No. 812- 13844
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT
NO. 1 TO THE APPLICATION FOR AN ORDER PURSUANT TO SECTION 57(i) OF THE INVESTMENT COMPANY ACT OF 1940, AND RULE 17d-1 UNDER THE ACT TO PERMIT CERTAIN JOINT TRANSACTIONS OTHERWISE PROHIBITED BY SECTION 57(a)(4) OF THE ACT
CORPORATE CAPITAL TRUST, INC., CNL FUND ADVISORS COMPANY, CNL FINANCIAL GROUP, LLC, CNL FINANCIAL GROUP, INC., CNL GLOBAL GROWTH
ADVISORS, LLC, CNL GLOBAL INCOME ADVISORS, LLC, CNL LIFESTYLE COMPANY, LLC, CNL DIVERSIFIED CORP., CNL FUND MANAGEMENT COMPANY, CNL MANAGEMENT CORP., CNL PRIVATE EQUITY CORP., CNL REAL ESTATE ADVISORS COMPANY, CNL REAL ESTATE SERVICES CORP., AND PC
INVESTMENT PARTNERS, LLC
450 S. Orange Avenue
Orlando, Florida 32801
(866) 745-3797
KOHLBERG KRAVIS ROBERTS & CO. L.P., KKR
ASSET MANAGEMENT LLC, KKR ASSET MANAGEMENT LTD., KKR CS ADVISORS I LLC, KKR FI ADVISORS LLC, KKR FI ADVISORS IV LLC, KKR FI ADVISORS CAYMAN LTD., KKR FINANCIAL ADVISORS LLC, KKR FINANCIAL ADVISORS II LLC, KKR MEZZANINE I ADVISORS LLC, KKR CAPITAL
MARKETS HOLDINGS L.P., KKR CAPITAL MARKETS LLC, KKR CAPITAL MARKETS LIMITED, KKR CAPITAL MARKETS ASIA LIMITED, KKR CORPORATE LENDING LLC, KKR CORPORATE LENDING (UK) LLC, KKR DEBT INVESTORS II (2006) IRELAND LP, KKR DI 2006 LP, KKR CS III
LIMITED, KKR ASSOCIATES CS III L.P., 8 CAPITAL PARTNERS L.P., KKR FINANCIAL CLO 2005-1, LTD., KKR FINANCIAL CLO 2005-2, LTD., KKR FINANCIAL CLO 2006-1, LTD., KKR FINANCIAL CLO 2007-1, LTD., KKR FINANCIAL CLO 2007-A, LTD., KKR FINANCIAL CLO 2009-1,
LTD., KKR FINANCIAL HOLDINGS, INC., KKR FINANCIAL HOLDINGS, LTD., KKR FINANCIAL HOLDINGS LLC, KKR FINANCIAL HOLDINGS II, LLC, KKR FINANCIAL HOLDINGS III, LLC, KKR FINANCIAL HOLDINGS IV, LLC, KKR CORPORATE CREDIT PARTNERS L.P., KKR MEZZANINE GP LLC,
KKR ASSOCIATES MEZZANINE I L.P., KKR MEZZANINE PARTNERS I L.P., KKR MEZZANINE PARTNERS I SIDE-BY-SIDE L.P., KKR PEI GP LIMITED, KKR PEI ASSOCIATES, L.P., KKR PEI INVESTMENTS, L.P., KKR PEI OPPORTUNITIES GP, LTD., KKR PEI OPPORTUNITIES, L.P., KKR PEI
SECURITIES HOLDINGS, LTD., KKR TRS HOLDINGS, LTD., KKR INVESTMENT MANAGEMENT LLC, KKR INVESTMENTS LLC, KKR CS II LIMITED, KKR ASSOCIATES CS II L.P., KKR-
KEATS CAPITAL PARTNERS L.P., KKR CS I LIMITED, KKR ASSOCIATES CS I L.P., KKR-MILTON CAPITAL PARTNERS L.P., KKR-MILTON CO-INVESTMENTS L.P.
555 California Street, 50
th
Floor
San Francisco, CA 94104
(415) 315-3260
All
Communications, Notices and Orders to:
Nicole Macarchuk, Esq.
General Counsel
KKR Asset Management LLC
555 California Street, 50
th
Floor
San Francisco, CA 94104
Telephone: (415) 315-3260
Copies to:
|
|
|
|
|
Richard Horowitz, Esq.
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
(212) 698-3525
|
|
Michael L. Sherman, Esq.
Dechert LLP
1775 I Street, NW
Washington, DC 20006
(202) 261-3449
|
|
Richard E. Baltz, Esq.
Arnold & Porter LLP
555 Twelfth Street, NW
Washington, DC 20004
(202) 942-5000
|
May 13, 2011
2
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
|
|
|
|
|
In the Matter of:
|
|
)
|
|
|
|
|
)
|
|
|
CORPORATE CAPITAL TRUST,
|
|
)
|
|
AMENDMENT NO. 1 TO THE
|
INC., CNL FUND ADVISORS
|
|
)
|
|
APPLICATION FOR AN ORDER
|
COMPANY, CNL FINANCIAL
|
|
)
|
|
PURSUANT TO SECTION 57(i) OF THE
|
GROUP, LLC, CNL FINANCIAL
|
|
)
|
|
INVESTMENT COMPANY ACT OF 1940
|
GROUP, INC., CNL GLOBAL
|
|
)
|
|
AND RULE 17d-1 UNDER THE ACT TO
|
GROWTH ADVISORS, LLC, CNL
|
|
)
|
|
PERMIT CERTAIN JOINT
|
GLOBAL INCOME ADVISORS, LLC,
|
|
)
|
|
TRANSACTIONS OTHERWISE
|
CNL LIFESTYLE COMPANY, LLC,
|
|
)
|
|
PROHIBITED BY SECTION 57(a)(4) OF
|
CNL DIVERSIFIED CORP., CNL
|
|
)
|
|
THE ACT
|
FUND MANAGEMENT COMPANY,
|
|
)
|
|
|
CNL MANAGEMENT CORP., CNL
|
|
)
|
|
|
PRIVATE EQUITY CORP., CNL
|
|
)
|
|
|
REAL ESTATE ADVISORS
|
|
)
|
|
|
COMPANY, CNL REAL ESTATE
|
|
)
|
|
|
SERVICES CORP., AND PC
|
|
)
|
|
|
INVESTMENT PARTNERS, LLC
|
|
)
|
|
|
|
|
)
|
|
|
450 S. Orange Avenue
|
|
)
|
|
|
Orlando, Florida 32801
|
|
)
|
|
|
(866) 745-3797
|
|
)
|
|
|
|
|
)
|
|
|
and
|
|
)
|
|
|
|
|
)
|
|
|
KOHLBERG KRAVIS ROBERTS & CO. L.P.
|
|
)
|
|
|
KKR ASSET MANAGEMENT LLC
|
|
)
|
|
|
KKR ASSET MANAGEMENT LTD.
|
|
)
|
|
|
KKR CS ADVISORS I LLC
|
|
)
|
|
|
KKR FI ADVISORS LLC
|
|
)
|
|
|
KKR FI ADVISORS IV LLC
|
|
)
|
|
|
KKR FI ADVISORS CAYMAN LTD.
|
|
)
|
|
|
KKR FINANCIAL ADVISORS LLC
|
|
)
|
|
|
KKR FINANCIAL ADVISORS II LLC
|
|
)
|
|
|
KKR MEZZANINE I ADVISORS LLC
|
|
)
|
|
|
KKR CAPITAL MARKETS HOLDINGS
L.P.
|
|
)
|
|
|
KKR CAPITAL MARKETS LLC
|
|
)
|
|
|
KKR CAPITAL MARKETS LIMITED
|
|
)
|
|
|
KKR CAPITAL MARKETS ASIA LIMITED
|
|
)
|
|
|
3
|
|
|
|
|
KKR CORPORATE LENDING LLC
|
|
)
|
|
|
KKR CORPORATE LENDING (UK) LLC
|
|
)
|
|
|
KKR DEBT INVESTORS II (2006) IRELAND LP
|
|
)
|
|
|
KKR DI 2006 LP
|
|
)
|
|
|
KKR CS III LIMITED
|
|
)
|
|
|
KKR ASSOCIATES CS III L.P.
|
|
)
|
|
|
8 CAPITAL PARTNERS L.P.
|
|
)
|
|
|
KKR FINANCIAL CLO 2005-1, LTD.
|
|
)
|
|
|
KKR FINANCIAL CLO 2005-2, LTD.
|
|
)
|
|
|
KKR FINANCIAL CLO 2006-1, LTD.
|
|
)
|
|
|
KKR FINANCIAL CLO 2007-1, LTD.
|
|
)
|
|
|
KKR FINANCIAL CLO 2007-A, LTD.
|
|
)
|
|
|
KKR FINANCIAL CLO 2009-1, LTD.
|
|
)
|
|
|
KKR FINANCIAL HOLDINGS, INC.
|
|
)
|
|
|
KKR FINANCIAL HOLDINGS, LTD.
|
|
)
|
|
|
KKR FINANCIAL HOLDINGS LLC
|
|
)
|
|
|
KKR FINANCIAL HOLDINGS II, LLC
|
|
)
|
|
|
KKR FINANCIAL HOLDINGS III, LLC
|
|
)
|
|
|
KKR FINANCIAL HOLDINGS IV, LLC
|
|
)
|
|
|
KKR CORPORATE CREDIT PARTNERS L.P.
|
|
)
|
|
|
KKR MEZZANINE GP LLC
|
|
)
|
|
|
KKR ASSOCIATES MEZZANINE I L.P.
|
|
)
|
|
|
KKR MEZZANINE PARTNERS I L.P.
|
|
)
|
|
|
KKR MEZZANINE PARTNERS I SIDE-BY- SIDE L.P.
|
|
)
|
|
|
KKR PEI GP LIMITED
|
|
)
|
|
|
KKR PEI ASSOCIATES, L.P.
|
|
)
|
|
|
KKR PEI INVESTMENTS, L.P.
|
|
)
|
|
|
KKR PEI OPPORTUNITIES GP, LTD.
|
|
)
|
|
|
KKR PEI OPPORTUNITIES, L.P.
|
|
)
|
|
|
KKR PEI SECURITIES HOLDINGS, LTD.
|
|
)
|
|
|
KKR TRS HOLDINGS, LTD.
|
|
)
|
|
|
KKR INVESTMENT MANAGEMENT LLC
|
|
)
|
|
|
KKR INVESTMENTS LLC
|
|
)
|
|
|
KKR CS II LIMITED
|
|
)
|
|
|
4
|
|
|
|
|
KKR ASSOCIATES CS II L.P.
|
|
)
|
|
|
KKR-KEATS CAPITAL PARTNERS L.P.
|
|
)
|
|
|
KKR CS I LIMITED
|
|
)
|
|
|
KKR ASSOCIATES CS I L.P.
|
|
)
|
|
|
KKR-MILTON CAPITAL PARTNERS L.P.
|
|
)
|
|
|
KKR-MILTON CO-INVESTMENTS L.P.
|
|
)
|
|
|
|
|
|
|
|
555 California Street, 50
th
Floor
|
|
|
|
|
San Francisco, CA 94104
|
|
|
|
|
(415) 315-3260
|
|
|
|
|
|
|
|
|
|
File No. 812-13844
|
|
|
|
|
Investment Company Act of 1940
|
|
|
|
|
5
The following entities hereby request an order (the
Order
) of
the U.S. Securities and Exchange Commission (the
Commission
) pursuant to Section 57(i) of the Investment Company Act of 1940, as amended (the
1940 Act
),
1
and Rule 17d-1 thereunder, authorizing certain joint transactions
that otherwise may be prohibited by Section 57(a)(4):
|
|
|
Corporate Capital Trust, Inc. (the
Company
)
|
|
|
|
CNL Fund Advisors Company (
CFA
)
|
|
|
|
CNL Financial Group, LLC (
CNL
) and its investment advisory subsidiaries set forth on Schedule A hereto (other than CFA)
(collectively and together with CFA, the
CNL Affiliated Advisors
)
|
|
|
|
KKR Asset Management LLC (
KAM
, and together with CFA, the
Advisers
) and its investment advisory
subsidiaries set forth on Schedule A hereto (collectively,
KAM Affiliated Advisers
)
|
|
|
|
Kohlberg Kravis Roberts & Co. L.P. (
KKR & Co.
) and its investment advisory subsidiaries set forth on
Schedule A hereto (other than the KAM Affiliated Advisers) (collectively, the
KKR & Co. Affiliated Advisers
and, together with the KAM Affiliated Advisers, the
KKR Affiliated Advisers
)
|
|
|
|
KKR Capital Markets Holdings L.P. and its capital markets subsidiaries set forth on Schedule A hereto (collectively, the
KCM
Companies
)
|
|
|
|
Investment funds and other vehicles affiliated with KKR & Co. L.P. (
KKR
) set forth on Schedule A hereto (and which may
include KCM Companies when they are investing in a principal capacity) (collectively, the
Existing Affiliated Investors
and, together with the Company, the CNL Affiliated Advisors, the KKR Affiliated Advisers and the KCM
Companies, the
Applicants
)
|
In particular, the relief requested in this
application (the
Application
) would allow the Company, on one hand, and the Existing Affiliated Investors, any future entities or accounts that a CNL Affiliated Advisor, a KKR Affiliated Adviser or an affiliated person (as
defined in Section 2(a)(3)(C) of the 1940 Act) of any of them may in the future sponsor, provide investment management services to or hold assets in a principal capacity, and any other vehicles
2
that may be established in the future that may invest on a
side-by-side basis therewith or make an investment in lieu thereof for tax, legal, regulatory or other purposes to effect financing transactions with or on behalf of an Affiliated Investor (any such entities, accounts and vehicles, together with the
Existing Affiliated Investors, the
Affiliated Investors
), on the other hand, to co-invest in the same investment opportunities where such investment would otherwise be prohibited under the 1940 Act (collectively, the
Co-Investment Transactions
).
1
|
Unless otherwise indicated, all section and rule references herein are to the 1940 Act and rules promulgated thereunder.
|
2
|
In certain circumstances, the Company or an Affiliated Investor may form a special purpose vehicle to invest side by side with such entity (each, an
Alternative Investment Vehicle
) or as a special purpose subsidiary of the Company or one or more Affiliated Investors to hold one or more investments (each, a
Blocker Subsidiary
, and the
Alternative Investment Vehicles and Blocker Subsidiaries collectively, the
Special Purpose Funds
). The Special Purpose Funds are generally formed because they are necessary or desirable from a tax, legal, regulatory or
other perspective (for example, to address tax issues that a non-U.S. investor has in a fund that are not shared by other domestic investors), or to facilitate participation in certain types of investments (for example, subsidiary corporations may
be used to address tax issues that result from investing in a pass through entity such as a partnership or a limited liability company).
Certain Special Purpose Funds that the Company forms will qualify for the exclusion from the
definition of the term investment company pursuant to Section 3(c)(7) of the 1940 Act or will otherwise not be required to register as an investment company under the 1940 Act. Such Special Purpose Funds ordinarily are structured as
corporations or as limited liability companies or partnerships that are taxed as corporations and hold certain investment assets that are structured as pass-through tax entities (such as partnership interests or limited liability company interests)
in order to allow the Company to continue to qualify as a RIC for tax purposes. Relief for these vehicles may be necessary as they will also be controlled and managed by CFA or a KKR Affiliated Adviser (or any entity directly or indirectly
controlled by or under common control with CFA or a KKR Affiliated Adviser within the meaning of Section 2(a)(9) of the 1940 Act) and may invest side by side with the Affiliated Investors, which are persons described in Section 57(b)(2) of
the 1940 Act. For avoidance of doubt, the term Affiliated Investors includes these Special Purpose Funds.
|
6
Applicants do not seek relief for transactions that would be permitted under other
regulatory or interpretive guidance, including, for example, transactions effected consistent with Commission staff no-action positions (
Permitted Transactions
).
3
Accordingly, the conditions and representations contained herein are not applicable to Permitted Transactions.
All existing entities that currently intend to rely on the Order have been named as Applicants and any existing or future
entities that may rely on the Order in the future will comply with the terms and conditions of the Application.
I. GENERAL
DESCRIPTION OF APPLICANTS
A. The Company
The Company was organized under the General Corporation Law of the State of Maryland on June 9, 2010 for the
purpose of operating as an externally-managed, non-diversified closed-end management investment company that has elected to be regulated as a business development company (
BDC
) under the 1940 Act.
4
The Companys investment objective is to provide stockholders
with current income and, to a lesser extent, long-term capital appreciation. In addition, the Company has made an election to be treated for tax purposes as a regulated investment company (
RIC
) under the Internal Revenue
Code of 1986, as amended (the
Code
), and intends to continue to make such election in the future. The Companys principal place of business is 450 S. Orange Avenue, Orlando, Florida 32801.
3
|
See, e.g.
, Massachusetts Mutual Life Insurance Co. (pub. avail. June 7, 2000), Massachusetts Mutual Life Insurance Co. (pub. avail. July 28, 2000) and
SMC Capital, Inc. (pub. avail. Sept. 5, 1995).
|
4
|
Section 2(a)(48) defines a BDC to be any closed-end investment company that operates for the purpose of making investments in securities described
in section 55(a)(1) through 55(a)(3) of the 1940 Act and makes available significant managerial assistance with respect to the issuers of such securities.
|
7
The Company has a five-member board of directors (the
Board
) of
which three members are not interested persons of the Company within the meaning of Section 2(a)(19) of the 1940 Act (the
Independent Directors
).
B. CNL Entities
CNL is a leading private investment management firm providing global real estate and alternative investment opportunities. Since inception in 1973, CNL or its affiliates have formed or acquired companies
with more than $24 billion in assets. CNL has sponsored or managed a wide range of investment programs and has extensive experience investing in and lending to companies operating in the retail, restaurant, health care, hotel, leisure and recreation
industries.
Structured as a holding company, CNL conducts its business through various affiliates, which include
operating companies, investment advisers and a broker-dealer that are each registered or licensed by regulatory authorities in the jurisdictions in which they operate. Services provided by the CNL companies include advisory, acquisition,
development, lease and loan servicing, asset and portfolio management, disposition, client services, capital raising, finance and administrative.
CFA, a subsidiary of CNL, serves as the Companys investment adviser. CFA is a Florida corporation that has been continuously registered as an investment adviser since 1991. Historically, CFA has
advised high-net-worth individuals, pension and profit sharing plans, pooled investment vehicles, government entities and charitable organizations. CFA is registered with the Commission under the Investment Advisers Act of 1940, as amended (the
Advisers Act
).
C. KKR Entities
KKR is a leading alternative asset manager with $61.0 billion in assets under management as of March 31, 2011. Founded in 1976, KKR is a
global firm with 14 offices and over 800 people, including over 180 investment professionals as of March 31, 2011. It operates an integrated global platform for sourcing and executing investments across multiple industries, asset classes and
geographies. Since its inception, KKR has completed approximately 190 private equity transactions with a total transaction value in excess of $435 billion. As of March 31, 2011, it had $14.8 billion of corporate credit assets under management.
Structured as a holding company, KKR conducts its business through various subsidiaries, which include investment
advisers and broker-dealers that are registered or licensed by regulatory authorities in the jurisdictions in which they operate. These business activities include managing and advising a number of investment funds, structured finance vehicles,
co-investment vehicles, finance companies, managed accounts and other entities and providing a broad range of capital markets services. KKR also holds various financial assets in a principal capacity. For management reporting purposes, KKR organizes
its business into three business segments: Private Markets, Public Markets, and Capital Markets and Principal Activities.
8
1. Private Markets
Through its Private Markets segment, KKR sponsors a group of investment funds, co-investment vehicles and other entities that invest
capital in private equity, infrastructure and natural resources assets. Investments in private equity and infrastructure assets typically include controlling ownership positions or strategic minority investments in operating companies that are made
primarily for long-term appreciation. Investments in natural resources assets include direct investments in mineral interests that generate returns through the production of the underlying natural resources and provide exposure to commodities and a
means to hedge inflation.
The Affiliated Investors that are currently managed within the Private Markets segment are
included under the heading Existing Affiliated Investors in Schedule A hereto. Each of these Affiliated Investors is a separate and distinct legal entity and none is required to register as an investment company under the 1940 Act. KKR &
Co. serves as the investment adviser to these Affiliated Investors and, in some instances, these Affiliated Investors are sub-advised by other KKR & Co. Affiliated Advisers. KKR & Co. has been registered with the Commission under
the
Advisers Act since 2008. As of March 31, 2011, the KKR & Co. Affiliated Advisers had $46.2 billion of assets under management.
2. Public Markets
Through its Public Markets segment, KKR manages and
advises a number of investment funds, structured finance vehicles, finance companies, managed accounts and other entities that invest capital in liquid credit strategies, such as senior loans and high yield bonds, and less liquid credit products,
such as mezzanine debt, special situation assets, rescue financings, distressed assets, debtor-in-possession financings and exit financings. These investments may be made for current income, long-term appreciation or a combination of the foregoing.
The Affiliated Investors that are currently managed within the Public Markets segment are included under the heading
Existing Affiliated Investors in Schedule A hereto. Each of those entities is a separate and distinct legal entity and none is required to register as an investment company under the 1940 Act. These entities are managed by KAM and other KAM
Affiliated Advisers, which also advise separate accounts that are maintained with third party custodians and managed pursuant to investment advisory agreements with clients. KAM has been registered with the Commission under the Advisers Act since
2008 and also serves as the sub-adviser to the Company. As of March 31, 2011, the KAM Affiliated Advisers had approximately $14.8 billion of assets under management.
3. Capital Markets and Principal Activities
Through its Capital Markets
and Principal Activities segment, KKR conducts a broad range of capital markets activities, including acting as an underwriter, placement agent, or other form of arranger or provider of debt and equity financing and carrying out other types of
capital markets services and broker-dealer activities. These activities are conducted through the KCM Companies, which include entities registered or authorized as broker-dealers or their foreign equivalents in various countries in North America,
Europe, Asia and Australia. In the United States, KKR conducts its broker-dealer activities through KKR Capital Markets LLC, which has been registered with the Commission as a broker-dealer since 2007 and is a member of the Financial Industry
Regulatory Authority (FINRA). In addition, through the Capital Markets and Principal Activities Segment, KKR holds various financial assets in a principal capacity.
9
II. PROPOSED RELIEF
A. Co-Investment in Portfolio Companies by the Company and Affiliated Investors
1. Mechanics of the Co-Investment Program
As previously described, CFA
will serve as the Companys investment adviser and administrator, and KAM will serve as the Companys sub-adviser. In these roles, CFA will be responsible for the overall management of the Companys activities, and KAM will be
responsible for the day-to-day management of the Companys investment portfolio, in each case consistent with their fiduciary duties. CFA provides its investment advisory services under an investment advisory agreement with the Company (as
amended from time to time, the
Advisory Agreement
) and provides its additional administrative services under an administrative services agreement. KAM provides its investment advisory services under an investment
sub-advisory agreement between CFA and KAM (as amended from time to time, the
Sub-Advisory Agreement
). Importantly, the relationship between CFA and KAM is arms length, and KAM may withdraw on 120 days written
notice.
5
Although KAM will identify and recommend
investments for the Company, prior to any investment by the Company, the Sub-Advisory Agreement requires KAM to present each proposed investment to CFA which has the authority to approve or reject all investments proposed for the Company by KAM.
Through this authority to approve or reject any investment proposed by KAM, CFA will have ultimate authority with respect to the Companys investments, subject in each case to the oversight of the Board.
It is anticipated that KAM or another KKR Affiliated Adviser will periodically determine that certain investments KAM recommends for the
Company would also be appropriate investments for one or more Affiliated Investors. Such a determination may arise in a number of scenarios, including Co-Investment Transactions, Joint Follow-On Transactions and Joint Exit Transactions, each of
which is defined and discussed below.
Opportunities for Co-Investment Transactions may arise when advisory personnel of KAM
or a KKR Affiliated Adviser become aware of investment opportunities that may be appropriate for both the Company and an Affiliated Investor. Upon issuance of the requested Order, in such cases, investment opportunities that are presented to an
Affiliated Investor may be referred to the Company and vice versa, and such investment opportunities may result in a Co-Investment Transaction. For each type of Co-Investment Transaction, a specific protocol applies, which is designed to ensure
fairness to the Company based on the specific type of Co-Investment Transaction. Consistent with the policies and procedures that have been adopted by KAM and the KKR Affiliated Advisers designed to allocate investment opportunities in a fair and
equitable manner, each must make reasonable efforts to refer investment opportunities to the Company and Affiliated Investors if such investment opportunity falls within any of the Companys or an Affiliated Investors primary investment
mandates. However, the Company or any Affiliated Investor will not be obligated to invest, or co-invest, when investment opportunities are referred to them.
5
|
The Sub-Advisory Agreement may also be terminated by the Company through its board of directors or a vote of its stockholders in accordance with Section 15(a) of
the 1940 Act.
|
10
2. Co-Investment Transactions
A Co-Investment Transaction may occur when, as described above, advisory personnel of KAM or another KKR Affiliated Adviser become aware
of investment opportunities that may be appropriate for both the Company and one or more Affiliated Investors. Investment opportunities that are presented to an Affiliated Investor may be referred to the Company and vice versa. For each such
referral, KAM will independently analyze and evaluate the investment opportunity as to its appropriateness for the Company taking into consideration the Companys investment objective and strategies, any applicable investment restrictions, the
amount the Company can or should invest in such investment, the relationship between the investment opportunity and the Companys investment strategies, the Companys available funds, the market conditions, any regulatory, tax, or legal
considerations, the availability of other investment opportunities, the anticipated timeframe for such investment, the extent of any potential required follow-on investment and other pertinent factors particular to the Company (the
Company Investment Factors
). If KAM determines that the opportunity is appropriate for the Company (and CFA approves the investment for the Company), and an Affiliated Investor has confirmed its desire to also participate,
the Advisers will present the investment opportunity to the directors eligible to constitute the required majority (
Required Majority
) within the meaning of Section 57(o)
6
of the Act (the
Eligible
Directors
) prior to the actual investment by the Company. A Co-Investment Transaction will be consummated only upon approval by a Required Majority of the Eligible Directors.
In a typical Co-Investment Transaction, the issuer agrees to pay a transaction fee to KAM or another KKR Affiliated Adviser for certain
services KAM or another KKR Affiliated Adviser provides to the issuer (
Fee
), which is normally calculated as a percentage of the total capital committed or invested in the Co-Investment Transaction and paid at closing. The
services provided by KAM or another KKR Affiliated Adviser vary by investment, but generally consist of assisting with transaction structuring, assisting with due diligence and providing general advice, which concludes at closing. Each Fee initially
would be apportioned by KAM or the other KKR Affiliated Adviser among the Company and any Affiliated Investors investing in the transaction
pro rata
based on their respective participation in the transaction giving rise to the Fee. The Fee
amount apportioned to each investing entity would then be allocated to the investing entity, on the one hand, and its KKR Affiliated Adviser (KAM in the case of the Company), on the other hand, in accordance with the provisions of the particular
investment advisory agreement (sub-advisory agreement in the case of the Company) with the investing entity.
7
While each investing entity and its KKR Affiliated Adviser may retain a different percentage of the Fees that are apportioned to the Company and Affiliated Investors participating in the investment, such
differences will be due solely to, and governed by, the terms of the particular investment advisory agreement or governing document of each such investing entity. With respect to any Fees attributable to an investment by the Company, the aggregate
amount of the Fees to be retained by CFA and KAM would be limited to one percent.
8
6
|
The term Required Majority, when used with respect to the approval of a proposed transaction, plan, or arrangement, means both a majority of the
Companys directors who have no financial interest in such transaction, plan, or arrangement and a majority of such directors who are not interested persons of the Company.
|
7
|
In some cases, the split of the Fees is set forth in the Affiliated Investors limited partnership agreement or limited liability company agreement.
|
8
|
Upon grant of relief, KAM would agree to pay a portion of any Fees it receives in respect of the Companys investment in an issuer to CFA pursuant to the
Sub-Advisory Agreement.
|
11
3. Third Party Placement Transactions
From time to time, an issuer may retain a KCM Company to assist such issuer in meeting its capital needs. In some cases, an issuer may
retain a KCM Company to act as a direct placement agent, seeking to place, on a best efforts basis, the issuers securities with unaffiliated third party investors (
i.e.
, non-Affiliated Investors) or a KCM Company may commit to purchase
an issuers securities in its principal capacity and seek to syndicate such securities among non-Affiliated Investors (in either case, a
Third Party Placement Transaction
). In a Third Party Placement Transaction, the
issuer would pay the KCM Company its usual and customary placement fee which would normally be calculated as a percentage of the value of the issuers securities that the KCM Company placed with, or syndicated to, non-Affiliated Investors
(
Placement Fee
). If the Company and one or more Affiliated Investors (including a KCM Company to the extent such KCM Company commits to purchase an issuers securities in its principal capacity) were to acquire
directly from the issuer the same security that is the subject of the Third Party Placement Transaction, and/or a different security at the same time as the Third Party Placement Transaction, such acquisition would be classified as a Co-Investment
Transaction and be subject to the conditions set forth herein.
9
For the avoidance of doubt, the KCM Company would not be paid a Placement Fee with respect to the investment acquired by the Company directly from the Issuer. Rather, the KCM Company would receive a
Placement Fee based solely on the securities it places with unaffiliated third party investors.
B. Ensuring
Fairness in Co-Investment Transactions and Third Party Placement Transactions
1. Ensuring Fairness in Co-Investment
Transactions
A Co-Investment Transaction may arise where, as described above, investment opportunities are presented to an
Affiliated Investor and referred to the Company or vice versa. For each such referral, KAM will independently analyze and evaluate whether the investment opportunity is appropriate for the Company taking into consideration the Company Investment
Factors.
9
|
When the Company invests alongside non-Affiliated Investors in transactions in which no Affiliated Investor participates, Sections 17(d) and 57(a) are not implicated.
Therefore, relief for such transactions is unnecessary.
|
12
If KAM determines that the opportunity is appropriate for the
Company (and CFA approves the investment) and an Affiliated Investor has also confirmed its desire to participate, the Company may invest only if, and at a price, approved by a Required Majority, after appropriate consideration of all relevant
information by the Eligible Directors, including the aggregate amount of Fees retained by the Company, the Affiliated Investors, all KKR Affiliated Advisers and CFA in connection with the Co-Investment Transaction. The Companys investment in
such Co-Investment Transaction would be on the same terms, conditions, price, class of securities,
10
settlement date and registration rights as
those applicable to the Affiliated Investors.
To allow for an independent review of co-investment activities, CFAs and
KAMs respective allocation procedures require that the Eligible Directors will receive, on a quarterly basis, a record of all investments made by Affiliated Investors during the preceding quarter that: (1) were consistent with the
Companys then current investment objective and met certain inclusion criteria determined by the Eligible Directors from time to time as described below, but (2) were not made available to the Company. This record will include an
explanation of why such investment opportunities were not offered to the Company. The Company believes it is appropriate for the Eligible Directors to set (and adjust from time to time) inclusion criteria for such reports. The Eligible
Directors inclusion criteria would be expected to relate to, among other things, expected minimum rate of return, liquidity, available capital and size of the investment, other available investment opportunities in the market, its status as a
qualified asset as described by Section 55(a) of the 1940 Act (Qualified Asset) as well as any control or management rights available to the Company. Providing the Eligible Directors the authority to set inclusion
criteria recognizes that many of the Affiliated Investors are not subject to leverage or other 1940 Act restrictions and may pursue investments with more liquidity, of a larger size or with less control over an issuer than the Company generally
pursues given its investment objective and BDC status. Providing information about transactions by an Affiliated Investor only when such transactions fall within the inclusion criteria ensures that the Eligible Directors will be able to focus on
those opportunities in which the Company would actually be expected to invest without being overwhelmed by information relating to opportunities that would not be pursued by the Company. The inclusion criteria may change over time depending on
market conditions, the Companys available capital and such other factors as the Eligible Directors deem appropriate.
2. Ensuring Fairness in Third Party Placement Transactions
As stated above, in certain circumstances, a Third Party Placement Transaction may also be a Co-Investment Transaction. To the extent that
a Third Party Placement Transaction is also a Co-Investment Transaction, KAM will provide: (i) the same information to the Eligible Directors as it would for any Co-Investment Transaction as well as (ii) the aggregate amount of the
Placement Fee payable to the KCM Company and such additional information as the Eligible Directors may request from time to time. For the avoidance of doubt, a KCM Company would not receive a Placement Fee with respect to securities purchased
directly from the issuer by the Company.
10
|
There may be instances where KAM determines (and CFA agrees) that the Company should invest in more than one class of securities of an issuer, while the investment
guidelines for a particular Affiliated Investor may limit that Affiliated Investor from investing in certain, but not all, of those classes of securities (each class in which the Affiliated Investor may participate, a
Permitted
Class
). In these instances, the Company and the Affiliated Investor would invest in the Permitted Class on the same terms, conditions, price, settlement date and registration rights and the Company would invest in the other class(es)
on terms as authorized by a Required Majority of the Eligible Directors.
|
13
Upon issuance of the requested Order, in each Third Party Placement Transaction, KAM
will independently analyze and evaluate whether the investment opportunity is appropriate for the Company taking into consideration the Company Investment Factors. KAMs investment decision to recommend that the Company participate in an
investment opportunity (and CFAs approval thereof) will be made independently of a KCM Companys decisions to provide placement services to the issuer. If KAM determines that the opportunity is appropriate for the Company (and CFA
approves the investment), the Company may invest in a Co-Investment Transaction where a KCM Company is engaging in a Third Party Placement Transaction only if approved by a Required Majority of the Eligible Directors after appropriate consideration
of all relevant information.
In addition to these procedures, each of which helps to ensure fairness in Co-Investment
Transactions by providing the Eligible Directors with the information regarding Third Party Placement Transactions set forth in Condition 11, the Eligible Directors will be able to evaluate the extent to which the Company is participating in
Co-Investment Transactions that are Third Party Placement Transactions, as compared to other Co-Investment Transactions, in order to conclude that such transactions do not involve any concerns of overreaching.
C. Rationale for Co-Investment Transactions and Third Party Placement Transactions
KAM and its affiliates provide the Company with immediate access to an established source of proprietary deal flow. The Board believes
that KAM is able to provide the Company with differentiated and attractive investment opportunities by leveraging KKRs global investment platform, resources and existing relationships with major companies, commercial and investment banks,
financial sponsors and other investment and advisory institutions. KKR has an established infrastructure and investment process for originating and managing leveraged credit portfolios, including senior secured loans, second lien loans, mezzanine
obligations, high yield bonds, structured finance instruments, credit derivatives and equity securities. The Company also has access to the KKR staff of over 800 people as of March 31, 2011, including over 180 investment professionals. It is
anticipated that the Company will benefit from this infrastructure through access to investment opportunities from KKRs existing institutional relationships and from KKRs ability to forge new institutional relationships that will yield
further investment opportunities that could be accessible to the Company, access to proprietary investments from KKRs dedicated origination and sourcing team, and risk management from KAMs investment policies and expertise. To allow the
Company to best benefit from KKRs infrastructure and process, CFA and the Board believe that it will be advantageous for the Company to co-invest with one or more Affiliated Investors to the extent that such investments are consistent with the
factors outlined above.
14
As noted above, CFA has the right to approve or reject all investment decisions for the
Company. Furthermore, KAMs investment recommendations for the Company are made separately from recommendations made by KAM or a KAM Affiliated Adviser with regard to the participation by an Affiliated Investor or the decision of a KCM Company
to provide placement services to the issuer in the transaction. Prior to recommending an investment in a Co-Investment Transaction (including a Third Party Placement Transaction), KAM will independently analyze each potential investment based on the
Company Investment Factors to determine whether it is appropriate for the Company. Unlike a traditional relationship between a fund and its investment adviser, KAMs investment recommendations for the Company are subject to approval by CFA. In
particular, KAM presents an available investment opportunity to the Company and CFA when KAM believes the opportunity to be appropriate and beneficial to the Company, and CFA may accept or reject the opportunity in its discretion. CFA has no
relationship with any Affiliated Investor or KCM Company that may participate in a Co-Investment Transaction (in the case of an Affiliated Investor) or a Third Party Placement Transaction (in the case of a KCM Company) and, therefore, no incentive
to place their interests above those of the Company. Rather, based on the fee arrangements between the Company and CFA, CFA has an incentive to assure that the best opportunities are offered to and undertaken by the Company (and, similarly, an
incentive to not approve opportunities that CFA does not believe will benefit the Company). For this reason, the Applicants submit that the conflicts intended to be addressed by the co-investment restrictions under the 1940 Act are well mitigated.
In order to provide further assurance that the best interests of the Company will be served, all Co-Investment Transactions will be subject to approval by a Required Majority of the Eligible Directors and will take place on the same terms and
conditions as those applicable to the Affiliated Investors.
Current credit market conditions have led to a decline in
the availability of capital, making it more difficult for the Company to raise capital while at the same time creating more opportunities for the Company to make investments consistent with its investment objective and allowing the Company to focus
on transactions where its competitive advantages are strongest. The ability to participate in Co-Investment Transactions (including Third Party Placement Transactions) that involve committing larger amounts of financing would enable the Company to
participate in larger financing commitments, which would, in turn, be expected to increase income, expand investment opportunities and provide better access to due diligence information for the Company. Indeed, the Companys inability to
co-invest with one or more Affiliated Investors could potentially result in the loss of beneficial investment opportunities for the Company and, in turn, adversely affect the Companys stockholders. For example, the Company may lose some
investment opportunities when KKR cannot provide one-stop financing to a company. In addition, the Code imposes diversification requirements on companies, such as the Company, that seek certain favorable tax treatment under Subchapter M
of the Code. Consequently, in some circumstances, the Company might not be able to commit to the entire amount of financing sought by an issuer. In such cases, the issuer is likely to reject an offer of funding from the Company due to the
Companys inability to commit the full amount of financing required. Allowing for the types of transactions described in this Application will generate greater deal flow, broaden the market relationships of the Company and allow the Company to
be more selective in choosing its investments so that the Company can pursue the most attractive risk-adjusted investments and optimize its portfolio. Enhanced selectivity and more favorable deal terms, pricing and structure would also likely lead
to closer relationships between the Company and its portfolio companies, all of which should create enhanced value for the Company and its stockholders.
15
D. Joint Follow-On Transactions and Joint Exit Transactions
1. Mechanics of Joint Follow-On Transactions and Joint Exit Transactions
There may be instances where the Company and one or more Affiliated Investors hold investments in the same issuer, but where the
respective acquisitions of that investment did not implicate the joint transaction proscriptions of Section 57(a)(4). A lack of jointness in the original investment transaction could arise because, among other things, the
transactions were Permitted Transactions, were separated by time or were otherwise distinct in nature such that the Company was able to conclude that Section 57(a) was not implicated. If, however, either the Company or an Affiliated Investor
wishes to exit the investment, or make a follow-on investment in that issuer, Section 57(a)(4) may be implicated (such situations, where Section 57(a)(4) is implicated, are referred to herein as
Joint Exit
Transactions
and
Joint Follow-On Transactions
, respectively) because the Company and the Affiliated Investor may be joint participants in the
transaction.
11
When Joint Exit Transactions and Joint
Follow-On Transactions arise, they will be executed based on the protocols described below.
2. Ensuring Fairness in
Joint Follow-On Transactions and Joint Exit Transactions
In connection with Joint Follow-On
Transactions and Joint Exit Transactions, the following protocols are designed to ensure the fairness of those transactions to the Company: (1) where each of the Company and an Affiliated Investor holds the same class of securities of an
issuer, Joint Exit Transactions and Joint Follow-On Transactions will be made in the same manner and subject to the same procedures as Co-Investment Transactions described above; (2) where each of the Company and an Affiliated Investor holds a
different class of securities of the same issuer and the Affiliated Investor desires to make a follow-on investment, a Joint Follow-On Transaction will only be made to the extent that the Company is also offered the opportunity, exercisable by a
Required Majority of the Eligible Directors, to invest in the same investment at the same time and on the same terms as the Affiliated Investor completing the follow-on investment;
and (3) where each of the Company and an Affiliated Investor holds a different class of securities of the same
issuer and the Affiliated Investor seeks to exit in a transaction that implicates Section 57(a)(4) because of the participation in some fashion by the Company, the Affiliated Investor may only exit to the extent that the Company is also offered
the opportunity, exercisable by a Required Majority of the Eligible Directors, to exit its investment. The price received by the Company for the sale of an investment in a Joint Exit Transaction described in scenario (3) of the preceding
sentence would be negotiated to be based on the price received by a non-affiliated third party also seeking to exit the same investment,
i.e.
, the market price of the investment in question, if any. If there is no non-affiliated third party
also exiting the same investment, then a Required Majority of the Eligible Directors of the Company must determine that the exit price to be received by the Company is fair and in the best interests of the stockholders of the Company. These
protocols ensure the fairness of Joint Follow-On Transactions and Joint Exit Transactions because they provide that the Company will have the same opportunity, at the same time and on the same terms as an Affiliated Investor to make an additional
investment in an issuer or to sell its investment in an issuer.
11
|
Certain exit transactions or follow-on investments may constitute Permitted Transactions that do not implicate Section 57(a)(4) and, therefore, are not subject to
the conditions contained herein. In certain Co-Investment Transactions, an Affiliated Investor may participate in an investment opportunity in anticipation of selling the investment within a short period of time (a Seasoning Period) to
an unaffiliated third party that was not able to acquire the investment at the time of the original commitment in accordance with the third partys governing documents, or otherwise as a customary accommodation by the Affiliated Investor to the
unaffiliated third party. A Seasoning Period usually terminates 48 hours from the closing of the original transaction, though the Seasoning Period can vary. Exit transactions that involve an Affiliated Investor selling an investment to an
unaffiliated third party following a brief Seasoning Period are not based on an investment decision by KAM to sell the particular investment and, therefore, should not require the Company to be offered a Joint Exit Transaction in accordance with the
conditions contained herein.
|
16
E. Rationale For Joint Exit and Joint Follow-On Transactions
With respect to Joint Follow-On Transactions, Applicants believe that the conditions set forth herein would provide appropriate
stockholder protection. The fact that a Joint Follow-On Transaction would be effected at a time when the Company and one or more Affiliated Investors already have positions in the issuer is fully addressed by the requirement that a Required Majority
of the Eligible Directors consider whether, and that the transaction proceeds only if a Required Majority of the Eligible Directors determines that, the proposed Joint Follow-On Transaction is in the best interests of the Companys
stockholders, prior to effecting the transaction. Additionally, the Applicants believe that not permitting a Required Majority of the Eligible Directors to provide authorization of
de minimis
dispositions would unduly restrict the ability of
the Company to exit investments at the most opportune time and to otherwise act in a manner to maximize value to the Companys stockholders. If a desired disposition transaction accounts for less than two percent of the Companys
portfolio, then the Company will be able to effect that transaction without any delay resulting from the need to seek action by a Required Majority of the Eligible Directors.
With respect to Joint Exit Transactions, Applicants believe that greater restrictions than those that would be imposed under the
traditional co-investment order conditions are unnecessary and inappropriate. There will be times when it will be in the best interests of the Companys stockholders for the Company to divest of a position also held by an Affiliated Investor.
Where the Company and an Affiliated Investor came to and have maintained their respective positions in an issuer under circumstances where Section 57(a)(4) is not implicated (
e.g.
, through a Permitted Transaction or a
non-joint transaction) absent the proposed disposition, additional conditions that would unduly limit, delay or prohibit a disposition serve no stockholder protection or policy purpose and, in fact, could harm the Company and its
stockholders. Moreover, the fact that the acquisitions resulting in contemporaneous ownership were not themselves subject to the conditions applicable to Co-Investment Transactions is not relevant. Those conditions have historically been imposed to
ensure that investments made under circumstances which Congress in Section 57(a)(4) identified as presumptively abusive
i.e.
, where a BDC and an affiliate are acting jointly by investing in the same issuer in some concerted way
are subject to a protocol designed to prevent the abuse through specific limitations and proactive board involvement, as appropriate. Where, as here, there was no potentially abusive transaction as a predicate, imposition of further
conditions would seem a solution in search of a problem that does not exist. As a result, Applicants believe that applying conditions applicable to any exit, but not adding additional conditions, appropriately protects the interests of the
Companys stockholders.
17
F. Applicable Law
1. Sections 57(a)(4) and 57(i) of the 1940 Act, and Rule 17d-1 thereunder
Section 57(a)(4) makes it unlawful for any person who is related to a BDC in a manner described in Section 57(b), acting as
principal, knowingly to effect any transaction in which the BDC is a joint or a joint and several participant with that person in contravention of rules and regulations as the Commission may prescribe for the purpose of limiting or preventing
participation by the BDC on a basis less advantageous than that of the other participant. Because the Commission has not adopted any rules expressly under Section 57(a)(4), Section 57(i) provides that the rules under Section 17(d)
applicable to registered closed-end investment companies (
e.g
., Rule 17d-1) are, in the interim, deemed to apply to transactions subject to Section 57(a).
12
Rule 17d-1, as made applicable to BDCs by Section 57(i), prohibits any person who is related to a BDC in a manner
described in Section 57(b), as modified by Rule 57b-1, from acting as principal, from participating in, or effecting any transaction in connection with, any joint enterprise or other joint arrangement or profit-sharing plan in which the BDC is
a participant, unless an application regarding the joint enterprise, arrangement, or profit-sharing plan has been filed with the Commission and has been granted by an order entered prior to the submission of the plan or any modification thereof, to
security holders for approval, or prior to its adoption or modification if not so submitted. In considering whether to grant an application under Rule 17d-1, the Commission will consider whether the participation by the BDC in such joint transaction
is consistent with the provisions, policies, and purposes of the 1940 Act and the extent to which such participation is on a basis different from or less advantageous than that of other participants.
2. Section 57(b) of the 1940 Act and Rule 57b-1 thereunder
Section 57(b), as modified by Rule 57b-1, specifies the persons to whom the prohibitions of Section 57(a)(4) apply. These
persons include the following: (1) any director, officer, employee, or member of an advisory board of a BDC or any person (other than the BDC itself) who is, within the meaning of Section 2(a)(3)(C), an affiliated person of any such
person; or (2) any investment adviser or promoter of, general partner in, principal underwriter for, or person directly or indirectly either controlling, controlled by, or under common control with a BDC (except the BDC itself and any person
who, if it were not directly or indirectly controlled by the BDC, would not be directly or indirectly under the control of a person who controls the BDC), or any person who is, within the meaning of Section 2(a)(3)(C) or (D), an affiliated
person of such person.
Rule 57b-1 under the 1940 Act exempts certain persons otherwise related to a BDC in a manner described
in Section 57(b)(2) of the 1940 Act from being subject to the prohibitions of Section 57(a). Specifically, this rule states that the provisions of Section 57(a) shall not apply to any person: (a) solely because that person is
directly or indirectly controlled by a BDC, or (b) solely because that person is directly or indirectly controlling, controlled by, or under common control with a person described in (a) of the rule or is an officer, director, partner,
copartner, or employee of a person described in (a) of the rule.
12
|
See
Section 57(i) of the 1940 Act.
|
18
Section 2(a)(9) defines control as the power to exercise a controlling
influence over the management or policies of a company, unless such power is solely the result of an official position with such company. The statute also sets forth the interpretation that any person who owns beneficially, either directly or
through one or more controlled companies, more than 25 percent of the voting securities of a company shall be presumed to control such company; any person who does not so own more than 25 percent of the voting securities of a company shall be
presumed not to control such company; and a natural person shall be presumed not to be a controlled person.
Sections
2(a)(3)(C) and (D) define an affiliated person of another person as: (C) any person directly or indirectly controlling, controlled by, or under common control with, such other person; (D) any officer, director, partner,
copartner, or employee of such other person.
G. Need For Relief
Co-Investment Transactions (including Third Party Placement Transactions), Joint Follow-on Transactions and Joint Exit Transactions could
be prohibited by Section 57(a)(4) and Rule 17d-1 without a prior order of the Commission to the extent that the Affiliated Investors fall within the categories of persons described by Section 57(b), as modified by Rule 57b-1 thereunder.
For purposes of Section 57(b), an investment sub-adviser is considered the equivalent to an investment adviser to an entity. Thus, KAM and any Affiliated Investors that it advises could be deemed to be persons related to the Company in a manner
described by Section 57(b) and therefore prohibited by Section 57(a)(4) and Rule 17d-1 from participating in Co-Investment Transactions (including Third Party Placement Transactions), Joint Follow-On Transactions and Joint Exit
Transactions. In addition, because other KKR Affiliated Advisers are affiliated persons of KAM, Affiliated Investors advised by any of them could be deemed to be persons related to the Company in a manner described by Section 57(b)
and also prohibited from participating in a Co-Investment Transaction (including a Third Party Placement Transaction), Joint Follow-on Transaction or Joint Exit Transaction.
H. Requested Relief
Accordingly, Applicants respectfully request an Order of the Commission, subject to the terms set forth in the Application, pursuant to Sections 57(i) and Rule 17d-1, to permit the Company and Affiliated
Investors to participate in: (1) Co-Investment Transactions (including applicable Third Party Placement
Transactions)
; (2) Joint Follow-On Transactions; and (3) Joint Exit
Transactions.
19
I. Precedents
The Commission has granted co-investment relief on numerous occasions in recent years.
13
Although the various precedents involve different co-investment scenarios, including approval procedures, and
presumptions for co-investment transactions to protect the interests of public investors in the BDC, than the one described in this Application, Applicants submit that the procedures set forth as conditions for the relief requested herein are
consistent with the range of investor protection found in the cited orders.
J. Applicants Legal Arguments
In accordance with Rule 17d-1 (made applicable to BDCs pursuant to Section 57(i)), the Commission may grant the
requested relief as to any particular joint transaction if it finds that the participation of the Company (or any person it controls) in the joint transaction is consistent with the provisions, policies and purposes of the 1940 Act and is not on a
basis different from or less advantageous than that of other participants.
13
|
Ridgewood
Capital Energy Growth Fund, LLC, et. al.
(File No. 812-13569), Release No. IC-28982 (Oct. 21, 2009) (order), Release No. IC-28931 (Sept. 25, 2009) (notice);
Main Street Capital Corporation, et. al.
(File No. 812-1343 8), Release
No. IC-28295 (June 3, 2008) (order), Release No. IC-28265 (May 8, 2008) (notice);
Gladstone Capital Corporation, et. al.
(File No. 812-12934), Release No. IC-27150 (November 22, 2005) (order), Release No. IC-27120 (October 25, 2005)
(notice);
meVC Draper Fisher Jurvetson Fund I, Inc., et al.
(File No. 812-11998), Release No. IC-24556 (July 11, 2000) (order), Release No. IC- 24496 (June 13, 2000) (notice);
Berthel Growth & Income Trust I, et al.
(File
No. 812-10830), Release No. IC-23864 (June 8, 1999) (order), Release No. IC- 23825 (May 12, 1999) (notice);
Technology Funding Venture Capital Fund VI, LLC, et al.
(File No. 812-11006), Release No. IC-23610 (Dec. 18, 1998) (order),
Release No. IC- 23573 (Nov. 25, 1998) (notice);
MACC Private Equities Inc., et al.
(File No. 812-11148), Release No. IC-23518 (Nov. 3, 1998) (order), Release No. IC- 23478 (Oct. 6, 1998) (notice);
Brantley Capital Corporation, et
al.
(File No. 812-10544), Release No. IC-22893 (Nov. 18, 1997) (order), Release No. IC-22864 (Oct. 21, 1997) (notice);
Renaissance Capital Growth & Income Fund III. Inc.
(File No. 8 12-10354), Release No. IC-22428 (Dec.
31, 1996) (order), Release No. IC-22378 (Dec. 6, 1996) (notice);
Sherry Lane Growth Fund. Inc.
(File No. 812-10082), Release No. IC-22130 (Aug. 9, 1996) (order), Release No. IC-22060 (July 10, 1996) (notice);
Access Capital Strategies
Community Investment Fund. Inc.
(File No. 812-9786), Release No. IC-21898 (Apr. 16, 1996) (order), Release No. IC-21836 (Mar. 20, 1996) (notice);
Ridgewood Electric Power Trust III
(File No. 812-9558), Release No. IC-21589 (Dec.
11, 1995) (order), Release No. IC-21472 (Nov. 3, 1995) (notice);
MAC Private Equities Inc.
, (File No. 812-9028), Release No. IC20887 (Feb. 7, 1995) (order), Release No. IC-20831 (Jan. 12, 1995) (notice);
Corporate Renaissance Group,
Inc.
(File No. 812-8978), Release No. IC-20690 (Nov. 8, 1994) (order), Release No. IC-20617 (Oct. 13, 1994) (notice);
ML Venture, Partners II. L.P.
(File No. 812-7841), Release No. IC-18700 (May 11, 1992) (order), Release No.
IC-18652 (Apr. 13, 1992) (notice);
Equus Capital Partners, L.P.
(File No. 812-7272), Release No. IC-18105 (Apr. 18, 1991) (order), Release No. IC-18058 (Mar. 21, 1991) (notice);
Equitable Capital, Partners, L.P.
(File
No. 812-7328), Release No. IC-17925 (Dec. 31, 1990) (order), Release No. IC-17894 (Dec. 5, 1990) (notice);
Technology Funding Partners III, L.P.
(File No. 812-7355), Release No. IC-17571 (July 5, 1990) (order), Release No. IC-17523
(June 6, 1990) (notice);
Berkshire, Partners III, L.P.,
(File No. 812-7335), Release No. IC-17533 (June 14, 1990) (order), Release No. IC-17496 (May 17, 1990) (notice);
ML-Lee Acquisition Fund II, L.P.
, (File No. 8127133),
Release No. IC-17123 (Sept. 1, 1989) (order), Release No. IC-17101 (Aug. 7, 1989) (notice);
The Prospect Group Opportunity Fund, Inc.
, (File No. 812-7024), Release No. IC16841 (Feb. 27, 1989) (order), Release No. IC-16774 (Jan. 24, 1989)
(notice).
|
20
As required by Rule 17d-1(b), the terms and conditions proposed in the Application
ensure that the terms on which Co-Investment Transactions (including Third Party Placement Transactions), Joint Follow-On Transactions and Joint Exit Transactions may be made are consistent with the participation of the Company being on a basis that
it is neither different from nor less advantageous than other participants, thus protecting the stockholders or interest holders of any participant from being disadvantaged. For each Co-Investment Transaction, the Company and one or more of the
Affiliated Investors will be offered the opportunity to participate in the Co-Investment Transactions on the same terms and conditions and, if the aggregate amount recommended by KAM to be invested by the Company and all participating Affiliated
Investors exceeds the amount of the investment opportunity, the investment opportunity will be allocated among them
pro rata
based on the amount that each such party would have invested if the amount of the investment opportunity was
sufficient to satisfy all the parties proposed investments. Further, the terms and conditions proposed herein will ensure that all such transactions are reasonable and fair to the Company and the Affiliated Investors and do not involve
overreaching by any person concerned, including CFA or KAM. The decision for the Company to participate in any Co-Investment Transaction (including one involving a Third Party Placement Transaction) will be based on the recommendation of KAM and
subject to the approval of CFA and the approval of a Required Majority of the Eligible Directors.
K. Conditions
Applicants agree that any Order granting the requested relief will be subject to the following conditions:
1. (a) If considering an investment opportunity that could result in a Co-Investment Transaction, KAM will make an independent
determination of the appropriateness of the Companys participation in such transaction in light of the Companys then-current circumstances.
(b) If KAM deems the Companys participation in any such transaction to be appropriate for the Company (and CFA approves the investment), KAM will then determine an appropriate level of investment
for the Company in such investment opportunity. For all Co-Investment Transactions (including Third Party Placement Transactions), if the amount determined by KAM to be invested by the Company in such Co-Investment Transaction, together with the
amount proposed to be invested by all Affiliated Investors in the same Co-Investment Transaction, exceed the aggregate amount of the investment opportunity, the amount of the investment opportunity will be allocated among the Company and such
Affiliated Investors, pro rata based on the amount that each such party would have invested if the amount of the investment opportunity was sufficient to satisfy each partys proposed investment.
(c) After making the determinations required in (a) and (b) above, the Advisers will distribute written information to the Eligible
Directors concerning the Co-Investment Transaction, including the amount proposed to be invested by the Company and any Affiliated Investor, the aggregate amount of Fees to be allocated to the Company, Affiliated Investors, CFA, KAM and KKR
Affiliated Advisers and, in the case of Third Party Placement Transactions, any Placement Fee payable by the issuer to the KCM Company. The Company will co-invest with an Affiliated Investor only if, prior to the Companys participation in the
Co-Investment Transaction, a Required Majority of the Eligible Directors concludes that:
21
(i) the terms of the Co-Investment Transaction, including the consideration to be paid,
are reasonable and fair and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned;
(ii) the Co-Investment Transaction is consistent with:
(A) the best interests
of the Companys stockholders; and
(B) the Companys investment objective and strategies (as described in the
Companys registration statements on Form N-2 and other filings made with the Commission by the Company under the Securities Act of 1933, as amended, any reports filed by the Company with the Commission under the Securities Exchange Act of
1934, as amended, and the Companys reports to stockholders);
(iii) the investment by an Affiliated Investor would
not disadvantage the Company, and participation by the Company is not on a basis different from or less advantageous than that of any other Affiliated Investor; provided, that if an Affiliated Investor, but not the Company, gains the right to
nominate a director for election to an issuers board of directors, the right to have a board observer, the right to provision of information or any similar right to participate in the governance or management of the issuer, such event shall
not be interpreted to prohibit a Required Majority of the Eligible Directors from reaching the conclusions required by this condition (1)(c)(iii), if:
(A) a Required Majority of the Eligible Directors shall have the right to ratify the selection of such director or board observer, if any; and
(B) KAM agrees to, and does, provide periodic reports to the Eligible Directors with respect to the actions of such director or the
information received by such board observer or obtained through the exercise of any similar right to participate in the governance or management of the issuer; and
(iv) the proposed investment by the Company will not benefit KAM, CFA, any Affiliated Investors or any affiliated person thereof (other than the participating Affiliated Investors), except to the extent
permitted under Sections 17(e) and 57(k) of the 1940 Act.
(d) The Company will have the right to decline to participate
in any Co-Investment Transaction or to invest less than the amount offered to the Company.
(e) The Eligible Directors
will be provided on a quarterly basis, a record of all investments made by Affiliated Investors during the preceding quarter that: (i) fell within the Companys then-current investment objective and met certain criteria determined by the
Eligible Directors from time to time for the purpose of this reporting requirement related to the expected minimum rate of return, liquidity, available capital and size of the investment, other potential opportunities and its status as a Qualified
Asset, as well as any control or management rights available to the Company and (ii) were not made available to the Company, as well as an explanation of why the investment opportunities were not offered to the Company so that a Required
Majority of the Eligible Directors may determine whether the conditions of the Order have been met. All information presented to the Eligible Directors pursuant to this condition will be kept by the Advisers or the Company for the life of the
Company and at least two years thereafter, and will be subject to examination by the Commission and its staff.
22
2. Except for a Joint Follow-On Transaction pursuant to condition 5 below, the Company
will not invest in reliance on the Order in any issuer in which KAM, CFA or any Affiliated Investor or any affiliated person thereof is an existing investor.
3. The Company will not participate in any Co-Investment Transaction unless the terms, conditions, price, class of securities to be purchased, settlement date, and registration rights will be the same for
the Company as for any other Affiliated Investor, except where the Company desires to purchase securities that are not a Permitted Class for an Affiliated Investor, in which case the Company and the Affiliated Investor will invest in each Permitted
Class on the same terms, conditions, price, settlement date and registration rights and the Company will invest in the other class(es) as authorized by a Required Majority of the Eligible Directors. The grant to an Affiliated Investor, but not the
Company, of the right to nominate a director for election to a issuers board of directors, the right to have an observer on the board of directors or similar rights to participate in the governance or management of the issuer will not be
interpreted so as to violate this condition 3, if conditions 1(c)(iii)(A) and (B) are met.
4.
(a) Except as described below, no Affiliated Investor nor
the Company will sell, exchange, or otherwise dispose of any investment acquired pursuant to the Order or engage in a Joint Exit Transaction involving an investment held by both the Affiliated Investor and the Company unless each Affiliated Investor
and the Company disposes of its interest in such investment at the same time, for the same unit consideration, on the same terms and conditions, and in amounts proportionate to its respective holding of such investment.
14
If the proposed participation of any Affiliated Investor or the
Company in a proposed disposition is disproportionate to its existing holding of such investment, or if any Affiliated Investor or the Company determines not to dispose of its investment, KAM shall formulate a recommendation as to the participation
of the Company in the proposed transaction and submit the recommendation to the Eligible Directors of the Company. The recommendation will include an explanation of why the Affiliated Investor is not participating to the extent of, or exercising,
its proportionate amount. The Company shall not participate in a disproportionate disposition of an investment acquired pursuant to the Order or engage in a Joint Exit Transaction in a disproportionate amount to an Affiliated Investor unless the
Eligible Directors have made the determinations set forth in condition 1 above.
(b)
If an Affiliated Investor and the Company hold different investments in
the same issuer, the Affiliated Investor may sell, exchange, or otherwise dispose of its investment in a Joint Exit Transaction only if prior notice of such disposition is provided to KAM and the Company also is offered the opportunity to exit its
different investment in the same issuer. KAM will make a recommendation regarding the disposition of the investment held by the Company to the Eligible Directors to permit them to make a determination regarding the disposition of such investment in
accordance with condition 1.
14
|
A sale by an Affiliated Investor to an unaffiliated third party following a brief Seasoning Period is not subject to the conditions contained herein.
|
23
5. (a) Except as described below, no Affiliated Investor may make a follow-on investment
or engage in a Joint Follow-On Transaction unless the Affiliated Investor and the Company make such follow-on investment or engage in such Joint Follow-On Transaction at the same time and in amounts proportionate to their respective holdings of such
investment. If an Affiliated Investor anticipates engaging in a Joint Follow-On Transaction or participating in a follow-on investment in an amount disproportionate to its holding, the Affiliated Investor will advise KAM of its intention to make a
disproportionate follow-on investment or Joint Follow-On Transaction. KAM will formulate a recommendation as to the proposed follow-on investment or Joint Follow-On Transaction by the Company and submit the recommendation to the Eligible Directors.
That recommendation will include an explanation why an Affiliated Investor is not participating to the extent of, or exercising, its proportionate amount. Prior to any such disproportionate follow-on investment or Joint Follow-On Transaction, the
Company must obtain approval for the transaction (except in situations where KAM determines that the Company should not participate in such proposed transaction) as set forth in condition 1 above. Transactions pursuant to this condition 5 will be
subject to the other conditions set forth in the application.
(b) If an Affiliated Investor and the Company hold different
investments in the same issuer, no Affiliated Investor may complete a Joint Follow-On Transaction unless the Company is also offered the opportunity to invest in the same investment at the same time and for the same price. KAM will formulate a
recommendation as to the proposed purchase of such investment by the Company and submit the recommendation to the Eligible Directors. If the aggregate amount recommended by KAM to be invested by the Company in such Joint Follow-On Transaction,
together with the amount proposed to be invested by all Affiliated Investors in the same Joint Follow-On Transaction, exceeds the amount of the investment opportunity, the amount of the investment opportunity will be allocated among them pro rata
based on the amount that each such party would have invested if the amount of the investment opportunity was sufficient to satisfy each partys proposed investment. Prior to any such investment, the Company must obtain approval for the
transaction as set forth in condition 1 above. Transactions pursuant to this condition 5 will be subject to the other conditions set forth in the application.
6. A Required Majority of the Eligible Directors will consider at least annually the continued appropriateness of the standards established for Co-Investment Transactions by the Company, including whether
the use of the standards continues to be in the best interests of the Company and its stockholders and does not involve overreaching on the part of any person concerned.
7. The Company will maintain the records required by Section 57(f)(3) of the 1940 Act as if each of the investments permitted under these conditions were approved by a Required Majority of the
Eligible Directors under Section 57(f).
8. No Independent Director will also be a director, general partner or
principal, or otherwise an affiliated person (as defined in the 1940 Act) of any Affiliated Investor.
24
9. The expenses, if any, associated with acquiring, holding or disposing of any investments
acquired in a Co-Investment Transaction (including, without limitation, the expenses of the distribution of any such securities registered for sale under the Securities Act of 1933) shall, to the extent not payable solely by KAM, CFA or an affiliate
of either, be shared by the co-investors in proportion to the relative amounts of their investments to be acquired or disposed of, as the case may be.
10. Any transaction fee (including break-up, structuring or commitment fees but excluding brokers fees contemplated by Section 17(e)(2) of the 1940 Act
15
paid with respect to placements to third party investors and administration fees) in connection with a Co-Investment
Transaction will be apportioned to the Company and Affiliated Investors
pro rata
based on their respective participation in the Co-Investment Transaction. If any such transaction fee is to be held by an Affiliated Investor, the Company, a KKR
Affiliated Adviser or CFA pending consummation of the transaction, such fee will be deposited into an account maintained by such person at a bank or banks having the qualifications prescribed in Section 26(a)(1) of the 1940 Act, and the account
will earn a competitive rate of interest that will be divided
pro rata
among the participants based on their participation in the Co-Investment Transaction. The Affiliated Investors, CFA, KAM or an affiliate of the foregoing (other than the
Company) will not receive additional compensation or remuneration of any kind as a result of or in connection with a Co-Investment Transaction other than: (i) the transaction fees and administration fees described above, (ii) investment
advisory fees paid in accordance with investment advisory agreements with the co-investors, (iii) the Fees received in a Co-Investment Transaction , and (iv) in the case of a KCM Company, Placement Fees which shall be subject to Condition
11 below.
11. With regard to Placement Fees received by a KCM Company:
(a) CFA or KAM, on behalf of the Company, will be required to maintain such records with respect to Third Party Placement Transactions in
which the Company and one or more Affiliated Investors also participate as may be necessary to confirm compliance with these procedures. In that regard, CFA or KAM, on behalf of the Company, will maintain:
(i) an itemized record of all Third Party Placement Transactions encompassed hereby, showing for each transaction: the name and quantity
of securities placed or syndicated by the KCM Companies; the percentage of the issue being purchased by the Company and any Affiliated Investors in the aggregate; the unit purchase price; the aggregate Placement Fees received by KCM Companies and
the time and date of the transaction;
(ii) a ledger or other record showing, the percentage (based on dollar amount) of the
Companys total assets represented by securities acquired in Co-Investment Transactions where a KCM Company has placed or syndicated securities in a Third Party Placement Transaction; and
15
|
As discussed in Section II.A.2 of this Application, the aggregate portion of the Fees to be retained by CFA and KAM with respect to Fees attributable to an investment
by the Company would be limited to one percent.
|
25
(iii) such other information about Third Party Placement Transactions requested by the
Eligible Directors.
(b) CFA or KAM, on behalf of the Company, will be required to continuously monitor Third Party
Placement Transactions in which the Company participates and report promptly to the Board any deviation from the above requirements.
(c) With respect to a Third Party Placement Transaction in which the Company participates, CFA or KAM will report to the Board on a quarterly basis certain information about the Placement Fees received by
the KCM Companies. Such reports will include the name of the issuer, the price of the security, the percentage of the investment purchased by the Company and all Affiliated Investors in the aggregate, the aggregate Placement Fee received by the KCM
Companies and any other information reasonably requested by the Eligible Directors.
(d) The Company will participate in a
Third Party Placement Transaction only if, prior to the Companys participation therein, a Required Majority of the Eligible Directors concludes that the Companys participation in such Third Party Placement Transaction is in the best
interests of the Company and its stockholders.
(e) The Board, including a Required Majority of the Eligible Directors acting
separately, have the ability at all times to amend or supplement the procedures, or to terminate the ability of the Company to engage in Third Party Placement Transactions.
III. PROCEDURAL MATTERS
A. Communications
Please address all communications concerning this Application and the Notice and Order to:
Nicole Macarchuk, Esq.
General Counsel
KKR Asset Management LLC
555 California Street, 50
th
Floor
San Francisco, CA 94104
Telephone: (415) 315-3260
Please address any questions, and a copy of any communications, concerning this Application, the Notice and Order to:
|
|
|
|
|
Richard Horowitz, Esq.
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
(212) 698-3525
|
|
Michael L. Sherman, Esq.
Dechert LLP
1775 I Street, NW
Washington, DC 20006
(202) 261-3449
|
|
Richard E. Baltz, Esq.
Arnold & Porter LLP
555 Twelfth Street, NW
Washington, DC 20004
(202) 942-5000
|
26
B. Authorizations
The filing of this Application for the order sought hereby and the taking of all acts reasonably necessary to obtain the relief requested
herein was authorized by the Companys Board pursuant to resolutions duly adopted by the Board on October 29, 2010 (attached hereto as Exhibit A). In accordance with Rule 0-2(c) under the 1940 Act, each person executing the Application on
behalf of the Applicants (other than the Company) being duly sworn deposes and says that he has duly executed the attached Application for and on behalf of the applicable entity listed; that he is authorized to execute the Application pursuant to
the terms of an operating agreement, management agreement or otherwise; and that all actions by members, directors or other bodies necessary to authorize each such deponent to execute and file the Application have been taken.
27
Applicants have caused this Application to be duly signed on their
behalf on the 13
th
day of May, 2011
|
|
|
CORPORATE CAPITAL TRUST, INC.
|
|
|
By:
|
|
/
S
/ P
AUL
S.
S
AINT
-P
IERRE
|
Name:
|
|
Paul S. Saint-Pierre
|
Title:
|
|
Chief Financial Officer
|
|
CNL FUND ADVISORS COMPANY
|
|
|
By:
|
|
/
S
/ P
AUL
S.
S
AINT
-P
IERRE
|
Name:
|
|
Paul S. Saint-Pierre
|
Title:
|
|
Chief Financial Officer, Senior Vice President
|
|
CNL FINANCIAL GROUP, LLC
CNL GLOBAL GROWTH ADVISORS, LLC
CNL GLOBAL INCOME ADVISORS LLC
|
|
|
By:
|
|
/
S
/ R
OBERT
A.
B
OURNE
|
Name:
|
|
Robert A. Bourne
|
Title:
|
|
Vice President
|
|
CNL FINANCIAL GROUP, INC.
|
CNL DIVERSIFIED CORP.
|
CNL FUND MANAGEMENT COMPANY
|
CNL MANAGEMENT CORP.
|
CNL PRIVATE EQUITY CORP.
|
CNL REAL ESTATE ADVISORS COMPANY
|
|
|
By:
|
|
/
S
/ R
OBERT
A.
B
OURNE
|
Name:
|
|
Robert A. Bourne
|
Title:
|
|
Vice Chairman
|
|
|
|
CNL LIFESTYLE COMPANY, LLC
|
|
|
By:
|
|
CNL Income Member Corp., its Managing Member
|
|
|
By:
|
|
/
S
/ R
OBERT
A.
B
OURNE
|
Name:
|
|
Robert A. Bourne
|
Title:
|
|
President
|
|
CNL REAL ESTATE SERVICES CORP.
|
|
|
By:
|
|
/
S
/ P
AUL
B.
E
LLIS
|
Name:
|
|
Paul B. Ellis
|
Title:
|
|
President
|
|
PC INVESTMENT PARTNERS, LLC
|
|
|
By:
|
|
CNL Private Equity Corp., its Manager
|
|
|
By:
|
|
/
S
/ R
OBERT
A.
B
OURNE
|
Name:
|
|
Robert A. Bourne
|
Title:
|
|
Vice Chairman
|
|
|
|
KKR ASSET MANAGEMENT LLC
|
KKR ASSET MANAGEMENT LTD.
|
KKR CS ADVISORS I LLC
|
KKR FI ADVISORS LLC
|
KKR FI ADVISORS IV LLC
|
KKR FI ADVISORS CAYMAN LTD.
|
KKR FINANCIAL ADVISORS LLC
|
KKR FINANCIAL ADVISORS II LLC
|
KKR MEZZANINE I ADVISORS LLC
|
KKR DEBT INVESTORS II (2006) IRELAND LP
|
KKR DI 2006 LP
|
8 CAPITAL PARTNERS L.P.
|
KKR FINANCIAL CLO 2005-1, LTD.
|
KKR FINANCIAL CLO 2005-2, LTD.
|
KKR FINANCIAL CLO 2006-1, LTD.
|
KKR FINANCIAL CLO 2007-1, LTD.
|
KKR FINANCIAL CLO 2007-A, LTD.
|
KKR FINANCIAL CLO 2009-1, LTD.
|
KKR FINANCIAL HOLDINGS, INC.
|
KKR FINANCIAL HOLDINGS, LTD.
|
KKR FINANCIAL HOLDINGS LLC
|
KKR FINANCIAL HOLDINGS II, LLC
|
KKR FINANCIAL HOLDINGS III, LLC
|
KKR FINANCIAL HOLDINGS IV, LLC
|
KKR CORPORATE CREDIT PARTNERS L.P.
|
KKR MEZZANINE GP LLC
|
KKR ASSOCIATES MEZZANINE I L.P.
|
KKR MEZZANINE PARTNERS I L.P.
|
KKR MEZZANINE PARTNERS I SIDE-BY-SIDE L.P.
|
KKR TRS HOLDINGS, LTD.
|
KKR-KEATS CAPITAL PARTNERS L.P.
|
KKR-MILTON CAPITAL PARTNERS L.P.
|
|
|
|
By:
|
|
/
S
/ M
ICHAEL
R.
M
C
F
ERRAN
|
Name:
|
|
Michael R. McFerran
|
Title:
|
|
Authorized Signatory
|
|
KOHLBERG KRAVIS ROBERTS & CO. L.P.
|
KKR CS III LIMITED
|
KKR ASSOCIATES CS III L.P.
|
KKR PEI GP LIMITED
|
KKR PEI ASSOCIATES, L.P.
|
KKR PEI INVESTMENTS, L.P.
|
KKR PEI OPPORTUNITIES, L.P.
|
KKR INVESTMENT MANAGEMENT LLC
|
KKR INVESTMENTS LLC
|
KKR CS II LIMITED
|
KKR ASSOCIATES CS II L.P.
|
KKR CS I LIMITED
|
KKR ASSOCIATES CS I L.P.
|
KKR-MILTON CO-INVESTMENTS L.P.
|
|
|
|
By:
|
|
/
S
/ D
AVID
J.
S
ORKIN
|
Name:
|
|
David J. Sorkin
|
Title:
|
|
Authorized Signatory
|
|
|
|
KKR CAPITAL MARKETS HOLDINGS L.P. KKR CAPITAL MARKETS LLC
KKR CORPORATE LENDING LLC
KKR CORPORATE LENDING (UK) LLC
|
|
|
By:
|
|
/
S
/ A
DAM
S
MITH
|
Name:
|
|
Adam Smith
|
Title:
|
|
Authorized Signatory
|
|
|
|
KKR CAPITAL MARKETS LIMITED
|
|
|
By:
|
|
/
S
/ J
OHN
E
MPSON
|
Name:
|
|
John Empson
|
Title:
|
|
Managing Director
|
|
|
|
KKR CAPITAL MARKETS ASIA LIMITED
|
|
|
By:
|
|
/
S
/ R
EX
C
HUNG
|
Name:
|
|
Rex Chung
|
Title:
|
|
Director
|
|
|
|
KKR PEI OPPORTUNITIES GP, LTD.
|
KKR PEI SECURITIES HOLDINGS, LTD.
|
|
|
By:
|
|
/
S
/ W
ILLIAM
J.
J
ANETSCHEK
|
Name:
|
|
William J. Janetschek
|
Title:
|
|
Authorized Signatory
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of Corporate Capital Trust, Inc., that he is the Chief Financial Officer of such entity and that all action by
officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein
set forth are true to the best of his knowledge, information and belief.
|
|
|
CORPORATE CAPITAL TRUST, INC.
|
|
|
By:
|
|
/
S
/ P
AUL
S.
S
AINT
-P
IERRE
|
Name:
|
|
Paul S. Saint-Pierre
|
Title:
|
|
Chief Financial Officer
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of CNL Fund Advisors Company, that he is the Chief Financial Officer and Senior Vice President of such entity
and that all action by officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and
that the facts therein set forth are true to the best of his knowledge, information and belief.
|
|
|
CNL FUND ADVISORS COMPANY
|
|
|
By:
|
|
/
S
/ P
AUL
S.
S
AINT
-P
IERRE
|
Name:
|
|
Paul S. Saint-Pierre
|
Title:
|
|
Chief Financial Officer, Senior Vice President
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of CNL Financial Group, LLC, CNL Global Growth Advisors, LLC, CNL Global Income Advisors LLC, that he is the
Vice President of such entities and that all action by officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument,
and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
|
|
|
CNL FINANCIAL GROUP, LLC
|
CNL GLOBAL GROWTH ADVISORS, LLC
|
CNL GLOBAL INCOME ADVISORS LLC
|
|
|
By:
|
|
/
S
/ R
OBERT
A.
B
OURNE
|
Name:
|
|
Robert A. Bourne
|
Title:
|
|
Vice President
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of CNL Financial Group, Inc., CNL Diversified Corp., CNL Fund Management Company, CNL Management Corp., CNL
Private Equity Corp., CNL Real Estate Advisors Company, that he is the Vice Chairman of such entities and that all action by officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken.
The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
|
|
|
CNL FINANCIAL GROUP, INC.
CNL DIVERSIFIED CORP.
CNL FUND MANAGEMENT COMPANY
CNL MANAGEMENT CORP.
CNL PRIVATE
EQUITY CORP.
CNL REAL ESTATE ADVISORS COMPANY
|
|
|
By:
|
|
/
S
/ R
OBERT
A.
B
OURNE
|
Name:
|
|
Robert A. Bourne
|
Title:
|
|
Vice Chairman
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of CNL Lifestyle Company, LLC, that he is the President of the Managing Member of such entity and that all
action by officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts
therein set forth are true to the best of his knowledge, information and belief.
|
|
|
CNL LIFESTYLE COMPANY, LLC
|
|
|
By:
|
|
CNL Income Member Corp., its Managing Member
|
|
|
By:
|
|
/
S
/ R
OBERT
A.
B
OURNE
|
Name:
|
|
Robert A. Bourne
|
Title:
|
|
President
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of CNL Real Estate Services Corp., that he is the President of such entity and that all action by officers,
directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth
are true to the best of his knowledge, information and belief.
|
|
|
CNL REAL ESTATE SERVICES CORP.
|
|
|
By:
|
|
/
S
/ P
AUL
B.
E
LLIS
|
Name:
|
|
Paul B. Ellis
|
Title:
|
|
President
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of PC Investment Partners, LLC, that he is the Vice Chairman of the Manager of such entity and that all action
by officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts
therein set forth are true to the best of his knowledge, information and belief.
|
|
|
PC INVESTMENT PARTNERS, LLC
|
|
By: CNL Private Equity Corp., its Manager
|
|
|
By:
|
|
/
S
/ R
OBERT
A.
B
OURNE
|
Name:
|
|
Robert A. Bourne
|
Title:
|
|
Vice Chairman
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of KKR Asset Management LLC, KKR Asset
Management LTD., KKR CS Advisors I LLC, KKR FI Advisors LLC, KKR FI Advisors IV LLC, KKR FI Advisors Cayman LTD., KKR Financial Advisors LLC, KKR Financial Advisors II LLC, KKR Mezzanine I Advisors LLC, KKR Debt Investors II (2006) Ireland LP,
KKR DI 2006 LP, 8 Capital Partners L.P., KKR Financial CLO 2005-1, LTD., KKR Financial CLO 2005-2, LTD., KKR Financial CLO 2006-1, LTD., KKR Financial CLO 2007-1, LTD., KKR Financial CLO 2007-A, LTD., KKR Financial CLO 2009-1, LTD., KKR Financial
Holdings, Inc., KKR Financial Holdings, LTD., KKR Financial Holdings LLC, KKR Financial Holdings II, LLC, KKR Financial Holdings III, LLC, KKR Financial Holdings IV, LLC, KKR Corporate Credit Partners L.P., KKR Mezzanine GP LLC, KKR Associates
Mezzanine I L.P., KKR Mezzanine Partners I L.P., KKR Mezzanine Partners I Side-By-Side L.P., KKR TRS Holdings, LTD., KKR- Keats Capital Partners L.P., KKR-Milton Capital Partners L.P., that he is authorized to execute this sworn statement of each
entity and that all action by officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents
thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
|
KKR ASSET MANAGEMENT LLC
|
KKR ASSET MANAGEMENT LTD.
|
KKR CS ADVISORS I LLC
|
KKR FI ADVISORS LLC
|
KKR FI ADVISORS IV LLC
|
KKR FI ADVISORS CAYMAN LTD.
|
KKR FINANCIAL ADVISORS LLC
|
KKR FINANCIAL ADVISORS II LLC
|
KKR MEZZANINE I ADVISORS LLC
|
KKR DEBT INVESTORS II (2006) IRELAND LP
|
KKR DI 2006 LP
|
8 CAPITAL PARTNERS L.P.
|
KKR FINANCIAL CLO 2005-1, LTD.
|
KKR FINANCIAL CLO 2005-2, LTD.
|
KKR FINANCIAL CLO 2006-1, LTD.
|
KKR FINANCIAL CLO 2007-1, LTD.
|
KKR FINANCIAL CLO 2007-A, LTD.
|
KKR FINANCIAL CLO 2009-1, LTD.
|
KKR FINANCIAL HOLDINGS, INC.
|
KKR FINANCIAL HOLDINGS, LTD.
|
KKR FINANCIAL HOLDINGS LLC
|
KKR FINANCIAL HOLDINGS II, LLC
|
KKR FINANCIAL HOLDINGS III, LLC
|
KKR FINANCIAL HOLDINGS IV, LLC
|
KKR CORPORATE CREDIT PARTNERS L.P.
|
|
KKR MEZZANINE GP LLC
|
KKR ASSOCIATES MEZZANINE I L.P.
|
KKR MEZZANINE PARTNERS I L.P.
|
KKR MEZZANINE PARTNERS I SIDE-BY-SIDE L.P.
|
KKR TRS HOLDINGS, LTD.
|
KKR-KEATS CAPITAL PARTNERS L.P.
|
KKR-MILTON CAPITAL PARTNERS L.P.
|
|
|
|
By:
|
|
/
S
/ M
ICHAEL
R.
M
C
F
ERRAN
|
Name:
|
|
Michael R. McFerran
|
Title:
|
|
Authorized Signatory
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of Kohlberg Kravis Roberts & Co.
L.P., KKR CS III Limited, KKR Associates CS III L.P., KKR PEI GP Limited, KKR PEI Associates, L.P., KKR PEI Investments, L.P., KKR PEI Opportunities, L.P., KKR Investment Management LLC, KKR Investments LLC, KKR CS II Limited, KKR Associates CS II
L.P., KKR CS I Limited, KKR Associates CS I L.P., KKR-Milton Co- Investments L.P., that he is authorized to execute this sworn statement of each entity and that all action by officers, directors, and other bodies necessary to authorize deponent to
execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
|
KOHLBERG KRAVIS ROBERTS & CO. L.P.
KKR CS III LIMITED
KKR ASSOCIATES CS III L.P.
KKR PEI GP LIMITED
KKR PEI ASSOCIATES,
L.P.
KKR PEI INVESTMENTS, L.P.
KKR PEI OPPORTUNITIES, L.P.
KKR INVESTMENT MANAGEMENT LLC
KKR INVESTMENTS LLC
KKR CS II
LIMITED
KKR ASSOCIATES CS II L.P.
KKR CS I LIMITED
KKR ASSOCIATES CS I L.P.
KKR-MILTON CO-INVESTMENTS L.P.
|
|
|
|
By:
|
|
/
S
/ D
AVID
J.
S
ORKIN
|
Name:
|
|
David J. Sorkin
|
Title:
|
|
Authorized Signatory
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of KKR Capital Markets Holdings L.P., KKR Capital Markets LLC, KKR Corporate Lending LLC, KKR Corporate Lending
(UK) LLC, that he is authorized to execute this sworn statement of each entity and that all action by officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The undersigned further
states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
|
|
|
KKR CAPITAL MARKETS HOLDINGS L.P. KKR CAPITAL MARKETS LLC
KKR CORPORATE LENDING LLC
KKR CORPORATE LENDING (UK) LLC
|
|
|
By:
|
|
/
S
/ A
DAM
S
MITH
|
Name:
|
|
Adam Smith
|
Title:
|
|
Authorized Signatory
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of KKR Capital Markets Limited, that he is authorized to execute this sworn statement of such entity and that
all action by officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the
facts therein set forth are true to the best of his knowledge, information and belief.
|
|
|
KKR CAPITAL MARKETS LIMITED
|
|
|
By:
|
|
/
S
/ J
OHN
E
MPSON
|
Name:
|
|
John Empson
|
Title:
|
|
Managing Director
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of KKR Capital Markets Asia Limited, that he is authorized to execute this sworn statement of such entity and
that all action by officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that
the facts therein set forth are true to the best of his knowledge, information and belief.
|
|
|
KKR CAPITAL MARKETS ASIA LIMITED
|
|
|
By:
|
|
/
S
/ R
EX
C
HUNG
|
Name:
|
|
Rex Chung
|
Title:
|
|
Director
|
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of KKR PEI Opportunities GP, LTD., KKR PEI
Securities Holdings, LTD., that he is authorized to execute this sworn statement of each entity and that all action by officers, directors, and other bodies necessary to authorize deponent to execute and file such instrument has been taken. The
undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
|
|
|
KKR PEI OPPORTUNITIES GP, LTD.
|
KKR PEI SECURITIES HOLDINGS, LTD.
|
|
|
By:
|
|
/
S
/ W
ILLIAM
J.
J
ANETSCHEK
|
Name:
|
|
William J. Janetschek
|
Title:
|
|
Authorized Signatory
|
SCHEDULE A
CNL Affiliated Advisors
CNL Financial Group, Inc.
CNL Global Growth Advisors, LLC CNL Global Income Advisors, LLC
CNL Lifestyle Company, LLC CNL Diversified Corp.
CNL Fund Management Company CNL
Management Corp.
CNL Private Equity Corp.
CNL Real Estate Advisors Company CNL Real Estate Services Corp.
PC Investment
Partners, LLC
And others that may be similarly situated in the future.
KAM Affiliated Advisers
KKR Asset Management LTD.
KKR CS Advisors I LLC
KKR FI Advisors LLC
KKR FI Advisors IV LLC
KKR FI Advisors Cayman LTD.
KKR Financial Advisors LLC
KKR Financial Advisors II LLC
KKR Mezzanine I Advisors LLC
And others that may be similarly situated
in the future.
KKR & Co. Affiliated Advisers
KKR CS III Limited
KKR Associates CS III L.P.
KKR Mezzanine GP LLC
KKR Associates Mezzanine I L.P.
KKR PEI GP Limited
KKR PEI Associates, L.P.
KKR PEI Opportunities GP, LTD.
KKR PEI Opportunities, L.P.
KKR Investment Management LLC
KKR CS II Limited
KKR Associates CS II L.P.
KKR CS I Limited
KKR Associates CS I L.P.
And others that may be similarly situated in the future.
KCM Companies
KKR Capital Markets Holdings L.P.
KKR Capital Markets LLC
KKR Capital Markets Limited
KKR Capital Markets Asia Limited
KKR Corporate Lending LLC
Schedule A-1
KKR Corporate Lending (UK) LLC
And others that may be similarly situated in the future.
Existing Affiliated Investors
KKR Corporate Lending LLC
KKR Corporate Lending (UK) LLC
KKR Debt Investors II (2006) Ireland LP
KKR DI 2006 LP
8 Capital Partners L.P.
KKR Financial CLO 2005-1, LTD.
KKR Financial CLO 2005-2, LTD.
KKR Financial CLO 2006-1, LTD.
KKR Financial CLO 2007-1, LTD.
KKR Financial CLO 2007-A, LTD.
KKR Financial CLO 2009-1, LTD.
KKR Financial Holdings, Inc.
KKR Financial Holdings, LTD.
KKR Financial Holdings LLC
KKR Financial Holdings II, LLC
KKR Financial Holdings III, LLC
KKR Financial Holdings IV, LLC
KKR Corporate Credit Partners L.P.
KKR Mezzanine Partners I L.P.
KKR Mezzanine Partners I Side-by-Side L.P.
KKR PEI Associates, L.P.
KKR PEI Investments, L.P.
KKR PEI Opportunities, L.P.
KKR PEI Securities Holdings, LTD.
KKR TRS Holdings, LTD.
KKR Investments LLC
KKR-Keats Capital Partners L.P.
KKR-Milton Capital Partners L.P.
KKR-Milton Co-Investments L.P.
And others that may be similarly situated in the future.
Schedule A-2
EXHIBIT A
Resolutions of Board of Directors of
Corporate Capital Trust, Inc.
WHEREAS, the Board deems it advisable and in the best interest of Corporate Capital Trust, Inc. (the
Corporation
) to file with the Securities and Exchange Commission (the
Commission
) an application for an order pursuant to Sections 57(c) and 57(i) of the Investment Company Act, as amended (the
1940
Act
), and Rule 17d-1 promulgated thereunder (an
Application
), to authorize the entering into of certain joint transactions and co-investments by the Corporation with certain entities which may be deemed to be
affiliates of the Corporation pursuant to the provisions of the 1940 Act, which such joint transactions and co-investments may otherwise be prohibited by Section 57(a)(4) of the 1940 Act.
NOW, THEREFORE, BE IT RESOLVED, that the officers (the
Officers
) of the Corporation be, and they hereby are,
authorized, empowered and directed, in the name and on behalf of the Corporation, to cause to be prepared, executed, delivered and filed with the Commission an Application and to do such other acts or things and execute such other documents,
including, but not limited to, amendments to the Application and requests for no-action relief or interpretive positions under the Securities Act of 1933, the Securities Exchange Act of 1934, the 1940 Act, or any other applicable federal or state
securities law, as they deem necessary or desirable to cause the Application to conform to comments received from the Staff of the Commission and otherwise to comply with the 1940 Act and the rules and regulations promulgated thereunder, in such
form and accompanied by such exhibits and other documents as the Officer or Officers preparing the same shall approve, such approval to be conclusively evidenced by the execution or filing of such documents, including, but not limited to, the filing
of the Application, any amendments thereto or any requests for no-action relief or interpretive positions;
RESOLVED FURTHER,
that the Officers be, and each of them acting alone hereby is, authorized and directed to file such additional Applications, any amendments thereto or any additional requests for no-action relief or interpretive positions, as such officers shall
deem necessary or desirable in order for the Corporation to accomplish its investment objective, in such form and accompanied by such exhibits and other documents as the Officer or Officers preparing the same shall approve, such approval to be
conclusively evidenced by the execution or filing of such documents, including, but not limited to, the filing of such additional Applications, any amendments thereto or any additional requests for no-action relief or interpretive positions; and
Exhibit A-1
RESOLVED FURTHER, that the Officers be, and each of them hereby is, authorized, empowered
and directed, in the name and on behalf of the Corporation, to perform all of the agreements and obligations of the Corporation in connection with the foregoing resolutions, to take or cause to be taken any and all further actions, to execute and
deliver, or cause to be executed and delivered, all other documents, instruments, agreements, undertakings, and certificates of any kind and nature whatsoever, to incur and pay all fees and expenses and to engage such persons as the Officer or
Officers may determine to be necessary, advisable or appropriate to effectuate or carry out the purposes and intent of the foregoing resolutions, and the execution by the Officer or Officers of any such documents, instruments, agreements,
undertakings and certificates, the payment of any fees and expenses or the engagement of such persons or the taking by them of any action in connection with the foregoing matters shall conclusively establish the Officers or Officers
authority therefor and the authorization, acceptance, adoption, ratification, approval and confirmation by the Corporation thereof.
Exhibit A-2
Kkr Financial (NYSE:KFN)
Historical Stock Chart
From May 2024 to Jun 2024
Kkr Financial (NYSE:KFN)
Historical Stock Chart
From Jun 2023 to Jun 2024