the opportunity to achieve improved returns.
The letter also urges stockholders to protect their investment in TICC and vote by signing and returning the GOLD proxy card FOR the termination of the investment advisory agreement between TICC and its external adviser and the election of TSLX’s highly-qualified and independent nominee, T. Kelley Millet, to TICC’s Board of Directors at TICC’s 2016 Annual Meeting, which is scheduled for September 2, 2016.
Please click here to view the full letter: http://www.changeticcnow.com/content/uploads/2016/07/Second-TSLX-Letter-to-TICC-Stockholders.pdf
TSLX’s proxy materials are also available through the SEC’s website and at www.changeTICCnow.com.
About TPG Specialty Lending
TPG Specialty Lending, Inc. (“TSLX” or the “Company”) is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities. The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940 and the rules and regulations promulgated thereunder. TSLX is externally managed by TSL Advisers, LLC, a Securities and Exchange Commission registered investment adviser. TSLX leverages the deep investment, sector, and operating resources of TPG Special Situations Partners, the dedicated special situations and credit platform of TPG, with approximately $16 billion of assets under management as of March 31, 2016, and the broader TPG platform, a global private investment firm with approximately $74 billion of assets under management as of March 31, 2016. For more information, visit the Company’s website at www.tpgspecialtylending.com.
Forward-Looking Statements
Information set forth herein may contain forward-looking statements, including, but not limited to, statements with regard to the expected future financial position, results of operations, cash flows, dividends, portfolio, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management of TICC Capital Corp. (“TICC”), statements with regard to the expected future financial position, results of operations, cash flows, dividends, portfolio, financing plans, business strategy, budgets, capital expenditures, competitive positions, growth opportunities, plans and objectives of management of TPG Specialty Lending, Inc. (“TSLX”), and statements with regard to TSLX’s proposed business combination transaction with TICC (including any financing required in connection with a possible transaction and the benefits, results, effects and timing of a possible transaction). Statements set forth herein concerning the business outlook or future economic performance, anticipated profitability, revenues, expenses, dividends or other financial items, and product or services line growth of TSLX, TICC and/or the combined businesses of TSLX and TICC, including, but not limited to, statements containing words such as “anticipate,” “approximate,” “believe,” “plan,” “estimate,” “expect,” “project,” “could,” “would,” “should,” “will,” “intend,” “may,” “potential,” “upside” and other similar expressions, together with other statements that are not historical facts, are forward-looking statements that are estimates reflecting the best judgment of TSLX based upon currently available information.
Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from TSLX’s expectations as a result of a variety of factors including, without limitation, those discussed below. Such forward-looking statements are based upon TSLX’s current expectations and include known and unknown risks, uncertainties and other factors, many of which TSLX is unable to predict or control, that may cause TSLX’s plans with respect to TICC or the actual results or performance of TICC, TSLX or TICC and TSLX on a combined basis to differ materially from any plans, future results or performance expressed or implied by such forward-looking statements. These statements involve risks, uncertainties and other factors discussed below and detailed from time to time in TSLX’s filings with the Securities and Exchange Commission (“SEC”).
Risks and uncertainties related to a possible transaction include, among others, uncertainty as to whether TSLX will further pursue, enter into or consummate a transaction on the terms set forth in its proposal or on other terms, uncertainty as to whether TICC’s board of directors will engage in good faith, substantive discussions or negotiations with TSLX concerning its proposal or any other possible transaction, potential adverse reactions or changes to business relationships resulting from the announcement or completion of a transaction, uncertainties as to the timing of a transaction, adverse effects on TSLX’s stock price resulting from the announcement or consummation of a transaction or any failure to complete a transaction, competitive responses to the announcement or consummation of a transaction, the risk that regulatory or other approvals and any financing required in connection with the consummation of a transaction are not obtained or are obtained subject to terms and conditions that are not anticipated, costs and difficulties related to a potential integration of TICC’s businesses and operations with TSLX’s businesses and operations, the inability to obtain, or delays in obtaining, cost savings and synergies from a transaction, unexpected costs, liabilities, charges or expenses resulting from a transaction, litigation relating to a transaction, the inability to retain key personnel, and any changes in general economic and/or industry specific conditions.
In addition to these factors, other factors that may affect TSLX’s plans, results or stock price are set forth in TSLX’s Annual Report on Form 10-K and in its reports on Forms 10-Q and 8-K.
Many of these factors are beyond TSLX’s control. TSLX cautions investors that any forward-looking statements made by TSLX are not guarantees of future performance. TSLX disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.
Third Party-Sourced Statements and Information
Certain statements and information included herein have been sourced from third parties. TSLX does not make any representations regarding the accuracy, completeness or timeliness of such third party statements or information. Except as expressly set forth herein, permission to cite such statements or information has neither been sought nor obtained from such third parties. Any such statements or information should not be viewed as an indication of support from such third parties for the views expressed herein. All information in this communication regarding TICC, including its businesses, operations and financial results, was obtained from public sources. While TSLX has no knowledge that any such information is inaccurate or incomplete, TSLX has not verified any of that information. TSLX reserves the right to change any of its opinions expressed herein at any time as it deems appropriate. TSLX disclaims any obligation to update the data, information or opinions contained herein.
Proxy Solicitation Information
In connection with TSLX’s solicitation of proxies for the 2016 annual meeting of TICC stockholders in favor of (a) the election of TSLX’s nominee to serve as a director of TICC and (b) TSLX’s proposal to terminate the Investment Advisory Agreement, dated as of July 1, 2011, by and between TICC and TICC Management, LLC, as contemplated by Section 15(a) of the Investment Company Act of 1940, as amended, TSLX filed an amended definitive proxy statement in connection therewith on Schedule 14A with the SEC on July 14, 2016 (the “TSLX Proxy Statement”). TSLX has commenced mailing the TSLX Proxy Statement and accompanying GOLD proxy card to stockholders of TICC. This communication is not a substitute for the TSLX Proxy Statement.
TSLX STRONGLY ADVISES ALL STOCKHOLDERS OF TICC TO READ THE TSLX PROXY STATEMENT AND THE OTHER PROXY MATERIALS AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION. SUCH TSLX PROXY MATERIALS ARE AND WILL BECOME AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV AND ON TSLX’S WEBSITE AT HTTP://WWW.TPGSPECIALTYLENDING.COM. IN ADDITION, TSLX WILL PROVIDE COPIES OF THE TSLX PROXY STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO TSLX’S PROXY SOLICITOR AT TPG@MACKENZIEPARTNERS.COM.
The participants in the solicitation are TSLX and T. Kelley Millet, and certain of TSLX’s directors and executive officers may also be deemed to be participants in the solicitation. As of the date hereof, TSLX beneficially owned 1,633,719 shares of common stock of TICC. As of the date hereof, Mr. Millet did not directly or indirectly beneficially own any shares of common stock of TICC.
Security holders may obtain information regarding the names, affiliations and interests of TSLX’s directors and executive officers in TSLX’s Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on February 24, 2016, its proxy statement for the 2016 annual meeting of TSLX stockholders, which was filed with the SEC on April 8, 2016, and certain of its Current Reports on Form 8-K. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the interests of these participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is available in the TSLX Proxy Statement and other relevant materials to be filed with the SEC (if and when available).
This document shall not constitute an offer to sell, buy or exchange or the solicitation of an offer to sell, buy or exchange any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Contacts
Investors
TPG Specialty Lending, Inc.
Lucy Lu, 212-601-4753
llu@tpg.com
or
MacKenzie Partners, Inc.
Charlie Koons, 800-322-2885
tpg@mackenziepartners.com
or
Media
TPG Specialty Lending, Inc.
Luke Barrett, 212-601-4752
lbarrett@tpg.com
or
Abernathy MacGregor
Tom Johnson or Pat Tucker
212-371-5999
tbj@abmac.com / pct@abmac.com
http://www.businesswire.com/news/home/20160719005846/en/TPG-Specialty-Lending-Corrects-Misleading-Statements-TICC
Enterprising Investor
8 years ago
TPG Specialty Lending, Inc. to Start Distributing Proxy Materials to TICC Capital Corp. Stockholders (6/20/16)
Urges TICC Stockholders to vote the GOLD Proxy Card to Terminate TICC’s External Manager Contract and Elect T. Kelley Millet to the TICC Board
Highlights Need For Change Given TICC’s External Manager and Board Have Delivered a Decade of Failed Returns While Collecting Millions of Dollars in Fees
Reminds TICC Stockholders That They Have the Right to Terminate the External Manager’s Contract AT NO COST
TICC Notifies Broadridge of Possible July 15 Record Date; TSLX Looks Forward to TICC Publicly Announcing Record Date and Setting Meeting Date
NEW YORK--(BUSINESS WIRE)--TPG Specialty Lending, Inc. (“TSLX”; NYSE:TSLX), a specialty finance company focused on lending to middle-market companies, today announced that it has filed with the Securities and Exchange Commission (“SEC”) and will soon commence distributing proxy materials and the following letter to TICC Capital Corp. (“TICC”) stockholders urging them to protect their investment in TICC and vote the GOLD proxy card FOR the termination of the investment advisory agreement between TICC and its external manager and the election of TSLX’s highly-qualified and independent nominee, T. Kelley Millet, to TICC’s Board of Directors at TICC’s 2016 annual meeting.
TSLX understands that TICC has notified Broadridge Financial Solutions, Inc. of a possible July 15, 2016 record date, with the meeting date to be determined. TSLX looks forward to TICC publicly announcing the record date and setting a date for the annual meeting.
Josh Easterly, Chairman and Co-Chief Executive Officer of TSLX, stated: “TICC stockholders once again have an opportunity to determine the future of their company. We’re confident that the long-suffering TICC stockholders, who in December 2015 overwhelmingly voted to reject the value-destructive transaction backed by management, will terminate the external manager contract and elect our highly-qualified, independent Board nominee. By voting the GOLD proxy card, TICC stockholders can make their voices heard and set TICC on the path toward meaningful value creation and stockholder alignment, effecting real change and ending a decade of failure at TICC.”
The proxy materials are also available through the SEC’s website and at www.changeTICCnow.com.
A copy of the letter follows:
Fellow TICC Stockholders:
On behalf of TPG Specialty Lending, Inc. (“TSLX”), a publicly traded specialty finance company focused on lending to middle-market companies and a fellow stockholder of TICC Capital Corp. (“TICC” or “the Company”), we are writing today to urge you to vote to terminate the investment advisory agreement between TICC and its external manager and to elect our highly-qualified and independent nominee, T. Kelley Millet, to TICC’s Board of Directors at the Company’s 2016 annual meeting.
It is your right, under the Investment Company Act of 1940, as amended, to terminate the external manager’s contract at no cost to stockholders.
THE NEED TO CHANGE THE EXTERNAL MANAGER AND ENHANCE THE BOARD IS CLEAR. THE EXISTING EXTERNAL MANAGER AND THE TICC BOARD HAVE . . .
1. DELIVERED A DECADE OF FAILED RETURNS.
Since TICC’s IPO in 2003, the external manager has delivered total returns of just 53.9% versus 224.4% for the BDC Composite.1 Even more disturbing, TICC has underperformed the return of U.S. Treasuries by 18.4% over the past three years.
2. COLLECTED MILLIONS IN FEES.
By any measure and over any time period, the external manager’s performance has been abysmal. Meanwhile, the external manager, majority owned by TICC Board members Jonathan Cohen and Charles Royce, has collected more than $141.4 million in management and incentive fees over the last 10 years. And Mr. Novak, Chairman of the Board, has collected in excess of $1.0 million in aggregate compensation during his 12-year tenure as an independent director. TICC’s other independent directors have also collected significant Board-related compensation over a similar time period.
3. PAID AN UNSUSTAINABLE DIVIDEND.
The weak returns delivered by the external manager have led to TICC’s dividend policy becoming unsustainable. By TICC’s own admission, its past dividends are in part a return of investor capital and five independent analysts have stated the dividend is unsustainable. TICC has under-earned its dividend by a cumulative 45.3% in the six most recent quarters and likely would have under-earned its dividend in previous quarters if not for an accounting error by TICC disclosed in the first quarter of 2015.
4. TAKEN BLATANT SELF-SERVING ACTIONS TO PROTECT THE EXTERNAL MANAGER AT THE EXPENSE OF STOCKHOLDERS.
TICC has taken extraordinary measures to continue executing its self-serving strategy to the detriment of stockholders. Instead of replacing the failed external manager to generate value for stockholders – at no cost to stockholders – the Company instead pursued a value destructive transaction in 2015 that would have resulted in the owners of the external manager receiving millions of dollars in fees. A federal judge found that TICC likely violated federal securities law in its solicitation in favor of that transaction by failing to disclose the amount of payments to be made under that deal to its interested directors. In addition, TICC has refused to meaningfully engage on our compelling proposals to bring real change to TICC stockholders.
For the first time in 11 years, the Company has not filed proxy materials, nor publicly announced a record date or set a meeting date, for its annual meeting. At the same time, the owners of the external manager, including two Board members, are buying TICC shares for the first time in four years. These share purchases have been in direct proportion to their respective ownership interest in the external manager, a clear illustration that these purchases have been undertaken with the intent to permit the existing manager to build a stake in TICC to protect the external manager’s fee stream, and not to align the manager more closely with stockholders’ interests. It is hard to see the Board’s failure to publicly announce a record date or set a meeting date as anything but a blatant effort to buy time for insiders to acquire enough shares to block change at TICC to the detriment of stockholders. This governance record is concerning.
This level of failure demands immediate change. You deserve better.
VOTE TO TERMINATE THE EXTERNAL MANAGER AND ELECT T. KELLEY MILLET TO END A DECADE OF FAILURE AT TICC
Despite the Board’s own admission that change was needed, we have been shocked by the lack of meaningful action since the failed Stockholder vote held in December 2015 and by the Board’s efforts to frustrate stockholders’ ability to take action on their own. As outlined in our November 29, 2015 letter to the Board, we expected the Board to take meaningful actions on behalf of all stockholders regardless of the success or failure of the conflicted transaction. The clear path for change includes:
• Immediately terminating the existing investment advisory agreement;
• Immediately seating our nominee on the Board and further refreshing the Board with a new slate of independent directors, in consultation with us and other stockholders; and
• Promptly following the reconstitution of the Board, conducting a comprehensive strategic review process to identify the best path forward to deliver value to stockholders.
Time is overdue for TICC to become a professionally governed public company with a focus on maximizing stockholder value. Given the poor financial performance, the deterioration of NAV per share, declining values in the CLO equity portfolio, and an overall lack of transparency, the TICC Board needs to act now to prioritize stockholders’ interests over its own by terminating the existing management contract.
Mr. Millet’s more than 30 years of proven industry expertise across the financial sector, particularly in credit markets, coupled with his proven leadership as a director, make him the ideal candidate to effect change at TICC. He has led companies across the financial services sector in senior positions, including in his current role as CEO of Banca IMI Securities. He also brings Board experience that spans public financial technology companies to private equity-backed financial services companies to equity trading firms. He has a track record of success in reinvigorating companies, driving growth, prioritizing stockholders’ interests and protecting their investments.
TICC has not yet publicly disclosed the date, time or location of the annual meeting or the record date for determining the TICC stockholders entitled to notice of and to vote at the annual meeting or filed a proxy statement for the annual meeting with the Securities and Exchange Commission. However, we understand that TICC has notified Broadridge Financial Solutions, Inc. of a possible July 15, 2016 record date, with the meeting date to be determined. We look forward to TICC publicly announcing the record date and setting a date for the annual meeting. We urge the Board to schedule the annual meeting promptly so that stockholders have the opportunity to vote on our nominee and on terminating the investment advisory agreement.
As always, we stand ready and willing to immediately engage in a constructive dialogue with the Company. Once the aforementioned issues are addressed, we believe there is a brighter path ahead for TICC and its stockholders.
The time for change is now.
VOTE TODAY TO TERMINATE THE EXISTING MANAGER AND SET TICC ON THE PATH TOWARD VALUE CREATION, STOCKHOLDER ALIGNMENT AND REAL CHANGE.
VOTE THE GOLD PROXY CARD. Visit www.changeTICCnow.com for more information about why voting to terminate the external manager’s contract and to elect our independent director nominee are votes to protect your investment.
Sincerely,
TPG SPECIALTY LENDING, INC.
Joshua E. Easterly
Chairman and Co-Chief Executive Officer
Michael Fishman
Co-Chief Executive Officer
If you have any questions concerning this letter,
please call MacKenzie Partners at one of the phone numbers listed below.
105 Madison Avenue
New York, NY 10016
(212) 929-5500 (call collect)
or
TOLL-FREE (800) 322-2885
TPG@mackenziepartners.com
About TPG Specialty Lending
TPG Specialty Lending, Inc. (“TSLX” or the “Company”) is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities. The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940 and the rules and regulations promulgated thereunder. TSLX is externally managed by TSL Advisers, LLC, a Securities and Exchange Commission registered investment adviser. TSLX leverages the deep investment, sector, and operating resources of TPG Special Situations Partners, the dedicated special situations and credit platform of TPG, with approximately $16 billion of assets under management as of March 31, 2016, and the broader TPG platform, a global private investment firm with approximately $74 billion of assets under management as of March 31, 2016. For more information, visit the Company’s website at www.tpgspecialtylending.com.
http://www.businesswire.com/news/home/20160620005693/en/TPG-Specialty-Lending-Start-Distributing-Proxy-Materials
Enterprising Investor
9 years ago
TPG Specialty Lending, Inc. Sends Letter to TICC Board of Directors Calling Recent Actions Wholly Unacceptable and Affirming Commitment to Deliver Value to TICC Stockholders (3/17/17)
TSLX Urges TICC Stockholders to Elect Independent Candidate to TICC Board and Adopt Proposal to Terminate the Investment Advisory Agreement Between TICC and External Manager
TSLX is Encouraged by Investor Focus on BDC Sector and Confident TICC Stockholders will Force Meaningful Change
TSLX Remains Committed to its Clear, Compelling Alternatives to Generate Value for TICC Stockholders
TICC’s Recent Proposals Fail to Meaningfully Address Fundamental Failures, Including Continued Poor Performance and Troubling Governance Practices
NEW YORK--(BUSINESS WIRE)--TPG Specialty Lending, Inc. (“TSLX”; NYSE:TSLX), a specialty finance company focused on lending to middle-market companies, today sent a letter to the Board of Directors of TICC Capital Corp. (“TICC”; Nasdaq: TICC) in which TSLX reiterated its support of the candidacy of Mr. T. Kelley Millet to the TICC Board at the 2016 Annual Meeting of Stockholders and its proposal to terminate the investment advisory agreement between TICC and the external manager.
In its letter to the TICC Board, TSLX also expressed its disappointment that TICC’s recently announced “fee waiver” and its appointment of a new Chairman of the Board are empty gestures that fail to effect real change for TICC investors and further undermine corporate governance at TICC. TSLX has identified clear, compelling alternatives to generate value for TICC stockholders that remain unaddressed by the TICC Board.
A copy of the letter follows:
Board of Directors
TICC Capital Corp.
8 Sound Shore Drive, Suite 255
Greenwich, Connecticut 06830
Dear Members of the Board:
We are writing to express our disappointment in the recent events that further undermine corporate governance at TICC Capital Corp. (“TICC” or the “Company”) and keep the Company on a path to destroy still more stockholder value.
We were surprised to hear you say on your fourth quarter earnings call held on March 10, 2016 that in January the TICC Board of Directors “commenced the shareholder outreach program and contacted the 20 largest institutional holders.” We are your third largest stockholder, holding approximately 3.2%1 of your common stock, and we did sit down with you, but it was just two days prior to your March 9, 2016 announcement. It was clear in the meeting and confirmed by the very short notice that your objective was an attempt to garner our support for an already fully baked plan and input from stockholders was not being entertained. This was not a genuine effort to discuss an appropriate pathway for stockholder value creation. If all of your outreach meetings were as unconstructive as ours, we suspect your other stockholders were just as underwhelmed and disappointed as we were.
As we have moved through this process since September of last year, it has become apparent through your actions that you remain solely focused on saving your positions on the Board and as the external manager rather than fulfilling your duty to TICC investors. We have outlined clear and powerful measures that TICC could implement to create tremendous value and we remain committed to effecting change.
We respond to the announcements you made last week in more detail below. However, the points we lay out have already been understood by our fellow TICC stockholders as total return for TICC is down 3.9% since your announcement on March 9, 2016, as compared to the BDC Composite2 which has increased 2.3% over the same period; 6.2 percentage points of underperformance in five trading days. Year to date, TICC’s total return has been negative 16.5%, while the BDC Composite has increased 0.2%; 16.7 percentage points of underperformance in 2016.
Put simply, the “fee waiver” and appointment of a new Chairman of the Board are empty gestures and a transparent attempt to escape the resounding defeat you experienced at the special meeting of TICC stockholders on December 22, 2015. And the market already knows this. Specifically:
• Reduction in Fees – After years of terrible performance, including underperforming the BDC Composite by 183.1 percentage points since your IPO on a total returns basis, a whopping 7.7 percentage points per year of under-performance, the only appropriate response from the Board would have been to terminate the management contract with the external manager. Again, TICC’s net total return for investors was approximately 2% per year less than if you had invested in risk-free U.S. treasuries. As we have said time and again, our issues with TICC are broad and systemic. While important, a simplistic focus on fees distorts the core problems at TICC to easily-manipulated and misleading headline figures. Any fees paid to the external manager are too high given TICC’s massive and consistent underperformance.
Rewarding the same management team through marginally reduced fees does not address the core problem of poor performance. A change in management was passionately advocated by the Board and the current management team as they negotiated the now failed transaction that would have enriched management at the expense of your existing stockholders. Simply put, after 14 years of underperformance across all time periods, the answer shouldn’t be a reduction in continued compensation. The answer, as the Board had previously advocated, is real change— change in management and the external manager, and a change in investment strategy.
We find Mr. Novak’s characterization of the reduced fee structure as “best in class” laughable. Fees and compensation should be a function of management’s ability to add value and drive return on equity (“ROE”), not metrics to be viewed in isolation and certainly not ones to be determined against a barely comparable group of other BDCs (particularly a group that conveniently ignores the underlying nature of the assets they own).
In our review of BDC peers, we believe TICC has failed to truly recognize the unique nature of its own portfolio of broadly syndicated securities versus bespoke, directly originated transactions. In our view the most appropriate compensation structure for TICC’s portfolio is that of American Capital Senior Floating, Ltd. (NASDAQ: ACSF). The composition of ACSF’s portfolio is nearly identical to TICC’s with 84% senior secured broadly syndicated debt and 16% collateralized loan obligation (“CLO”) equity; TICC has a portfolio composed of 71% senior secured broadly syndicated debt and 27% CLO equity. Meanwhile, ACSF charges 80 basis points of management fee on assets and no incentive fee. TICC’s new fee structure that includes a 1.5% base management fee and a 20% incentive fee continues to look rich indeed when assessed against a comparable collateral mix.
In other words, TICC’s new fee structure is approximately 265% higher than applying the comparable fee structure from ACSF against the TICC portfolio, including the incentive fee.
It should also be noted that ACSF trades at approximately 78% of book value, even with its lower fee structure. The sobering reality in our view is that any notion of TICC shares trading at Net Asset Value without implementing more significant changes than those announced is a distant reality.
• New Chairman – Appointing Mr. Novak as the “independent” Chairman of the Board is not only misdirected but highly concerning. Mr. Novak led the Special Committee during the flawed and failed transaction in 2015. His supposed leadership resulted in the reappointment of the same underperforming external manager for 12 consecutive years and he led the Special Committee during a process in which a federal judge found TICC to have misled stockholders and to have likely violated federal securities laws. We do not see how Mr. Novak, a Board member for over 13 years, can continue to be viewed as independent or be in any position to positively effect change for TICC stockholders given his track record of weak corporate governance on behalf of TICC stockholders.
On February 3, 2016, we delivered a formal notice of our nomination of an independent director and of our intent to introduce a proposal to terminate the investment advisory agreement between TICC and the external manager before the 2016 annual meeting of stockholders. We remain committed to these efforts, which will lead to positive changes at TICC.
We are compelled to move forward with this campaign for change as TICC has not addressed its fundamental failures. Our issues with TICC extend beyond merely fees. TICC’s value destructive capital allocation strategy has continually eroded Net Asset Value (“NAV”) and destroyed stockholder value, and yet the Board continues to prioritize wealth creation for the underperforming external manager.
Over the last quarter alone, TICC has seen a NAV per share decrease of 18.1%, which is almost as astonishing as the 25.6% NAV per share decrease over the past two quarters. TICC’s stock trades at 73% of pro forma NAV including the impact of the early stock buybacks in 2016. Although we applaud management’s willingness to repurchase shares during the fourth quarter of 2015 and during 2016, it is not lost on us nor on other stockholders that management has refused to commit to continuing this strategy. The idea that you are not continuing to buy back stock at a 27% discount to NAV is unacceptable. Our estimate is that the 2016 repurchases have added approximately $0.12 to NAV per share. One must ask: why not continue these value creation measures? The only conclusion is that it comes at the detriment of the external manager’s revenue stream.
The proposals that have been put in motion with your March 9, 2016 press release are wholly unacceptable. Most alarmingly, the results of your “comprehensive” review do not acknowledge whether the Special Committee considered a sale or liquidation of the Company, which were direct asks from TSLX and other stockholders. Any “comprehensive” review would require an honest and rigorous review of TICC for stockholders, not an empty gesture to fiddle with fees and shuffle the same faces around the Board.
Your actions lead us to believe that TICC’s external manager continues to be prioritized above TICC stockholders.
As you know, we have nominated Mr. T. Kelley Millet for election to the Board at the 2016 annual meeting of stockholders. As part of our formal notice, we have also submitted a proposal to terminate the investment advisory agreement between TICC and the external manager.
Under the Investment Company Act of 1940, as amended, stockholders have the power to terminate the external manager at no cost to stockholders. The burden of TICC’s failed external manager must finally be lifted from stockholders. Severing ties at no cost for stockholders will enable a fresh view on how to produce change and guide the Company away from an investment strategy that has impaired TICC’s financial future.
Mr. Millet’s more than 30 years of proven industry expertise across the financial sector, particularly in credit markets, coupled with his proven leadership as a director, make him the ideal candidate to effect change at TICC. He has led companies across the financial services sector in senior positions, including in his current role as CEO of Banca IMI Securities. Mr. Millet has carefully reviewed the public materials relating to TICC and is fully committed to implementing a plan that will create meaningful investment returns for TICC stockholders. His experience in the credit markets, as a board member and as a leader, will enable him to have an immediate and positive impact on stockholders’ investments.
A contentious proxy fight is not our preferred course of action. As we have said before, we urge you to immediately seat Mr. Millet on the Board and reconstitute the Board with independent, highly qualified individuals willing to act aggressively in the interest of TICC stockholders. We also urge you to immediately terminate the existing investment advisory agreement with the external manager.
We hope our efforts to bring the issues that have plagued TICC’s performance to light will lead other TICC stockholders and members of the broader investment community to share our view. Given what we have seen unfold at other BDCs this year, we are confident TICC will not go overlooked.
We are also troubled by TICC’s lack of transparency on its annual stockholder meeting date. In this regard, we note with concern the comment made by Jonathan H. Cohen, the Chief Executive Officer and a director of TICC, on TICC’s fourth quarter earnings call, that TICC has no legal obligation to hold the 2016 annual meeting of stockholders until December 31, 2016—more than 18 months from its prior annual meeting. Historically, the Board has scheduled TICC’s annual meeting of stockholders for the first half of June. Indeed, for the past five years TICC has convened its annual meeting of stockholders no later than June 11 and for every year since its initial annual meeting of stockholders in 2004, TICC has held its annual meeting no later than June 18.
We expect the Board will schedule the 2016 annual meeting of stockholders within the same time frame—early June—as it has in the past versus trying to maneuver for a date that will improve their chances of resisting stockholder nominees and proposals.
We believe termination of the existing investment advisory agreement and reconstitution of the Board will be the catalysts needed to finally unlock stockholder value, resulting in the potential for significant growth in TICC’s stock. We remain committed to work for this needed change.
It is time for stockholders to take action. The time for change is now.
Very truly yours,
TPG SPECIALTY LENDING, INC.
By: ___________________________
Joshua E. Easterly
Chairman and Co-Chief Executive Officer
By: ___________________________
Michael Fishman
Co-Chief Executive Officer
About TPG Specialty Lending
TPG Specialty Lending, Inc. (“TSLX” or the “Company”) is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities. The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940 and the rules and regulations promulgated thereunder. TSLX is externally managed by TSL Advisers, LLC, a Securities and Exchange Commission (“SEC”) registered investment adviser. TSLX leverages the deep investment, sector, and operating resources of TPG Special Situations Partners, the dedicated special situations and credit platform of TPG, with over $16 billion of assets under management as of December 31, 2015, and the broader TPG platform, a global private investment firm with over $70 billion of assets under management as of September 30, 2015. For more information, visit the Company’s website at www.tpgspecialtylending.com.
http://www.businesswire.com/news/home/20160317006148/en/TPG-Specialty-Lending-Sends-Letter-TICC-Board
Enterprising Investor
9 years ago
NexPoint Nominates Highly Qualified Candidate for Director to Serve on TICC Board to Protect Interests of Stockholders (2/08/16)
DALLAS, Feb. 8, 2016 /PRNewswire/ -- NexPoint Advisors, L.P. ("NexPoint") today announced that it has nominated Ethan Powell, a highly qualified candidate with considerable Investment Company Act fund management and board experience, for election as a director at the Annual Meeting of TICC Capital Corp. ("TICC" or the "Company"; Nasdaq: TICC), which is expected to be scheduled by TICC for this June. NexPoint has taken this step in order to protect the stockholders and prevent the further destruction of value by the TICC Board of Directors (the "Board") and management team ("Management").
"The stockholders of TICC deserve directors who not only understand their fiduciary duties and are focused on creating value for investors, but who also understand the intricacies of managing registered Investment Company Act vehicles" stated Thomas Surgent, Partner and Deputy General Counsel at NexPoint. "Change is direly needed as TICC has continued to underperform following the Company's deeply flawed and widely criticized attempt to sell itself to an affiliate of Benefit Street Partners in a transaction that would have enriched the departing management team at the expense of stockholders."
NexPoint remains willing to implement its superior investment advisory proposal, which was designed to support and buttress TICC's stockholder distribution and offers the following benefits for stockholders:
•stockholder savings of $85-90 million in management fees over the next 10 years (based on the Company's AUM as of September 30, 2015);
•preservation of the Company's current investment strategy, which is the strategy elected by stockholders (although NexPoint will consider revising such strategy should stockholders so desire);
•an industry-leading stockholder loyalty program where NexPoint will provide an additional 2% investment incentive to stockholders that invest through the program and hold the related shares for at least a year;
•NexPoint's superior expertise in managing the Company's investment strategy; and
•If appointed, an investment of at least $20 million in the Company's common stock in open market transactions in the first 12 months following appointment.
We remain willing to discuss any terms that the Board believes may be important to the Company and its stockholders. We continue to be committed to advancing the interests of the Company and its stockholders and urge the Board to act accordingly.
Mr. Powell's qualifications are discussed more fully below.
Ethan Powell's Qualifications as a Director
Mr. Powell is currently President and Founder of Impact Shares LLC, a registered investment advisor dedicated to building a platform to create better socially responsible investment solutions. Prior to joining Impact Shares LLC, Mr. Powell was Chief Product Strategist at Highland Capital Management Fund Advisors, L.P. ("HCFMA"). In his role with HCMFA he was responsible for evaluating and optimizing the registered product lineup offered by HCMFA and its affiliate, Highland Capital Management, L.P. ("Highland"). Additionally, Mr. Powell worked with portfolio managers and wholesalers on appropriate positioning of strategies in the market place. Prior to his position as Chief Product Strategist, Mr. Powell was a senior fund analyst responsible for working with portfolio management teams and service providers in the operation and marketing of the funds. Prior to joining Highland in April 2007, Mr. Powell spent most of his career with Ernst and Young providing audit and merger and acquisition services within the firm's Transaction Advisory Services Group in Houston, Texas. Mr. Powell's primary focus was acquisitions in the Energy industry. Mr. Powell received an MS in Management Information Systems and a BS in Accounting from Texas A&M University. Mr. Powell is a holder of the right to use the Chartered Financial Analyst designation and is a licensed Certified Public Accountant. He serves on the Board of Directors of NexPoint and HCMFA's affiliated registered investment funds.
About NexPoint Advisors, L.P.
NexPoint, together with its affiliates, currently manages approximately $18.3 billion in net assets and believes that its core competences are squarely within the Company's investment strategy. NexPoint is indirectly wholly owned by a trust that is beneficially owned and controlled by James Dondero. Highland is ultimately controlled by Mr. Dondero and is therefore an affiliate of, and under common control with, NexPoint, which shares personnel and other resources with Highland. Highland (together with its affiliates) is one of the world's most experienced alternative credit managers, tested by numerous credit cycles, specializing in credit strategies, such as a broad range of leveraged loans, high yield bonds, direct lending, public and private equities and CLOs. Highland also offers alternative investment-oriented strategies, including asset allocation, long/short equities, real estate and natural resources.
Important Additional Information and Where to Find It
NexPoint intends to file a proxy statement with the U.S. Securities and Exchange Commission (the "SEC") in connection with the solicitation of proxies from the stockholders of the Company in connection with the election of Ethan Powell as NexPoint's nominee for director (the "Nominee") at the Company's Annual Meeting of Stockholders, expected to be held in June 2016. STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ SUCH PROXY STATEMENT AND THE ACCOMPANYING PROXY CARD AND OTHER DOCUMENTS FILED BY NEXPOINT WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. The NexPoint proxy statement and other relevant materials (when they become available), and any other documents filed by NexPoint with the SEC, may be obtained free of charge at the SEC's website at www.sec.gov. Free copies of the NexPoint proxy statement and other relevant materials (when they become available) can be obtained from NexPoint on its website at www.nexpointadvisors.com or by contacting NexPoint by telephone at (972) 628-4100.
Participants in the Solicitation
NexPoint and the Nominee are deemed to be participants in NexPoint's solicitation of proxies from the Company's stockholders in connection with the election of Ethan Powell as NexPoint's nominee for director at the Company's Special Meeting of Stockholders, expected to be held in June 2016. NexPoint is the beneficial owner of 100 shares of common stock of the Company. Information regarding NexPoint and the Nominee, and their direct or indirect interests in the Company, by security holdings or otherwise, will be disclosed in the proxy statement to be filed with the SEC by NexPoint.
Cautionary Statement Regarding Forward-Looking Statements
These materials may contain forward-looking statements. All statements contained herein that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate," "believe," "expect," "potential," "opportunity," "estimate," "plan" and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained in these materials that are not historical facts are based on current expectations and speak only as of the date of such materials, and involve risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such projected results and statements. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of NexPoint. Although NexPoint believes that the assumptions underlying the projected results or forward-looking statements included in these materials are reasonable as of the date of such materials, any of the assumptions could be inaccurate and therefore, there can be no assurance that the projected results or forward-looking statements included herein will prove to be accurate. In light of the significant uncertainties inherent in the projected results and forward-looking statements included herein, the inclusion of such information should not be regarded as a representation as to future results or that the objectives and strategic initiatives expressed or implied by such projected results and forward-looking statements will be achieved. NexPoint will not undertake and specifically declines any obligation to disclose the results of any revisions that may be made to any projected results or forward-looking statements herein to reflect events or circumstances after the date of such projected results or statements or to reflect the occurrence of anticipated or unanticipated events.
NexPoint reserves the right to change any of its opinions expressed herein at any time as it deems appropriate and disclaims any obligation to notify the market or any other party of any such changes. NexPoint disclaims any obligation to update the information or opinions contained herein.
Media Contact
Prosek Partners
Brian H. Schaffer
212-279-3115 ext. 229
bschaffer@prosek.com
Josh Clarkson
212-279-3115 ext. 259
jclarkson@prosek.com
http://www.prnewswire.com/news-releases/nexpoint-nominates-highly-qualified-candidate-for-director-to-serve-on-ticc-board-to-protect-interests-of-stockholders-300216505.html
Enterprising Investor
9 years ago
NexPoint Applauds TICC Capital Corp. Investors' Rejection of the BSP Transaction (12/22/15)
DALLAS, Dec. 22, 2015 /PRNewswire/ -- NexPoint Advisors, L.P. ("NexPoint") today issued the below statement regarding the preliminary voting results from TICC Capital Corp.'s (NASDAQ: TICC) ("TICC" or the "Company") Special Meeting of Stockholders that was held on December 22, 2015. At the meeting the proposed transaction with Benefit Street Partners ("BSP") was soundly defeated by the Company's stockholders.[1]
"We believe TICC's stockholders recognized the repeated, in our view, egregious misconduct of the Board in attempting to implement a windfall insider transaction through deception and specious assessment of our superior management proposals," said Thomas Surgent, Partner and Deputy General Counsel at NexPoint. "The Board acknowledged that new management is in the best interests of the Company's stockholders. Now that the Company's stockholders have effectively conveyed their disdain for the Company's antics and deficient process to date, we believe the Board should finally engage us with respect to implementing our superior management proposal. In any event, we intend to continue our efforts to protect the interests and investment of all TICC stockholders."
About NexPoint Advisors, L.P.
NexPoint, together with its affiliates, currently manages approximately $20 billion in net assets and believes that its core competences are squarely within the Company's investment strategy. NexPoint is indirectly wholly owned by a trust that is beneficially owned and controlled by James Dondero. Highland Capital Management, L.P. ("Highland") is ultimately controlled by James Dondero and is therefore an affiliate of, and under common control with, NexPoint, which shares personnel and other resources with Highland. Highland (together with its affiliates) is one of the world's most experienced alternative credit managers, tested by numerous credit cycles, specializing in credit strategies, such as a broad range of leveraged loans, high yield bonds, direct lending, public and private equities and CLOs. Highland also offers alternative investment-oriented strategies, including asset allocation, long/short equities, real estate and natural resources. If NexPoint is retained by the Company as its investment adviser, the Company will have access to all of Highland's capabilities and expertise.
Cautionary Statement Regarding Forward-Looking Statements
These materials may contain forward-looking statements. All statements contained herein that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate," "believe," "expect," "potential," "opportunity," "estimate," "plan" and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained in these materials that are not historical facts are based on current expectations and speak only as of the date of such materials, and involve risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such projected results and statements. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of NexPoint. Although NexPoint believes that the assumptions underlying the projected results or forward-looking statements included in these materials are reasonable as of the date of such materials, any of the assumptions could be inaccurate and therefore, there can be no assurance that the projected results or forward-looking statements included herein will prove to be accurate. In light of the significant uncertainties inherent in the projected results and forward-looking statements included herein, the inclusion of such information should not be regarded as a representation as to future results or that the objectives and strategic initiatives expressed or implied by such projected results and forward-looking statements will be achieved. NexPoint will not undertake and specifically declines any obligation to disclose the results of any revisions that may be made to any projected results or forward-looking statements herein to reflect events or circumstances after the date of such projected results or statements or to reflect the occurrence of anticipated or unanticipated events.
NexPoint reserves the right to change any of its opinions expressed herein at any time as it deems appropriate and disclaims any obligation to notify the market or any other party of any such changes. NexPoint disclaims any obligation to update the information or opinions contained herein.
These materials are provided for information purposes only, and are not intended to be, nor should they be construed as, an offer to sell or the solicitation of an offer to buy any security. These materials do not recommend the purchase or sale of any security.
Media Contact
Brian H. Schaffer
Prosek Partners
212-279-3115 ext. 229
bschaffer@prosek.com
Investor Contact
D.F. King & Co., Inc.
Stockholders 866-416-0556
Bank and Brokers 212-269-5550
TICC@dfking.com
[1] Based on preliminary results announced on December 22, 2015.
http://www.prnewswire.com/news-releases/nexpoint-applauds-ticc-capital-corp-investors-rejection-of-the-bsp-transaction-300196640.html
Enterprising Investor
9 years ago
TICC Capital Corp. Ordered to Correct False and Misleading Proxy Materials, Enjoined From Holding Special Meeting (10/26/15)
DALLAS, Oct. 26, 2015 /PRNewswire/ -- NexPoint Advisors, L.P. ("NexPoint") today announced that the United States District Court for the District of Connecticut has issued an order enjoining TICC Capital Corp. (NASDAQ: TICC) ("TICC" or the "Company"), its President and its Board of Directors (the "Board") from holding the special meeting of stockholders previously scheduled for October 27 (the "Special Meeting") until the Company corrects several materially false and misleading portions of its proxy statement so that stockholders are fully informed of the Board's conduct and incentives related to the Benefit Street Partners ("BSP") transaction.
Specifically, the court ruled that TICC made several material misrepresentations to stockholders in its proxy statement and other proxy materials, has ordered TICC to file revised proxy materials with regard to the points below, and has delayed the Special Meeting until the court is satisfied that corrective disclosure has been made.
•The benefits to be received by Board members Cohen and Royce and TICC President Rosenthal. The court found that TICC violated federal securities laws by not disclosing the substantial compensation that these individuals stood to gain from the BSP transaction. Industry analysts believe the payment to these individuals may be as high as $60 million (a number which NexPoint believes was originally as high as $132 million prior to NexPoint's involvement); value that stockholders would be deprived of in order to enrich the interested directors and departing management team. ?The court found that the "omission of those amounts by TICC is materially false or misleading and is thereby in violation of [federal securities law]," and further, that "[v]ague descriptors such as a 'significant conflict' and 'substantial payments' do not present the true nature of Cohen, Royce, and Rosenthal's multi-million dollar interests in the approval of [the BSP] deal being presented to shareholders as in their best interest." (emphasis in original)
•TICC's engagement with NexPoint: The court also found that TICC misrepresented its engagement with NexPoint, or lack thereof, to stockholders and would not allow TICC to mischaracterize the Board's perfunctory requests for information as substantive negotiations. ?The court found it "apparent that a reasonable shareholder would place importance on the level of interaction the Board had with a third-party competing against a proposal being presented to them, specifically where the proposal favored by the Board is one that would provide tens of millions of dollars to certain of that board's members."
•The counsel provided by Wachtell and Morgan Stanley: The court took a similarly dim view of the Board's attempt to cloak its self-serving and conflicted rejection of NexPoint's offer with the imprimatur of law firm Wachtell, Lipton, Rosen & Katz and investment bank Morgan Stanley when in fact such firms were only engaged after the decision to deny NexPoint's proposal had been made and did not counsel the Board on the merits of the NexPoint proposal. ?The Court found that TICC's linguistic gymnastics with respect to the Company's disclosure on advisory counsel can "reasonably be regarded as an effort to mislead stockholders."
While the court did not order the NexPoint nominees to be included on the ballot, NexPoint does not believe the court considered the permissibility of a conditional election as a matter of law, and intends to continue to litigate that important issue and seek further relief prior to the rescheduled meeting.
"As expected the court saw through TICC and the Board's willful misstatements and continued attempts to conceal essential facts in order to mislead stockholders and distract them from several glaring deficiencies and conflicts related to the BSP transaction," said Thomas Surgent, NexPoint partner and deputy general counsel. "We remain undaunted in our view that a soviet-style election like the one presented to TICC stockholders is illegal as a matter of law and NexPoint will continue to do what is in the best interests of stockholders by protecting their rights and investment through the legal system. NexPoint believes that stockholders will be irreparably harmed in the event that TICC fails to include NexPoint's nominees on the ballot for the Special Meeting and will pursue all available remedies to ensure recognition of its nominees, including asking the court to set aside the election results if NexPoint's nominees are not on the ballot. We look forward to the next steps in this process."
Please visit www.timetochangeticc.com for further information regarding NexPoint's proposals, including press releases, board nominees, questions and answers, SEC filings and proxy materials.
About NexPoint Advisors, L.P.
NexPoint, together with its affiliates, currently manages approximately $20 billion in net assets and believes that its core competences are squarely within the Company's investment strategy. NexPoint is indirectly wholly owned by a trust that is beneficially owned and controlled by James Dondero. Highland Capital Management, L.P. ("Highland") is ultimately controlled by James Dondero and is therefore an affiliate of, and under common control with, NexPoint, which shares personnel and other resources with Highland. Highland (together with its affiliates) is one of the world's most experienced alternative credit managers, tested by numerous credit cycles, specializing in credit strategies, such as a broad range of leveraged loans, high yield bonds, direct lending, public and private equities and CLOs. Highland also offers alternative investment-oriented strategies, including asset allocation, long/short equities, real estate and natural resources. If NexPoint is retained by the Company as its investment adviser, the Company will have access to all of Highland's capabilities and expertise.
Important Additional Information and Where to Find It
NexPoint has filed a definitive proxy statement and accompanying proxy card with the U.S. Securities and Exchange Commission (the "SEC") in connection with the solicitation of proxies from the stockholders of the Company in connection with the matters to be considered at the Company's Special Meeting of Stockholders to be held on October 27, 2015, including the election of NexPoint's nominees for director: Dr. Bob Froehlich, John Honis, Timothy K. Hui, Ethan Powell, William M. Swenson and Bryan A. Ward (collectively, the "Nominees"). STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ THE PROXY STATEMENT AND THE ACCOMPANYING PROXY CARD AND OTHER DOCUMENTS FILED BY NEXPOINT WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY AS THEY CONTAIN IMPORTANT INFORMATION. The proxy statement and proxy card have been distributed to stockholders. The proxy statement and other relevant materials, and any other documents filed by NexPoint with the SEC, may also be obtained free of charge at the SEC's website at www.sec.gov. This is not the Company's or TSLX's proxy statement.
If you have any questions, need free copies of the proxy statement or other relevant materials, or need assistance voting your Shares, please call:
D.F. King & Co., Inc.
48 Wall Street
New York, NY 10005
Stockholders Call Toll-Free at: 866-416-0556
Banks and Brokers Call Collect at: 212-269-5550
Email: TICC@dfking.com
You may also contact NexPoint via email at TICCProxy@NexPointAdvisors.com.
Participants in the Solicitation
NexPoint and the Nominees are deemed to be participants in NexPoint's solicitation of proxies from the Company's stockholders in connection with the matters to be considered at the Company's Special Meeting of Stockholders to be held on October 27, 2015. NexPoint is the beneficial owner of 100 shares of common stock[1] of the Company and also proposes to become the Company's investment adviser, for which it would receive advisory fees. Information regarding NexPoint and the Nominees, and their direct or indirect interests in the Company, by security holdings or otherwise, are set forth in the proxy statement filed with the SEC by NexPoint.
Third Party Information
These materials may contain or refer to news, commentary and other information sourced from persons or companies that are not affiliated with NexPoint. The author and source of any third party information and the date of its publication are clearly and prominently identified. NexPoint has neither sought nor obtained permission to use or quote such third party information. NexPoint cannot guarantee the accuracy, timeliness, completeness or availability of such third party information, and does not explicitly or implicitly endorse or approve such third party information. NexPoint, the Nominees and their affiliates shall not be responsible or have any liability for any misinformation or inaccuracy in such third party information.
Cautionary Statement Regarding Forward-Looking Statements
These materials may contain forward-looking statements. All statements contained herein that are not clearly historical in nature or that necessarily depend on future events are forward-looking, and the words "anticipate," "believe," "expect," "potential," "opportunity," "estimate," "plan" and similar expressions are generally intended to identify forward-looking statements. The projected results and statements contained in these materials that are not historical facts are based on current expectations and speak only as of the date of such materials, and involve risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such projected results and statements. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of NexPoint. Although NexPoint believes that the assumptions underlying the projected results or forward-looking statements included in these materials are reasonable as of the date of such materials, any of the assumptions could be inaccurate and therefore, there can be no assurance that the projected results or forward-looking statements included herein will prove to be accurate. In light of the significant uncertainties inherent in the projected results and forward-looking statements included herein, the inclusion of such information should not be regarded as a representation as to future results or that the objectives and strategic initiatives expressed or implied by such projected results and forward-looking statements will be achieved. NexPoint will not undertake and specifically declines any obligation to disclose the results of any revisions that may be made to any projected results or forward-looking statements herein to reflect events or circumstances after the date of such projected results or statements or to reflect the occurrence of anticipated or unanticipated events.
NexPoint reserves the right to change any of its opinions expressed herein at any time as it deems appropriate and disclaims any obligation to notify the market or any other party of any such changes. NexPoint disclaims any obligation to update the information or opinions contained herein.
These materials are provided for information purposes only, and are not intended to be, nor should they be construed as, an offer to sell or the solicitation of an offer to buy any security. These materials do not recommend the purchase or sale of any security.
Media Contact
Brian H. Schaffer
Prosek Partners
212-279-3115 229
bschaffer@prosek.com
Investor Contact
D.F. King & Co., Inc.
Stockholders 866-416-0556
Bank and Brokers 212-269-5550
TICC@dfking.com
[1] If appointed as investment adviser of the Company, NexPoint intends to make an investment of at least $20 million in the Company's common stock in open market transactions in the first 12 months following appointment. This represents about 2.88 million shares, or approximately 4.8% of all outstanding shares at closing on September 18, 2015.
http://www.prnewswire.com/news-releases/ticc-capital-corp-ordered-to-correct-false-and-misleading-proxy-materials-enjoined-from-holding-special-meeting-300165929.html
Enterprising Investor
9 years ago
NexPoint Advisors Urges TICC Capital, Inc.'s Stockholders to Act to Protect their Interests and Investment in TICC (9/30/15)
DALLAS, Sept. 29, 2015 /PRNewswire/ -- NexPoint Advisors, L.P. ("NexPoint") announced today it has released a letter to stockholders of TICC Capital, Inc. (the "Company") (NASDAQ: TICC) urging them to act to protect their interests and investment in the Company, which is reproduced in full below:
URGENT: YOUR IMMEDIATE ACTION IS NECESSARY TO PROTECT YOUR RIGHTS AS A STOCKHOLDER OF TICC CAPITAL, INC.
September 29, 2015
RE: Special Meeting of TICC Capital Corp. to be held on October 27, 2015 (the "Special Meeting")
Dear Fellow Stockholder:
NexPoint Advisors, L.P. ("NexPoint" or "we") is a fellow stockholder of TICC Capital Corp. (NASDAQ: TICC) (the "Company"). We are writing you because we believe that, for the reasons described below, the Company's current board of directors (the "Board") has failed to act in your best interest. Accordingly, your immediate action is necessary to protect both your rights as a stockholder of the Company and your investment in the Company.
The Company is in the process of soliciting stockholder votes to approve at the Special Meeting certain proposals related to Benefit Street Partners, LLC's acquisition of the Company's current investment adviser, TICC Management, LLC. In our view, the Board has systematically ignored stockholder interests and failed to act in your best interest by:
•Initially recommending the Benefit Street Partners transaction where 100% of the related consideration (which we believe to be at least $60 million and initially as high as $132 million prior to our involvement) would be paid to the existing management team rather than the Company's stockholders;[1]
•Refusing to engage us in any meaningful dialogue after we provided the Board multiple superior management proposals offering significant economic benefits for stockholders, as well as superior expertise in managing the Company's investment strategy;
•Continuing to support a revised advisory agreement with the current investment adviser that was only enhanced in reaction to our superior proposals; and
•Still refusing to engage us after we further enhanced our proposals to create approximately $45 to $50 million of incremental value for stockholders over the next 10 years (based on the Company's AUM as of June 30, 2015) that remains notably absent from the Benefit Street Partners proposal.
Since the Board's actions to date indicate that their interests are more aligned with the Company's incumbent management than with you as a stockholder, we have nominated a highly experienced alternative slate of Board nominees who, if elected at the October 27 meeting, we believe will work in good faith to protect your rights and investment and, subject to their duties as directors, hire NexPoint as the Company's investment adviser.
You should know that in addition to the Board's apparent dereliction of duty in refusing to negotiate with NexPoint, the Secretary of the Company apparently attempted to disenfranchise you and your fellow stockholders by refusing to accept NexPoint's validly delivered nomination of directors.
We believe that the Board and management's conduct and the Company's investment performance over at least the past five years are unacceptable and continue to be destructive to the value of your investment. Accordingly, NexPoint seeks your support at the Special Meeting to elect our nominees in opposition to those nominated by the current Board.
NexPoint's proposal remains superior because, among other things, it:
•Saves stockholders approximately $45-50 million in management fees over the next 10 years (based on the Company's AUM as of June 30, 2015);
•Proposes to preserve the Company's current investment strategy, which is the strategy elected by stockholders (although NexPoint will consider revising such strategy should stockholders so desire);
•Includes an industry-leading stockholder loyalty program where NexPoint will provide an additional 2% investment incentive to stockholders that invest through the program and hold the related shares for at least a year; and
•Provides NexPoint's superior expertise in managing the Company's investment strategy.
On a separate but related note, shareholders should understand there is no competing proposal available to stockholders from TPG Specialty Lending, Inc. ("TSLX"). In our view, the sole way you can protect your interests and protect your investment NOW is to elect our nominees. Delaying the meeting creates the worst of all worlds where incumbent management and Board members remain in place, none of whom we believe has or will ever act in your best interest. For more detail on the numerous issues and weaknesses with TSLX's non-binding preliminary proposal to the Company's Board, which include, among others, TSLX's lower dividend, higher fees and our superior expertise with respect to the Company's investments, please see our prior press release on the TSLX proposal, available at https://www.sec.gov/Archives/edgar/data/1259429/000095010315007474/dp59815_dfan14a.htm, and the Q&A in our proxy statement (when available).
In our view, the sole avenue available at the Special Meeting to protect your interests and your investment in the Company is to elect our board nominees, who would then be immediately positioned to allow the Company to begin implementing our superior management proposal for the benefit of stockholders.
In order to protect your rights and investment, it is critical that you vote at the Special Meeting or via proxy:
•"AGAINST" the Company's proposals related to the Benefit Street Partners transaction;
•"FOR" each of NexPoint's six director nominees; and
•"AGAINST" the Company's proposal to adjourn the Special Meeting in the event that a quorum is present and the Company's proposals do not receive sufficient votes.
We have filed our preliminary proxy statement and expect to have our proxy statement and BLUE proxy card mailed to you in the next several weeks. The preliminary proxy statement is publicly available at https://www.sec.gov/edgar.shtml. You should IGNORE any other proxy cards you receive from the Company, TSLX or others.
Your vote is important, no matter how many or how few shares you own. Every vote counts! Make your voice heard.
On September 23, 2015 we filed with the Securities and Exchange Commission our Preliminary Proxy Statement, which includes a series of questions and answers (the "Q&A") to further inform and assist TICC stockholders. NexPoint urges TICC's stockholders to carefully consider the Q&A together with the other information contained in its proxy statement upon their availability. If you have any further questions or require assistance voting your shares, please contact D.F. King & Co., Inc., who is assisting us, at their address and toll-free number listed below.
D.F. King & Co., Inc.
48 Wall Street
New York, NY 10005
Stockholders Call Toll-Free at: 866-416-0556
Banks and Brokers Call Collect at: 212-269-5550
Email: TICC@dfking.com
You may also contact NexPoint via email at TICCProxy@NexPointAdvisors.com.
Thank you for your support,
NexPoint Advisors, L.P.
By: NexPoint Advisors GP, LLC, its general partner
By: /s/ Brian Mitts
Name: Brian Mitts
Title: Executive Vice President
About NexPoint Advisors, L.P.
NexPoint, together with its affiliates, currently manages approximately $22 billion in net assets and believes that its core competences are squarely within the Company's investment strategy. NexPoint is affiliated, through common ownership, with Highland Capital Management, L.P. ("Highland"), and shares personnel and other resources with Highland. Highland (together with its affiliates) is one of the world's most experienced alternative credit managers, tested by numerous credit cycles, specializing in credit strategies, such as a broad range of leveraged loans, high yield bonds, direct lending, public and private equities and CLOs. Highland also offers alternative investment-oriented strategies, including asset allocation, long/short equities, real estate and natural resources. If NexPoint is retained by the Company as its investment adviser, the Company will have access to all of Highland's capabilities and expertise.
Important Additional Information and Where to Find It
NexPoint has filed a preliminary proxy statement with the U.S. Securities and Exchange Commission (the "SEC") in connection with the solicitation of proxies from the stockholders of the Company in connection with the matters to be considered at the Company's Special Meeting of Stockholders to be held on October 27, 2015, including the election of NexPoint's nominees for director: Dr. Bob Froehlich, John Honis, Timothy K. Hui, Ethan Powell, William M. Swenson and Bryan A. Ward (collectively, the "Nominees"). STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ THE PROXY STATEMENT AND THE ACCOMPANYING PROXY CARD AND OTHER DOCUMENTS FILED BY NEXPOINT WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. When finalized, the proxy statement and proxy card will be mailed to all stockholders. The proxy statement and other relevant materials (when they become available), and any other documents filed by NexPoint with the SEC, may also be obtained free of charge at the SEC's website at www.sec.gov. Free copies of the proxy statement and other relevant materials (when they become available) can be obtained from NexPoint on its website at www.nexpointadvisors.com or by contacting NexPoint by telephone at (972) 628-4100. This is not the Company's or TSLX's proxy statement.
Participants in the Solicitation
NexPoint and the Nominees are deemed to be participants in NexPoint's solicitation of proxies from the Company's stockholders in connection with the matters to be considered at the Company's Special Meeting of Stockholders to be held on October 27, 2015. NexPoint is the beneficial owner of 100 shares of common stock of the Company and also proposes to become the Company's investment adviser, for which it would receive advisory fees. Information regarding NexPoint and the Nominees, and their direct or indirect interests in the Company, by security holdings or otherwise, will be set forth in the proxy statement filed with the SEC by NexPoint.
Media Contact
Brian H. Schaffer
Prosek Partners
212-279-3115 229
bschaffer@prosek.com
D.F. King & Co., Inc.
Stockholders 866-416-0556
Bank and Brokers 212-269-5550
TICC@dfking.com
[1] According to at least one industry analyst, the current revised arrangement with Benefit Street Partners could generate $60 million in payments to TICC Management, LLC. Assuming that the value of the concessions made by Benefit Street Partners in its revised proposal was deducted from the initial consideration offered by Benefit Street Partners, we estimate that the initial consideration offered by Benefit Street Partners could have been as high as $132 million, i.e., $60 million plus the estimated present value of the 50bps perpetual management fee concession (based on the company's AUM as of June 30, 2015), which is $52 million, together with the $20 million of proposed purchases of Company shares. Notably, NexPoint's current proposal still provides approximately $45 to $50 million of value to shareholders over the next 10 years compared to the proposed arrangement with Benefit Street Partners(based on the Company's AUM as of June 30, 2015).
http://www.prnewswire.com/news-releases/nexpoint-advisors-urges-ticc-capital-incs-stockholders-to-act-to-protect-their-interests-and-investment-in-ticc-300151241.html
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