File
No. 812-15348
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FIRST
AMENDED AND RESTATED
Application for an Order to Amend a Prior Order UNDER
SECTIONS 17(D) AND 57(I) OF THE INVESTMENT COMPANY ACT OF 1940 AND RULE 17D-1 UNDER THE INVESTMENT COMPANY ACT OF
1940 TO PERMIT CERTAIN JOINT TRANSACTIONS OTHERWISE PROHIBITED BY
SECTIONS 17(D) AND 57(A)(4) OF THE INVESTMENT COMPANY
ACT OF 1940 AND RULE 17D-1 UNDER THE INVESTMENT COMPANY ACT OF 1940
In
the Matter of the Application of:
RAND
CAPITAL CORPORATION, RAND CAPITAL MANAGEMENT, LLC AND
RAND CAPITAL SUB LLC
1405
Rand Building
Buffalo, NY 14203
CALLODINE
CAPITAL MANAGEMENT, LP, CALLODINE CREDIT MANAGEMENT, LLC, CALLODINE STRATEGIC CREDIT, LLC, BLUEARC MEZZANINE PARTNERS I, LP,
CALLODINE ASSET BASED LOAN FUND II, LP, CALLODINE PERPETUAL ABL FUND, LP, CALLODINE CAPITAL FUND, LP, CALLODINE CAPITAL OFFSHORE
FUND, LTD., CALLODINE CAPITAL MASTER FUND, LP, CALLODINE BDC INCOME FUND, LP, CALLODINE EQUITY INCOME FUND, LP, CALLODINE STRATEGIC CREDIT
FUND II, LP, THOROFARE, LLC, THOROFARE ASSET BASED LENDING FUND IV, L.P., THOROFARE ASSET BASED LENDING REIT FUND IV, LLC, THOROFARE
ASSET BASED LENDING FUND V, L.P. AND THOROFARE ASSET BASED LENDING REIT FUND V, LLC
Two
International Place, Suite 1830
Boston, MA 02110
All
Communications, Notices and Orders to:
James
Morrow
Callodine
Group, LLC
Two
International Place, Suite 1830
Boston,
MA 02110
(617)
880-7480
jmorrow@callodine.com |
Daniel
Penberthy
Rand
Capital Corporation
1405
Rand Building
Buffalo,
NY 14203
(716)
853-0802
dpenberthy@randcapital.com |
Copies
to:
Cynthia
M. Krus, Esq.
Stephani
M. Hildebrandt, Esq.
Anne
G. Oberndorf, Esq.
Eversheds
Sutherland (US) LLP
700
Sixth Street, NW, Suite 700
Washington,
DC 20001-3980
(202)
383-0100
anneoberndorf@eversheds-sutherland.us
August 4, 2022
I. INTRODUCTION
A.
Summary of Requested Relief
In
this application (the “Application”), the Applicants (as defined below) request an
order (“Order”) from the U.S. Securities and Exchange Commission (the “Commission”)
to amend the prior order issued to Rand Capital Corporation, et al. (the “Prior Applicants”) under
Sections 17(d) and 57(i) of the Investment Company Act of 1940, as amended (the “1940 Act”),1
and Rule 17d-1 thereunder, permitting certain joint transactions otherwise prohibited by Sections 17(d) and 57(a)(4) of the 1940 Act
and Rule 17d-1 thereunder (the “Prior Order”).2 In particular, the Prior Order permits Regulated
Funds and Affiliated Funds to participate in the same investment opportunities where such participation would otherwise be prohibited
under Section 17(d) or 57(a)(4) and the rules under the 1940 Act.
B.
Applicants Seeking Relief
| ◌ | Rand
Capital Corporation (“Rand”), a New York corporation that
has elected to be regulated as a BDC under the 1940 Act. The investment adviser to Rand is
RCM (as defined below). |
| ◌ | Rand
Capital Management, LLC (“RCM”), a Delaware limited liability company
that serves as the investment adviser for Rand, on behalf of itself and its successors.3
RCM is an investment adviser registered under the Investment Advisers Act of 1940,
as amended (the “Advisers Act”). |
| | |
| ◌ | Callodine
Capital Management, LP (“Callodine Capital”), a Massachusetts
limited partnership that serves as the investment adviser to certain of the Existing Affiliated
Funds, on behalf of itself and its successors. Callodine Capital is an investment adviser
registered under the Advisers Act. |
| | |
| ◌ | Callodine
Credit Management, LLC (“CCM”), a Delaware limited liability company
that serves as the investment adviser to certain of the Existing Affiliated Funds, on behalf
of itself and its successors. CCM is an Exempt Reporting Adviser. |
1
Unless otherwise indicated, all section and rule references herein are to the 1940 Act and rules promulgated thereunder.
2
Certain of the Applicants previously submitted an application with the Commission (File No. 812-15174), as
filed on October 30, 2020, and amended and restated and filed with the Commission on January 5, 2021 (the “Prior Application”),
requesting such relief. The Prior Application was noticed in Investment Company Act Release No. 34218 dated
March 1, 2021 (the “Prior Notice”) and the Prior Order granting the relief requested was contained in Investment
Company Act Release No. 34237 dated March 29, 2021. Except as specifically noted herein, all representations and conditions contained
in the Prior Application remain applicable and will apply to any Applicants relying on the Order. All capitalized terms not otherwise
defined in this Application have the same meanings ascribed to them in the Prior Application.
3
The term successor, as applied to each Adviser, means an entity which results from a reorganization
into another jurisdiction or change in the type of business organization.
| ◌ | Callodine
Strategic Credit, LLC (“CSC”), a Delaware limited liability company
that serves as the investment adviser to certain of the Existing Affiliated Funds, on behalf
of itself and its successors. CSC is an Exempt Reporting Adviser. |
| | |
| ◌ | Thorofare,
LLC (“Thorofare” and together with RCM, Callodine Capital, CCM,
and CSC, the “Existing Advisers”) a California limited liability
company that serves as the investment adviser for to certain of the Existing Affiliated Funds,
on behalf of itself and its successors. Thorofare is an investment adviser registered under
the Advisers Act. All of the Existing Advisers are under common control. |
| ● | Rand
Capital Sub LLC (the “Existing Wholly-Owned Subsidiary”), which
is a separate and distinct legal entity and is a Wholly-Owned Investment Sub of the Existing Regulated Fund. The Existing Wholly-Owned Subsidiary
is a subsidiary of Rand. |
| ● | Certain
existing Affiliated Funds (as identified on Schedule A hereto), each of which is a
separate and distinct legal entity and each of which would be an investment company but for
Section 3(c)(1) or 3(c)(7) of the 1940 Act (the “Existing Affiliated Funds”
and collectively with the Existing Regulated Fund, the Existing Advisers and the Existing
Wholly-Owned Subsidiary, the “Applicants”). Each of the Existing
Affiliated Funds is advised by an Existing Adviser. |
All
Applicants are eligible to rely on the Prior Order. All existing entities that currently rely on the Prior Order and 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 Order as set forth in or incorporated into this Application.
II.
Applicants’ Proposal
A. Requested Amendment
Under
the Prior Order, Affiliated Funds and Regulated Funds can only participate in Follow-On Investments if they are invested in the issuer.
The Order, if granted, would revise the definition of Follow-On Investment to permit Affiliated
Funds to participate in Follow-On Investments in issuers in which at least one Regulated Fund is invested, but such Affiliated Funds
are not invested. This relief would not permit Follow-On Investments by Regulated Funds that are not invested in the issuer.
B. Need for Relief
Affiliated
Funds often do not have infinite lives like many Regulated Funds. As a result, an Affiliated Fund that is invested in a portfolio company
may begin the process of winding down, during which it makes no further investments. If the portfolio company makes a capital call or
requests further funding once the Affiliated Fund is in wind down, the Affiliated Fund will not be able to participate and in some cases,
only one Regulated Fund is left to fulfill the portfolio company’s request. In that case, either the Regulated Fund will be forced
to make the investment by itself, which may not be the appropriate investment amount for the Regulated Fund or the Regulated Fund will
not be able to fulfill its commitment to the portfolio company. If the Regulated Fund does not have the available capital to fulfill
the portfolio company’s request, the portfolio company may be negatively affected, which could negatively affect the Regulated
Fund shareholders. In addition, if the Regulated Fund invested more than the appropriate amount, that could also negatively affect
the Regulated Fund shareholders.
Allowing
Affiliated Funds that do not have an investment in the portfolio company to participate in Follow-On Investments can protect Regulated
Fund shareholders from harm as another Affiliated Fund is winding down. Because the relief would not permit Follow-On Investments
by Regulated Funds that are not invested in an issuer, the Order could not be relied on to cause a Regulated Fund to be used to prop
up an affiliate’s investment.
C. Precedent
Applicants
submit that the requested Order is consistent with the
temporary relief granted by the Commission on April 8, 2020.4
III. STATEMENT
IN SUPPORT OF RELIEF REQUESTED
Applicants
note that the Commission may grant the requested relief for the same reasons set forth in Section IV, “Statement in Support of
Relief Requested,” of the Prior Application.
IV. REPRESENTATIONS
AND CONDITIONS
Applicants
agree that any Order of the Commission granting the requested relief will be subject to all of the representations and conditions in
the Prior Order. The only change is that the definition of “Follow-On Investment” in the Prior Application will be deleted
in its entirety and replaced with the following definition:
“Follow-On
Investment” (i) with respect to a Regulated Fund, an additional investment in the same issuer in which the Regulated
Fund is currently invested; or (ii) with respect to an Affiliated Fund, (X) an additional investment in the same issuer in which the
Affiliated Fund and at least one Regulated Fund are currently invested; or (Y) an investment in an issuer in which at least one Regulated
Fund is currently invested but in which the Affiliated Fund does not currently have an investment. An investment in an issuer includes,
but is not limited to, the exercise of warrants, conversion privileges or other rights to purchase securities of the issuer.5
V. PROCEDURAL
MATTERS
A.
Communications
Please
address all communications concerning this Application and the Notice and Order to:
James
Morrow
Callodine
Group, LLC
Two
International Place, Suite 1830
Boston,
MA 02110
(617)
880-7480
jmorrow@callodine.com |
Daniel
Penberthy
Rand
Capital Corporation
1405 Rand Building
Buffalo,
NY 14203
(716) 853-0802
dpenberthy@randcapital.com |
4
BDC Temporary Exemptive Order, Investment Company Act Rel. Nos. 33837 (April
8, 2020) (order) (extension granted on January 5, 2021 and further extension granted
on April 22, 2021).
5
Any and all references in the Prior Application to an Affiliated Fund needing to be invested in an issuer as a required precedent
for a Follow-On Investment would be struck as a result of the Order.
Please
address any questions, and a copy of any communications, concerning this Application, the Notice and Order to:
Cynthia
M. Krus, Esq.
Stephani M. Hildebrandt, Esq.
Anne
G. Oberndorf, Esq.
Eversheds
Sutherland (US) LLP
700
Sixth Street, NW, Suite 700
Washington,
DC 20001-3980
(202)
383-0100
anneoberndorf@eversheds-sutherland.us
Applicants
desire that the Commission issue an Order pursuant to Rule 0-5 without conducting a hearing.
Pursuant
to Rule 0-2, each person executing the Application on behalf of an Applicant says that he or she has duly executed the Application for
and on behalf of such Applicant; that he or she 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 deponent to
execute and file the Application have been taken.
The
verifications required by Rule 0-2(d) and the authorizations required by Rule 0-2(c) are attached hereto as Exhibit A and Exhibit B.1.
B.
Authorization
All
requirements for the execution and filing of this Application in the name and on behalf of each Applicant by the undersigned have been
complied with and the undersigned is fully authorized to do so and has duly executed this Application as of this 4th day of August,
2022.
|
Rand
Capital Corporation |
|
|
|
|
By: |
/s/
Daniel Penberthy |
|
Name: |
Daniel
Penberthy |
|
Title: |
President
& Chief Executive Officer |
|
|
|
|
Rand
Capital Management, LLC |
|
|
|
|
By: |
Callodine
Credit, LLC, its sole member |
|
By: |
/s/
James Morrow |
|
Name: |
James
Morrow |
|
Title: |
President
& Chief Executive Officer |
|
Callodine
Capital Management, LP |
|
|
|
|
By:
|
/s/
Austin McClintock |
|
Name:
|
Austin
McClintock |
|
Title:
|
Authorized
Person |
|
|
|
|
Callodine
Credit Management, LLC |
|
|
|
|
By:
|
/s/
Eugene Martin |
|
Name:
|
Eugene
Martin |
|
Title:
|
President
& Chief Executive Officer |
|
|
|
|
Callodine
Strategic Credit, LLC |
|
|
|
|
By:
|
/s/
Brian Collins |
|
Name: |
Brian
Collins |
|
Title:
|
Manager |
|
|
|
|
Thorofare,
LLC |
|
|
|
|
By: |
/s/
Brendan W. Miller |
|
Name: |
Brendan
W. Miller |
|
Title: |
Authorized
Signatory |
|
|
|
|
Existing
Wholly-Owned Subsidiary of |
|
Rand
Capital Corporation: |
|
|
|
Rand
Capital Sub LLC |
|
|
|
|
By: |
/s/
Daniel Penberthy |
|
Name: |
Daniel
Penberthy |
|
Title: |
President
& Chief Executive Officer |
|
|
|
|
Existing
Affiliated Funds: |
|
|
|
Callodine
Asset Based Loan Fund II, LP |
|
Callodine Perpetual ABL Fund, LP |
|
|
|
|
By:
|
Callodine
Credit Management, LLC |
|
By:
|
/s/
Eugene Martin |
|
Name:
|
Eugene
Martin |
|
Title:
|
President
& Chief Executive Officer |
|
Callodine
Capital Fund, LP |
|
Callodine
Capital Offshore Fund, Ltd. |
|
Callodine
Capital Master Fund, LP |
|
Callodine
BDC Income Fund, LP |
|
Callodine
Equity Income Fund, LP |
|
|
|
|
By:
|
Callodine
Capital Management, LP |
|
By:
|
/s/
Austin McClintock |
|
Name: |
Austin
McClintock |
|
Title: |
Authorized
Signatory |
|
|
|
|
Callodine
Strategic Credit Fund II, LP |
|
BlueArc
Mezzanine Partners I, LP |
|
|
|
|
By:
|
Callodine
Strategic Credit, LLC |
|
By: |
/s/
Brian Collins |
|
Name: |
Brian
Collins |
|
Title: |
Manager |
|
|
|
|
Thorofare
Asset Based Lending Fund IV, L.P. |
|
Thorofare
Asset Based Lending REIT Fund IV, LLC |
|
Thorofare
Asset Based Lending Fund V, L.P. |
|
Thorofare
Asset Based Lending REIT Fund V, LLC |
|
|
|
|
By: |
/s/
Brendan W. Miller |
|
Name: |
Brendan
W. Miller |
|
Title: |
Authorized
Signatory |
Exhibit
A
VERIFICATION
Each
of the undersigned states that he or she has duly executed the attached application dated as of August 4, 2022 for and on behalf
of the entities listed below; that he or she holds office with such entity as indicated below and that all action by directors, officers,
stockholders, general partners, trustees or members of each entity and any other body necessary to authorize the undersigned to execute
and file such instrument has been taken. Each of the undersigned further states that he or she is familiar with such instrument, and
the contents thereof, and that the facts therein set forth are true to the best of his or her knowledge, information and belief.
|
Rand
Capital Corporation |
|
|
|
|
By: |
/s/
Daniel Penberthy |
|
Name: |
Daniel
Penberthy |
|
Title: |
President
& Chief Executive Officer |
|
|
|
|
Rand
Capital Management, LLC |
|
|
|
|
By: |
Callodine
Credit, LLC, its sole member |
|
By: |
/s/
James Morrow |
|
Name: |
James
Morrow |
|
Title: |
President
& Chief Executive Officer |
|
|
|
|
Callodine
Capital Management, LP |
|
|
|
|
By: |
/s/
Austin McClintock |
|
Name: |
Austin
McClintock |
|
Title: |
Authorized
Person |
|
|
|
|
Callodine
Credit Management, LLC |
|
|
|
|
By:
|
/s/
Eugene Martin |
|
Name: |
Eugene
Martin |
|
Title: |
President
& Chief Executive Officer |
|
|
|
|
Callodine
Strategic Credit, LLC |
|
|
|
|
By: |
/s/
Brian Collins |
|
Name: |
Brian
Collins |
|
Title: |
Manager |
|
|
|
|
Thorofare,
LLC |
|
|
|
|
By: |
/s/
Brendan W. Miller |
|
Name: |
Brendan
W. Miller |
|
Title: |
Authorized
Signatory |
|
Existing
Wholly-Owned Subsidiary of |
|
Rand
Capital Corporation: |
|
|
|
Rand
Capital Sub LLC |
|
|
|
|
By: |
/s/ Daniel Penberthy |
|
Name: |
Daniel
Penberthy |
|
Title: |
President
& Chief Executive Officer |
|
|
|
|
Existing
Affiliated Funds: |
|
|
|
Callodine
Asset Based Loan Fund II, LP |
|
Callodine Perpetual ABL Fund, LP |
|
|
|
|
By: |
Callodine
Credit Management, LLC |
|
By: |
/s/
Eugene Martin |
|
Name: |
Eugene
Martin |
|
Title:
|
President
& Chief Executive Officer |
|
|
|
|
Callodine
Capital Fund, LP |
|
Callodine
Capital Offshore Fund, Ltd. |
|
Callodine
Capital Master Fund, LP |
|
Callodine
BDC Income Fund, LP |
|
Callodine
Equity Income Fund, LP |
|
|
|
|
By:
|
Callodine
Capital Management, LP |
|
By:
|
/s/
Austin McClintock |
|
Name: |
Austin
McClintock |
|
Title: |
Authorized
Signatory |
|
|
|
|
Callodine
Strategic Credit Fund II, LP |
|
BlueArc
Mezzanine Partners I, LP |
|
|
|
|
By: |
Callodine
Strategic Credit, LLC |
|
By: |
/s/
Brian Collins |
|
Name: |
Brian
Collins |
|
Title: |
Manager |
|
|
|
|
Thorofare
Asset Based Lending Fund IV, L.P. |
|
Thorofare
Asset Based Lending REIT Fund IV, LLC |
|
Thorofare
Asset Based Lending Fund V, L.P. |
|
Thorofare
Asset Based Lending REIT Fund V, LLC |
|
|
|
|
By: |
/s/
Brendan W. Miller |
|
Name: |
Brendan
W. Miller |
|
Title: |
Authorized
Signatory |
Exhibit
B.1
RESOLUTIONS
OF THE BOARD OF DIRECTORS
RAND
CAPITAL CORPORATION
WHEREAS,
the Board of Directors (the “Board”) believes it is in the best interests of Rand Capital Corporation (the
“Company”) to file an application for an order to amend a prior order under Sections 17(d) and 57(i) of the
Investment Company Act of 1940 and Rule 17d-1 under the Investment Company Act of 1940 to permit certain joint transactions otherwise
prohibited by Section 17(d) and 57(a)(4) of the Investment Company Act of 1940 and Rule 17d-1 under the Investment Company Act of 1940
(the “Application”).
NOW,
THEREFORE, BE IT RESOLVED, that the officers of the Company (the “Officers”) be, and they hereby are, authorized,
empowered and directed, in the name and on behalf of the Company, to cause to be prepared, executed, delivered and filed with the SEC
the Application, and to do such other acts or things and execute such other documents, including amendments to the Application, as they
deem necessary or desirable to cause the Application to conform to comments received from the Staff of the SEC and otherwise to comply
with the Investment Company Act of 1940 and the rules and regulations promulgated thereunder, in such form and accompanied by such exhibits
and other documents, as the Officers preparing the same shall approve, such approval to be conclusively evidenced by the filing of the
Application; and it is further
RESOLVED,
that the Officers be, and each of them hereby is, authorized, empowered and directed, in the name and on behalf of the Company, to perform
all of the agreements and obligations of the Company 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 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 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’ authority therefore and the authorization, acceptance, adoption, ratification, approval and confirmation
by the Company thereof.
Schedule
A
Callodine
Asset Based Loan Fund II, LP
Callodine
Perpetual ABL Fund, LP
Callodine
Capital Fund, LP
Callodine
Capital Offshore Fund, Ltd.
Callodine
Capital Master Fund, LP
Callodine
BDC Income Fund, LP
Callodine
Equity Income Fund, LP
Callodine
Strategic Credit Fund II, LP
BlueArc
Mezzanine Partners I, LP
Thorofare
Asset Based Lending Fund IV, L.P.
Thorofare
Asset Based Lending REIT Fund IV, LLC
Thorofare
Asset Based Lending Fund V, L.P.
Thorofare
Asset Based Lending REIT Fund V, LLC
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