No. 812-
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
APPLICATION FOR AN ORDER PURSUANT TO SECTIONS 17(d) AND 57(i) OF THE INVESTMENT COMPANY ACT OF 1940 AND RULE
17d-1
UNDER THE ACT TO PERMIT CERTAIN JOINT TRANSACTIONS OTHERWISE PROHIBITED BY SECTIONS 17(d) AND 57(a)(4) OF THE ACT AND RULE
17d-l
UNDER THE ACT
BLACKROCK CAPITAL INVESTMENT
CORPORATION, BLACKROCK CREDIT STRATEGIES FUND, BLACKROCK CAPITAL INVESTMENT ADVISORS, LLC, BLACKROCK ADVISORS, LLC, MIDDLE MARKET SENIOR FUND, L.P., GORDON BROTHERS FINANCE COMPANY
40 East 52
nd
Street
New York, NY 10022
BLACKROCK TCP CAPITAL
CORP., SPECIAL VALUE CONTINUATION PARTNERS LLC, TENNENBAUM OPPORTUNITIES PARTNERS V, LP, TENNENBAUM OPPORTUNITIES FUND V, LLC, SVOF/MM, LLC, TENNENBAUM CAPITAL PARTNERS, LLC, TENNENBAUM HEARTLAND
CO-INVEST,
LP, SEB DIP INVESTOR, LP, SPECIAL VALUE EXPANSION FUND, LLC, SPECIAL VALUE OPPORTUNITIES FUND, LLC, TCP DIRECT LENDING FUND VIII L (IRELAND), TCP DIRECT LENDING FUND VIII U (IRELAND), TCP DIRECT LENDING FUND
VIII-S,
LLC, TCP DIRECT LENDING FUND
VIII-T,
LLC, TCP DLF VIII 2018 CLO LLC, TCP ENHANCED YIELD FUNDING I, LLC, TCP RAINIER, LLC, TCP DIRECT LENDING FUND VIII, LLC, TCP DIRECT
LENDING FUND
VIII-L,
LLC, TCP DIRECT LENDING FUND
VIII-A,
LLC, TCPC SBIC, LP, TENNENBAUM ENERGY OPPORTUNITIES CO., LLC, TENNENBAUM ENERGY OPPORTUNITIES FUND, LP,
TENNENBAUM ENHANCED YIELD FUND I, LLC, TENNENBAUM OPPORTUNITIES FUND VI, LLC, TCP WATERMAN FUND, LLC, TENNENBAUM SENIOR LOAN FUND III, LP, TENNENBAUM SENIOR LOAN FUNDING III, LLC, TENNENBAUM SENIOR LOAN FUND
IV-A,
LP, TENNENBAUM SENIOR LOAN FUND
IV-B,
LP, TENNENBAUM SPECIAL SITUATIONS FUND IX, LLC, TENNENBAUM SPECIAL SITUATIONS FUND
IX-A,
LLC, TENNENBAUM SPECIAL SITUATIONS
IX-C,
L.P., TENNENBAUM SPECIAL SITUATIONS
IX-O,
L.P., TENNENBAUM SPECIAL SITUATIONS FUND
IX-S,
L.P., TENNENBAUM SENIOR LOAN FUND II, LP, TENNENBAUM SENIOR LOAN FUND V, LLC, TCPC FUNDING I, LLC, TENNENBAUM ENHANCED YIELD OPERATING I, LLC, TCP WATERMAN CLO, LLC, TCP WHITNEY CLO, LLC, TCP WHITNEY
CLO, LTD, TENNENBAUM SENIOR LOAN OPERATING III, LLC, TENNENBAUM SENIOR LOAN SPV
IV-A,
LLC, TCPC SBIC GP, LLC, TCP DIRECT LENDING FUND
VIII-N,
LLC
2951 28th Street, Suite 1000
Santa Monica, California 90405
All Communications, Notices and Orders to:
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Laurence D. Paredes
General Counsel
BlackRock Capital
Investment Corporation
40 East 52
nd
Street
New York, NY 10022
(212)
810-5800
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Howard M. Levkowitz
Managing Director
Tennenbaum
Capital Partners, LLC
2951 28th Street, Suite 1000
Santa Monica, California 90405
(310)
566-1000
Elizabeth Greenwood
Managing
Director
Tennenbaum Capital Partners, LLC
2951 28th Street, Suite 1000
Santa
Monica, California 90405
(310)
566-1000
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Copies to:
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Cynthia M. Krus, Esq.
Steven B. Boehm, Esq.
Anne G.
Oberndorf, Esq.
Eversheds Sutherland (US) LLP
700 Sixth Street, NW, Suite 700
Washington, DC 20001-3980
(202)
383-0100
(202)
637-3593
(fax)
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Michael Hoffman
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212)
735-3000
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September 21, 2018
BlackRock Capital Investment Corporation, BlackRock TCP Capital Corp. and their related entities identified in section I.B. below, hereby
request an order (the
Order
) pursuant to Sections 17(d) and 57(i) of the Investment Company Act of 1940 (the
Act
)
1
and Rule
17d-1
thereunder
2
authorizing certain joint transactions that otherwise would be prohibited by either or both of Sections 17(d) and 57(a)(4) as modified by the
exemptive rules adopted by the U.S. Securities and Exchange Commission (the
Commission
) under the Act.
In
particular, the relief requested in this application (the
Application
) would allow one or more Regulated Funds (including one or more BCIC Funds (as defined below)) and/or one or more Affiliated Funds (as defined below) to
participate in the same investment opportunities through a proposed
co-investment
program (the
Co-Investment
Program
) where such participation
would otherwise be prohibited under Section 17(d) or 57(a)(4) and the rules under the Act. 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 its terms and conditions set forth in this application (the
Conditions
).
The Order sought by this Application would supersede the exemptive orders issued by the Commission to BlackRock Capital Investment
Corporation, et al. on January 16, 2018
3
under Sections 17(d) and 57(i) of the Act and Rule
17d-1
under the Act and to Tennenbaum Capital Partners,
LLC, et al. on May 9, 2006
4
under Rule
17d-1
under the Act (the
Prior Orders
), with the result that no person will continue
to rely on the Prior Orders if the Order is granted.
5
B.
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Applicants Seeking Relief:
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BlackRock Capital Investment Corporation (
BCIC
), a
closed-end,
management investment company that has elected to be regulated as a BDC (defined below) under the Act;
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Gordon Brothers Finance Company (
Gordon Brothers
), a subsidiary of BCIC, of which BCIC
has sole control;
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1
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Unless otherwise indicated, all section references herein are to the Act.
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2
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Unless otherwise indicated, all rule references herein are to rules under the Act.
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3
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BlackRock Capital Investment Corporation, et al.
(File
No. 812-14582)
Investment Company Act Rel. Nos. 32943 (December 19, 2017) (notice) and 32968 (January 16, 2018) (order).
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4
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Special Value Opportunities Fund, LLC, et al.
(File
No. 812-13068)
Investment Company Act Release Nos.
IC-27287
(April 11, 2006) (notice) and 27316 (May 9, 2006) (order).
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5
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On April 17, 2018, it was announced that Tennenbaum Capital Partners, LLC would be merged with and into a
wholly-owned subsidiary of BlackRock Capital Investment Advisors, LLC with Tennenbaum Capital Partners, LLC being the surviving entity after the merger. The merger was consummated on August 1, 2018. As a result, Tennenbaum Capital Partners, LLC
and SVOF/MM (which is majority-owned by Tennenbaum Capital Partners, LLC) are controlled by BlackRock Capital Investment Advisors, LLC and the Applicants (as defined below) are requesting the Order to supersede the Prior Orders and allow the
Applicants to participate in
Co-Investment
Transactions (as defined below).
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BlackRock Credit Strategies Fund (
BCSF
), a
closed-end
non-diversified
management investment company registered under the Act;
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BlackRock TCP Capital Corp. (
TCPC
), a
closed-end
non-diversified
management investment company that has elected to be regulated as a BDC under the Act;
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Special Value Continuation Partners LLC (
SVCP
), a Wholly-Owned Investment Sub (as
defined below) of TCPC;
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TCPC Funding I, LLC (
TCPC Funding
), TCPC SBIC, LP (
TCPC SBIC
)
and TCPC SBIC GP, LLC (
TCPC SBIC GP
), each of which is a Wholly-Owned Investment Sub of TCPC;
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BlackRock Capital Investment Advisors, LLC (
BlackRock Capital Advisor
), an investment
adviser registered under the Investment Advisers Act of 1940 (the
Advisers Act
), and its successors
6
;
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Tennenbaum Capital Partners, LLC (
TCP
), an investment adviser registered under the
Advisers Act, and its successors;
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SVOF/MM, LLC (
SVOF/MM
, and together with BlackRock Capital Advisor and TCP, the
Existing Advisers
), an investment adviser registered under the Advisers Act, and its successors; and
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BlackRock Advisors, LLC (
BAL)
, a primary investment adviser that is registered under
the Advisers Act, and its successors;
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The investment vehicles identified in Appendix A, each of which is a separate and distinct legal entity and would
be an investment company but for Section 3(c)(1) or 3(c)(7) of the Act (the
Existing Affiliated Funds
,
and together with BCIC, BCSF, TCPC, SVCP, TCPC Funding, TCPC SBIC, TCPC SBIC GP, BlackRock
Capital Advisor, BAL, TCP, and SVOF/MM, the
Applicants
).
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Adviser
means any Existing Adviser and any Future Adviser (defined below);
provided
that an Adviser
serving as
a sub-adviser to
an Affiliated Fund is included in this term only if such Adviser controls the
Co-Investment
Program of the entity.
7
The term Adviser does not include BAL or any other investment adviser to an Affiliated Fund or a Regulated Fund (defined below)
whose sub-adviser is
an Adviser, except that such investment adviser is deemed to be an Adviser for purposes of Conditions 2(c)(iv), 13 and 14 only. BAL and any investment adviser to an Affiliated Fund or a Regulated Fund
whose sub-adviser is
an Adviser will not source
8
any
Potential Co-Investment Transactions
under
the requested Order.
6
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The term successor, as applied to an Adviser (as defined below), means an entity that results from
a reorganization into another jurisdiction or change in the type of business organization.
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7
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With respect to BCSF, or any other entity where an Adviser is responsible for only a sleeve or
portion of the entitys assets, controls the
Co-Investment
Program of the entity refers to only such sleeve or portion.
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8
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As used herein, source means to be responsible for evaluating, and making investment and allocation
decisions with respect to, a Potential Co-Investment Transaction.
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2
Affiliated Fund
means any Existing Affiliated Fund or any entity
(a) whose investment adviser or
sub-adviser
is an Adviser, (b) that would be an investment company but for Section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act, (c) that is not a BDC
Downstream Fund, and (d) that intends to participate in the
Co-Investment
Program;
provided
that an entity
sub-advised
by an Adviser is included in
this term only if such Adviser serving
as sub-adviser controls
the
Co-Investment
Program of the entity. No Existing Affiliated Fund is a BDC Downstream Fund.
BCIC Fund
means BCIC or any BCIC Downstream Fund.
BCIC Downstream Fund
means a BDC Downstream Fund that BCIC directly or indirectly controls. Currently, the only BCIC
Downstream Fund is Gordon Brothers. BCIC owns 80% of the equity, and has sole control, of Gordon Brothers. Gordon Brothers is a commercial finance company that is excluded from investment company status under Section 3(a).
BDC
means a business development company under the Act.
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BDC Downstream Fund
means, either (a) with respect to BCIC, Gordon Brothers or (b) with respect to any
Regulated Fund that is a BDC, an entity (i) that the BDC directly or indirectly controls, (ii) that is not controlled by any person other than the BDC (except a person that indirectly controls the entity solely because it controls the
BDC), (iii) that would be an investment company but for Section 3(c)(1) or 3(c)(7) of the Act, (iv) whose investment adviser or
sub-adviser
is an Adviser, (v) that is not a Wholly-Owned
Investment Sub and (vi) that intends to participate in the
Co-Investment
Program.
Board
means (i) with respect to a Regulated Fund other than a BDC Downstream Fund, the board of directors (or
the equivalent) of the Regulated Fund and (ii) with respect to a BDC Downstream Fund, the Independent Party of the BDC Downstream Fund.
Board-Established Criteria
means criteria that the Board of a Regulated Fund may establish from time to time to
describe the characteristics of Potential
Co-Investment
Transactions regarding which the Adviser to the Regulated Fund should be notified under Condition 1. The Board-Established Criteria will be consistent
with the Regulated Funds Objectives and Strategies. If no Board-Established Criteria are in effect, then the Regulated Funds Adviser will be notified of all Potential
Co-Investment
Transactions
that fall within the Regulated Funds then-current Objectives and Strategies. Board-Established Criteria will be objective and testable, meaning that they will be based on observable information, such as industry/sector of the issuer, minimum
EBITDA of the issuer, asset class of the investment opportunity or required commitment size, and not on characteristics that involve a discretionary assessment. The Adviser to the Regulated Fund may from time to time recommend criteria for the
Boards consideration, but Board-Established Criteria will only become effective if approved by a majority of the Independent Directors. The Independent Directors of a Regulated Fund may at any time rescind, suspend or qualify their approval of
any Board-Established Criteria, though Applicants anticipate that, under normal circumstances, the Board would not modify these criteria more often than quarterly.
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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) and makes available significant managerial assistance with respect to the issuers of such securities.
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3
Close Affiliate
means the Advisers, the other
Regulated Funds, the Affiliated Funds and any other person described in Section 57(b) (after giving effect to Rule
57b-1)
in respect of any Regulated Fund (treating any registered investment company or
series thereof as a BDC for this purpose) except for limited partners included solely by reason of the reference in Section 57(b) to Section 2(a)(3)(D).
Co-Investment
Transaction
means any transaction in which a Regulated Fund
(or its Wholly-Owned Investment Sub (defined below)) participated together with one or more Affiliated Funds and/or one or more other Regulated Funds in reliance on the Order.
Disposition
means the sale, exchange or other disposition of an interest in a security of an issuer.
Eligible Directors
means, with respect to a Regulated Fund and a Potential
Co-Investment
Transaction, the members of the Regulated Funds Board eligible to vote on that Potential
Co-Investment
Transaction under Section 57(o) of the
Act (treating any registered investment company or series thereof as a BDC for this purpose).
Follow-On
Investment
means an additional investment in the same issuer,
including, but not limited to, through the exercise of warrants, conversion privileges or other rights to purchase securities of the issuer.
Future Adviser
means any future investment adviser that (i) is controlled by BlackRock Capital Advisor,
(ii) (a) is registered as an investment adviser under the Advisers Act or (b) is a relying adviser of an investment adviser that is registered under the Advisers Act and that is controlled BlackRock Capital Advisor, and (iii) is not a
Regulated Fund or a subsidiary of a Regulated Fund.
Future Regulated Fund
means a
closed-end
management investment company (a) that is registered under the Act or has elected to be regulated as a BDC, (b) whose investment adviser or
sub-adviser
is
an Adviser, and (c) that intends to participate in the
Co-Investment
Program.
Independent Director
means a member of the Board of any relevant entity who is not an interested person
as defined in Section 2(a)(19) of the Act. No Independent Director of a Regulated Fund (including any
non-interested
member of an Independent Party) will have a financial interest in any
Co-Investment
Transaction, other than indirectly through share ownership in one of the Regulated Funds.
Independent Party
means, with respect to a BDC Downstream Fund, (i) if the BDC Downstream Fund has a board of
directors (or the equivalent), the board or (ii) if the BDC Downstream Fund does not have a board of directors (or the equivalent), a transaction committee or advisory committee of the BDC Downstream Fund.
JT
No-Action
Letters
means
SMC Capital, Inc.
, SEC
No-Action
Letter (pub. avail. Sept. 5, 1995) and
Massachusetts Mutual Life Insurance Company
, SEC
No-Action
Letter (pub. avail. June 7, 2000).
4
Objectives and Strategies
means (i) with respect to any Regulated
Fund other than a BDC Downstream Fund, its investment objectives and strategies, as described in its most current registration statement on Form
N-2,
other current filings with the Commission under the
Securities Act of 1933 (the
Securities Act
) or under the Securities Exchange Act of 1934, as amended, and its most current report to stockholders, and (ii) with respect to any BDC Downstream Fund, those investment
objectives and strategies described in its disclosure documents (including private placement memoranda and reports to equity holders) and organizational documents (including operating agreements).
Potential
Co-Investment
Transaction
means any investment opportunity in
which a Regulated Fund (or its Wholly-Owned Investment Sub) could not participate together with one or more Affiliated Funds and/or one or more other Regulated Funds without obtaining and relying on the Order.
Pre-Boarding
Investments
are investments in
an issuer held by a Regulated Fund as well as one or more Affiliated Funds and/or one or more other Regulated Funds that were acquired prior to participating in
any Co-Investment Transaction:
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i.)
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in transactions in which the only term negotiated by or on behalf of such funds was price in reliance on one of
the
JT No-Action Letters;
or
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ii.)
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in transactions occurring at least 90 days apart and without coordination between the Regulated Fund and any
Affiliated Fund or other Regulated Fund.
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Regulated Funds
means BCIC, TCPC, the Future
Regulated Funds and the BDC Downstream Funds.
Related Party
means (i) any Close Affiliate and (ii) in
respect of matters as to which any Adviser has knowledge, any Remote Affiliate.
Remote Affiliate
means any
person described in Section 57(e) in respect of any Regulated Fund (treating any registered investment company or series thereof as a BDC for this purpose) and any limited partner holding 5% or more of the relevant limited partner interests
that would be a Close Affiliate but for the exclusion in that definition.
Required Majority
means a required
majority, as defined in Section 57(o) of the Act.
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SBA
means the Small Business Administration.
SBA Act
means the Small Business Investment Act of 1958, as amended.
SBIC Subsidiary
means a wholly-owned consolidated subsidiary that is licensed by the SBA to operate under the SBA
Act as a small business investment company.
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In the case of a Regulated Fund that is a registered
closed-end
fund,
the Board members that make up the Required Majority will be determined as if the Regulated Fund were a BDC subject to Section 57(o). In the case of a BDC Downstream Fund with a board of directors (or the equivalent), the members that make up
the Required Majority will be determined as if the BDC Downstream Fund were a BDC subject to Section 57(o). In the case of a BDC Downstream Fund with a transaction committee or advisory committee, the committee members that make up the Required
Majority will be determined as if the BDC Downstream Fund were a BDC subject to Section 57(o) and as if the committee members were directors of the fund.
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5
Tradable Security
means a security that meets the following criteria at
the time of Disposition:
(i) it trades on a national securities exchange or designated offshore securities market as defined in rule
902(b) under the Securities Act;
(ii) it is not subject to restrictive agreements with the issuer or other security holders; and
(iii) it trades with sufficient volume and liquidity (findings as to which are documented by the Advisers to any Regulated Funds holding
investments in the issuer and retained for the life of the Regulated Fund) to allow each Regulated Fund to dispose of its entire position remaining after the proposed Disposition within a short period of time not exceeding 30 days at approximately
the value (as defined by section 2(a)(41) of the Act) at which the Regulated Fund has valued the investment.
Wholly-Owned
Investment Sub
means an entity (i) that is wholly-owned by a Regulated Fund (with such Regulated Fund at all times holding, beneficially and of record, directly or indirectly, 100% of the voting and economic interests); (ii) whose
sole business purpose is to hold one or more investments on behalf of such Regulated Fund (and, in the case of an SBIC Subsidiary, maintain a license under the SBA Act and issue debentures guaranteed by the SBA); (iii) with respect to which such
Regulated Funds Board has the sole authority to make all determinations with respect to the entitys participation under the Conditions to this application; and (iv) that would be an investment company but for Section 3(c)(1) or
3(c)(7) of the Act.
BCIC is a Delaware corporation organized as a
closed-end
management investment company that has elected
to be regulated as a BDC under Section 54(a) of the 1940 Act.
BCIC was organized on April 13, 2005 and gave notice of its intent to be regulated as a BDC by filing a Form
N-54A
with the Commission on July 22, 2005. On July 2, 2007, BCIC closed its initial public offering. BCICs investment adviser is Blackrock Capital Advisor.
BCICs Objectives and Strategies are to generate both current income and capital appreciation through debt and equity investments. BCIC
invests primarily in middle-market companies in the form of senior and junior secured, unsecured and subordinated debt securities and loans, each of which may include an equity component, and by making direct preferred, common and other equity
investments in such companies.
BCIC uses the term middle-market to refer to companies with annual revenues typically between
$50 million and $1 billion and its targeted investment typically ranges between $10 million and $50 million, although the investment sizes may be more or less than the targeted range and the size of its investments may grow with
its capital availability. BCIC generally seeks to invest in companies that operate in a broad variety of industries and that generate positive cash flows. Although most of BCICs investments are in senior and junior secured, unsecured and
subordinated loans to U.S. private and certain public middle-market companies, BCIC invests throughout the capital structure of its portfolio companies, which may include BCIC receiving common and preferred equity, options and warrants, credit
derivatives, high-yield bonds, distressed debt and other structured securities, as part of an investment in a portfolio company.
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BCIC is managed by a Board currently comprised of seven persons, six of whom are Independent
Directors. BCIC has elected to be treated for federal income tax purposes as a regulated investment company (
RIC
) under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended (the
Code
).
BCIC owns 80% of the equity, and has sole control, of Gordon Brothers, a BCIC Downstream Fund. Gordon
Brothers is a commercial finance company that is excluded from investment company status under Section 3(a). If Applicants receive the requested Order, Gordon Brothers will be permitted to
co-invest
with
other Regulated Funds and with Affiliated Funds.
B.
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BlackRock Credit Strategies Fund
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BCSF is organized as a statutory trust under the laws of Delaware. The Fund was organized as a Delaware statutory trust on August 27,
2018, pursuant to a Certificate of Trust, governed by the laws of the State of Delaware. BCSF is registered as a
non-diversified,
closed-end
management investment
company under the 1940 Act.
BCSFs investment objective is to seek to provide high income and attractive risk-adjusted returns.
Under normal conditions, the Fund intends to invest at least 80% of its Managed Assets
11
in fixed-income securities, with an emphasis on public and private corporate credit.
BCSF intends to invest across multiple credit sectors and employ multiple strategies. As part of its strategy, BCSF will seek to invest in
select less liquid or illiquid private credit investments, generally to corporate borrowers, that its investment adviser believes present the potential for higher yield and capital appreciation versus more liquid portions of its portfolio.
BAL will serve as BCSFs investment adviser and BCIA will serve as one of BCSFs
sub-advisers
and will be responsible for the
day-to-day
management of a sleeve of BCSFs portfolio.
BCSF will be managed by a board of trustees. A majority of BCSFs trustees will be Independent Trustees. BCSF intends to elect to be
treated and to qualify for federal income tax purposes as a RIC under Subchapter M of the Code.
C.
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TCPC, SVCP, TCPC Funding, TCPC SBIC, and TCPC SBIC GP
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TCPC is a specialty finance company that is a
closed-end,
non-diversified
management investment company incorporated in Delaware. Special Value Continuation Fund, LLC, TCPCs predecessor, was originally organized on July 17, 2006, commenced operations on
July 31, 2006 and registered as a
non-diversified
closed-end
management investment company under the Act. TCPC was originally formed as a limited liability company
under the laws of the State of Delaware and converted to a Delaware corporation on April 2, 2012. TCPC elected to be regulated as a BDC on April 2, 2012. In connection with its initial public offering, TCPC filed a registration statement
on Form
N-2
(File
No. 333-172669)
under the Securities Act. TCPC completed an initial public offering of its common stock, par value $0.001, in April 2012, and has
raised additional capital through subsequent debt and equity offerings from time to time, as well as through the use of revolving credit facilities.
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Managed Assets means the total assets of BCSF (including any assets attributable to money borrowed
for investment purposes) minus the sum of BCSFs accrued liabilities (other than money borrowed for investment purposes).
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7
SVCP was originally formed as a limited partnership under the laws of the State of Delaware and
converted to a limited liability company under the laws of the State of Delaware on August 2, 2018. SVCP elected to be regulated as a BDC at the same time as TCPC; however, pursuant to approval from TCPCs stockholders, withdrew its
election to be regulated as a BDC on August 1, 2018. SVCP is a wholly-owned subsidiary of TCPC. SVCP has entered into a $100.0 million revolving, multi-currency credit facility.
TCPC Funding was formed as a limited liability company under the laws of the State of Delaware and is a wholly-owned subsidiary of SVCP. TCPC
Funding has entered into a $350.0 million senior secured revolving credit facility.
TCPCs investment objective is to achieve
high total returns through current income and capital appreciation, with an emphasis on principal protection. It seeks to achieve this investment objective primarily through investments in debt securities of middle-market companies and its primary
investment focus is investing in and originating leveraged loans to performing middle-market companies, which it typically defines as those with enterprise values between $100 million and $1.5 billion. While TCPC primarily focuses on
privately negotiated investments in debt of middle-market companies, it makes investments of all kinds and at all levels of the capital structure, including in equity interests such as preferred or common stock and warrants or options received in
connection with its debt investments.
TCPC has qualified and elected to be treated as a RIC under Subchapter M of the Code and intends to
continue to qualify as a RIC in the future.
TCPCs business and affairs are managed under the direction of its Board. TCPC has an
eight-member Board, six of whom are Independent Directors.
TCPC has entered into an investment management agreement (the
TCPC
Management Agreement
) with TCP, under which TCP, subject to the overall supervision of TCPCs Board, manages the
day-to-day
operations of, and
provides investment advisory services to, TCPC. Series H of SVOF/MM serves as TCPCs administrator pursuant to an administration agreement (the
TCPC Administration Agreement
).
TCPC SBIC was organized as a limited partnership under the laws of the state of Delaware on June 12, 2013, and submitted an application
for a license to operate as an SBIC under the SBA Act with the SBA on June 28, 2013 and the application was accepted for filing on July 23, 2013 (the
SBIC Application
). TCPC SBIC has the same investment objective
and strategies as TCP, as summarized above. TCPC SBIC is an SBIC Subsidiary.
8
On April 17, 2014, TCPC SBIC received an SBIC license from the SBA. As a result, TCPC now
has the ability to issue, through TCPC SBIC, debentures guaranteed by the SBA at favorable interest rates. TCPC SBIC will not be registered under the Act based on the exclusion from the definition of investment company contained in
Section 3(c)(7). SVCP directly owns a 100% limited partnership interest in TCPC SBIC.
TCPC SBIC GP was organized as a limited
liability company under the laws of the state of Delaware on June 12, 2013, and is a wholly-owned subsidiary of SVCP, which is the sole member of the TCPC SBIC GP. TCPC SBIC GP is the sole general partner of TCPC SBIC.
TCPC effectively controls TCPC SBIC because TCPC SBIC GP is a wholly-owned subsidiary of SVCP. TCPCs Board may remove the managers of
TCPC SBIC GP with or without cause, subject to SBA approval. Moreover, SVCP owns all of the limited partnership interests of TCPC SBIC, and believes that its oversight of TCPC SBIC is appropriate to protect TCPCs interests. Accordingly,
TCPCs Board effectively has the power to exercise authority and provide oversight with respect to TCPC SBIC and will in fact exercise such authority and provide such oversight.
Subject to the overall supervision of TCPCs Board, TCP serves as the investment adviser to TCPC SBIC pursuant to a management services
agreement dated as of February 20, 2014 (as amended and
re-approved
from time to time by TCPCs Board, the
SBIC Management Services Agreement
,
and together with the
TCPC Management Agreement, the
TCP Management Agreements
).
On February 7, 2014, TCPC, SVCP, TCPC SBIC,
TCPC SBIC GP and TCP Adviser filed an application with the Commission for an order pursuant to Section 6(c) granting exemptions from Sections 18(a) and 61(a). On July 13, 2015, the Commission issued an order (the
SBIC
Order
)
12
permitting TCPC to adhere to a modified asset coverage requirement under Section 61 with respect to any direct or indirect wholly-owned subsidiary of TCPC that is an
SBIC and relies on Section 3(c)(7) for an exemption from the definition of an investment company under the Act.
D.
|
Blackrock Capital Advisor
|
BlackRock Capital Advisor is an indirect wholly-owned subsidiary of BlackRock, Inc., which is a New York based global investment management
firm. BlackRock Capital Advisor is a Delaware limited liability company and an investment adviser that is registered with the Commission under the Advisers Act. BlackRock Capital Advisor serves as investment adviser to BCIC and will serve as
investment adviser to Middle Market Senior Fund, L.P. and
sub-adviser
to BCSF. BlackRock Capital Advisor manages BCICs portfolio in accordance with BCICs Objectives and Strategies. BlackRock
Capital Advisor makes investment decisions for BCIC, including placing purchase and sale orders for portfolio transactions and otherwise managing the
day-to-day
operations of BCIC, subject to the oversight of BCIC Board.
12
|
TCP Capital Corp.
et al
. Investment Company Act Release Nos. 31670 (June 15, 2015) (notice) and 31712
(July 13, 2015) (order).
|
9
E.
|
Tennenbaum Capital Partners, LLC
|
TCP is a wholly-owned subsidiary of BlackRock Capital Advisor. TCP, a Delaware limited liability company registered under the Advisers Act,
serves as the investment adviser to TCPC pursuant to the TCPC Management Agreement and TCPC SBIC pursuant to the SBIC Management Services Agreement. Subject to the overall supervision of TCPCs Board, TCP manages the
day-to-day
operations of, and provides investment advisory and management services to, such funds. Under the terms of the TCP Management Agreements, TCP determines the
composition of each funds portfolio, the nature and timing of the changes to each funds portfolio, and the manner of implementing such changes; identifies, evaluates, and negotiates the structure of the investments each fund makes
(including performing due diligence on each funds prospective portfolio companies); closes, monitors and, when and where applicable, restructures the investments each fund makes; and determines the investments and other assets that each fund
purchases, retains, or sells.
SVOF/MM is a wholly-owned subsidiary of BlackRock Capital Advisor. SVOF/MM is an investment adviser registered under the Advisers Act. Pursuant
to the TCPC Administration Agreement, Series H of SVOF/MM furnishes TCPC with the facilities and administrative services necessary to conduct our
day-to-day
operations,
including equipment, clerical, bookkeeping and recordkeeping services at such facilities. In addition, Series H of SVOF/MM assists TCPC in connection with the determination and publishing of TCPCs net asset value, the preparation and filing of
tax returns and the printing and dissemination of reports to TCPCs stockholders. Certain classes and series of SVOF/MM also serve as managing member and/or investment adviser to certain Existing Affiliated Funds.
G.
|
BlackRock Advisors, LLC
|
BAL, a Delaware limited liability company that is registered with the Commission as an investment adviser under the Advisers Act, will serve as
the investment adviser to BCSF
13
and may serve as the investment adviser to Future Regulated Funds and Future Affiliated Funds that are
sub-advised
by an
Adviser. BAL is an indirect wholly-owned subsidiary of BlackRock, Inc. As BlackRock, Inc. controls BAL, it may be deemed to control the Regulated Funds and the Affiliated Funds. However, BlackRock, Inc. is not a registered investment
adviser and has not been included as an Applicant. BAL will not source any Potential
Co-investment
Transactions under the requested Order.
BCIA, as one of the
sub-advisers
to BCSF, will have the ability to monitor and comply with the
Conditions of this Application in respect of BCSFs investments in the
Co-Investment
Program. However, as BAL is a Section 17 affiliate of the Existing Advisers, BAL has been added as an Applicant in
order to be able to rely on the Order.
13
|
For the avoidance of doubt, BAL will not be treated as an Adviser under the requested Order, but will be
subject to
Conditions 2(c)(iv), 13 and 14.
|
10
H.
|
Existing Affiliated Funds
|
TCP is the investment adviser to all the Existing Affiliated Funds, except for four, three of which has Series I of SVOF/MM as its investment
adviser and the other of which has BlackRock Capital Advisor as its investment adviser. A complete list of the Existing Affiliated Funds is included in Appendix A.
The Applicants respectfully request an Order of the Commission under Sections 17(d) and 57(i) and Rule
17d-1
thereunder to permit, subject to the terms and Conditions set forth below in this Application, a Regulated Fund and one or more other Regulated Funds and/or one or more Affiliated Funds to enter into
Co-Investment
Transactions with each other.
The Regulated Funds and the Affiliated Funds seek relief to
enter into
Co-Investment
Transactions because such
Co-Investment
Transactions would otherwise be prohibited by either or both of Section 17(d) or
Section 57(a)(4) and the Rules under the Act without an exemptive order from the Commission. This Application seeks relief in order to (i) enable the Regulated Funds and Affiliated Funds to avoid, among other things, the practical
commercial and/or economic difficulties of trying to structure, negotiate and persuade counterparties to enter into transactions while awaiting the granting of the relief requested in individual applications with respect to each
Co-Investment
Transaction that arises in the future and (ii) enable the Regulated Funds and the Affiliated Funds to avoid the significant legal and other expenses that would be incurred in preparing such
individual applications.
Similar to precedent, Applicants seek relief that would permit
Co-Investment
Transactions in the form of initial investments,
Follow-On
Investments and Dispositions of investments in an issuer. In these cases, the terms and
Conditions of this Application would govern the entire lifecycle of an investment with respect to a particular issuer, including both the initial investment and any subsequent transactions. Similar to certain precedents, the Applicants also seek the
ability to make
Follow-On
Investments and to dispose of investments in issuers where the Regulated Funds and Affiliated Funds did not make their initial investments in reliance on the Order. The Applicants
seek this flexibility because the Regulated Funds and Affiliated Funds may, at times, invest in the same issuer without engaging in a prohibited joint transaction but then find that subsequent transactions with that issuer would be prohibited under
the Act. Through the proposed onboarding process, discussed below, the Applicants would, under certain circumstances, be permitted to rely on the Order to complete subsequent
Co-Investment
Transactions. In Section A.1. below, the Applicants first discuss the overall investment process that would apply to initial investments under the Order as well as subsequent transactions with issuers under the Order. In Sections A.3. and A.4.
below, the Applicants discuss additional procedures that apply to
Follow-On
Investments and Dispositions, including the onboarding process that applies when initial investments were made without relying on the
Order.
Applicants include multiple advisers that manage numerous funds and separate accounts with a wide variety of mandates and aggregate assets of
approximately $10 billion as of June 30, 2018. These clients currently include three BDCs that are regulated under the Act. Each Adviser manages the assets entrusted to it by its clients in accordance with its fiduciary duty to those
clients and, in the case of the BDCs, the Act.
11
The Advisers have established rigorous processes for ensuring compliance with the Prior Orders
and for allocating initial investment opportunities, opportunities for subsequent investments in an issuer and dispositions of securities holdings reasonably designed to treat all clients fairly and equitably. As discussed below, these processes
will be extended and modified in a manner reasonably designed to ensure that the additional transactions permitted under the Order will both (i) be fair and equitable to the Regulated Funds and the Affiliated Funds and (ii) comply with the
Conditions contained in the Order.
1.
|
The Investment Process
|
The investment process consists of three stages: (i) the identification and consideration of investment opportunities (including
follow-on
investment opportunities); (ii) order placement and allocation; and (iii) consideration by each applicable Regulated Funds Board when a Potential
Co-Investment
Transaction is being considered by one or more Regulated Funds, as provided by the Order.
|
(a)
|
Identification and Consideration of Investment Opportunities
|
The Advisers are organized and managed such that the individual portfolio managers, as well as the teams and committees of portfolio managers,
analysts and senior management (
Investment Teams
and
Investment Committees
),
14
responsible for evaluating investment opportunities and making investment decisions on behalf of clients are promptly notified of the opportunities.
Opportunities for Potential
Co-Investment
Transactions may arise when investment advisory personnel of
an Adviser become aware of investment opportunities that may be appropriate for one or more Regulated Funds and one or more Affiliated Funds. If the requested Order is granted, the Advisers will establish, maintain and implement policies and
procedures reasonably designed to ensure that, when such opportunities arise, the Advisers to the relevant Regulated Funds are promptly notified and receive the same information about the opportunity as any other Advisers considering the opportunity
for their clients. In particular, consistent with Condition 1, if a Potential
Co-Investment
Transaction falls within the then-current Objectives and Strategies and any Board-Established Criteria of a Regulated
Fund, the policies and procedures will require that the relevant portfolio managers, Investment Teams and/or Investment Committees responsible for that Regulated Fund receive sufficient information to allow the Regulated Funds Adviser to make
its independent determination and recommendations under Conditions 1, 2(a), 6, 7, 8 and 9 (as applicable).
15
In addition, the policies and procedures will specify the individuals or roles
responsible for carrying out the policies and procedures, including ensuring that the Advisers receive such information. After receiving notification of a Potential
Co-Investment
Transaction under Condition
1(a), the Adviser to each applicable Regulated Fund, working through the applicable portfolio manager, or in conjunction with any applicable Investment Team or Investment Committee, will then make an independent determination of the appropriateness
of the investment for the Regulated Fund in light of the Regulated Funds then-current circumstances.
14
|
Investment Teams and Investment Committees responsible for an area of investment may include portfolio
managers, analysts and senior management from among one or more of the Advisers.
|
15
|
Representatives from each Adviser to a Regulated Fund are members of each Investment Team or Investment
Committee, or are otherwise entitled to participate in each meeting of any Investment Team or Investment Committee, that is expected to approve or reject recommended investment opportunities falling within its Regulated Funds Objectives and
Strategies and Board-Established Criteria. Accordingly, the policies and procedures may provide, for example, that the Adviser will receive the information required under Condition 1 in conjunction with its representatives participation in the
relevant Investment Team or Investment Committee. The Investment Teams and Investment Committees will keep minutes of their meetings, and such minutes will include reference to the specific investment opportunities considered at the meeting.
|
12
Applicants represent that, if the requested Order is granted, the investment advisory personnel
of the Advisers to the Regulated Funds will be charged with making sure they identify, and participate in this process with respect to, each investment opportunity that falls within the Objectives and Strategies and Board-Established Criteria of
each Regulated Fund. Applicants assert that the Advisers allocation policies and procedures are structured so that the relevant investment advisory personnel for each Regulated Fund will be promptly notified of all Potential
Co-Investment
Transactions that fall within the then-current Objectives and Strategies and Board-Established Criteria of such Regulated Fund and that the Advisers will undertake to perform these duties regardless of
whether the Advisers serve as investment adviser or
sub-adviser
to the Regulated Fund or Affiliated Funds.
|
(b)
|
Order Placement and Allocation
|
General
. If the Adviser to a Regulated Fund deems the Regulated Funds participation in any Potential
Co-Investment
Transaction to be appropriate, it will, working through the applicable portfolio manager or in conjunction with any applicable Investment Team or Investment Committee, formulate a recommendation
regarding the proposed order amount for the Regulated Fund. In doing so, the Adviser and any applicable Investment Team or Investment Committee may consider such factors, among others, as investment guidelines, issuer, industry and geographical
concentration, committed capital, availability of cash and other opportunities for which cash is needed, tax considerations, leverage covenants, regulatory constraints (such as requirements under the Act), investment horizon, potential liquidity
needs, and the Regulated Funds risk concentration policies.
Allocation Procedure
. For each Regulated Fund and Affiliated
Fund whose Adviser recommends participating in a Potential
Co-Investment
Transaction, the Adviser will formulate a proposed order amount. Prior to the External Submission (as defined below), each proposed
order amount may be reviewed and adjusted, in accordance with the Advisers written allocation policies and procedures, by an allocation committee for the area in question (e.g., credit, private equity, real estate) on which senior management,
legal and compliance personnel from that area participate or, in the case of issues involving multiple areas, an Adviser-wide allocation committee on which senior management, legal and compliance personnel for the Advisers participate.
16
The order of a Regulated Fund or Affiliated Fund resulting from this process is referred to as its
Internal Order
. The Internal Order will be submitted for approval by the
Required Majority of any participating Regulated Funds in accordance with the Conditions and as discussed in Section III.A.1.c. below.
16
|
The reason for any such adjustment to a proposed order amount will be documented in writing and preserved in
the records of the Advisers.
|
13
If the aggregate Internal Orders for a Potential
Co-Investment
Transaction do not exceed the size of the investment opportunity immediately prior to the submission of the orders to the underwriter, broker, dealer or issuer, as applicable (the
External Submission
), then each Internal Order will be fulfilled as placed. If, on the other hand, the aggregate Internal Orders for a Potential
Co-Investment
Transaction exceed the
size of the investment opportunity immediately prior to the External Submission, then the allocation of the opportunity will be made pro rata on the basis of the size of the Internal Orders.
17
If,
subsequent to such External Submission, the size of the opportunity is increased or decreased, or if the terms of such opportunity, or the facts and circumstances applicable to the Regulated Funds or the Affiliated Funds consideration of
the opportunity, change, the participants will be permitted to submit revised Internal Orders in accordance with written allocation policies and procedures that the Advisers will establish, implement and maintain;
provided
that, if the size
of the opportunity is decreased such that the aggregate of the original Internal Orders would exceed the amount of the remaining investment opportunity, then upon submitting any revised order amount to the Board of a Regulated Fund for approval, the
Adviser to the Regulated Fund will also notify the Board promptly of the amount that the Regulated Fund would receive if the remaining investment opportunity were allocated pro rata on the basis of the size of the original Internal Orders. The Board
of the Regulated Fund will then either approve or disapprove of the investment opportunity in accordance with Condition 2, 6, 7, 8 or 9, as applicable.
Compliance
. The Applicants represent that the Advisers allocation review process is a robust process designed as part of their
overall compliance policies and procedures to ensure that every client is treated fairly and that the Advisers are following their allocation policies. The entire allocation process is monitored and reviewed by the compliance team, led by the chief
compliance officer, and approved by the Board of each Regulated Fund as it applies to such Regulated Fund.
|
(c)
|
Approval of Potential
Co-Investment
Transactions
|
A Regulated Fund will enter into a Potential
Co-Investment
Transaction with one
or more other Regulated Funds and/or Affiliated Funds only if, prior to the Regulated Funds participation in the Potential
Co-Investment
Transaction, the Required Majority approves it in accordance with
the Conditions of this Order.
In the case of a BDC Downstream Fund with an Independent Party consisting of a transaction committee or
advisory committee, the individuals on the committee would possess experience and training comparable to that of the directors of the parent Regulated Fund and sufficient to permit them to make informed decisions on behalf of the applicable BDC
Downstream Fund. The use of Independent Parties for BDC Downstream Funds results in a standard of approval that Applicants believe is equally as stringent as the standard of approval that a board of directors would apply. Most importantly,
Applicants represent that the Independent Parties of the BDC Downstream Funds would be bound (by law or by contract enforceable by such Independent Party) by fiduciary duties comparable to those applicable to the directors of the parent Regulated
Fund, including a duty to act in the best interests of their respective funds when approving transactions. These duties would apply in the case of all Potential
Co-Investment
Transactions, including
transactions that could present a conflict of interest.
17
|
The Advisers will maintain records of all proposed order amounts, Internal Orders and External Submissions in
conjunction with Potential
Co-Investment
Transactions. Each applicable Adviser will provide the Eligible Directors with information concerning the Affiliated Funds and Regulated Funds order sizes
to assist the Eligible Directors with their review of the applicable Regulated Funds investments for compliance with the Conditions.
|
14
Further, Applicants believe that the existence of differing routes of approval between the BDC
Downstream Funds and other Regulated Funds would not result in Applicants investing through the BDC Downstream Funds in order to avoid obtaining the approval of a Regulated Funds Board. Each Regulated Fund and BDC Downstream Fund has its own
Objectives and Strategies and may have its own Board-Established Criteria, the implementation of which depends on the specific circumstances of the entitys portfolio at the time an investment opportunity is presented. As noted above,
consistent with its duty to its BDC Downstream Funds, the Independent Party must reach a conclusion on whether or not an investment is in the best interest of its relevant BDC Downstream Funds. An investment made solely to avoid an approval
requirement at the Regulated Fund level should not be viewed as in the best interest of the entity in question and, thus, would not be approved by the Independent Party.
Applicants represent that the use of Independent Parties has been common practice in institutional funds for many years and sophisticated
investors, including global institutional investors, have relied on their presence in fund structures to ensure equitable treatment. Moreover, although a traditional board of directors would not be required to approve
Co-Investment
Transactions for a BDC Downstream Fund, a Board of a Regulated Fund would be required, as part of the overall duty of care that it owes to that Regulated Fund and its shareholders, to monitor the
Co-investment
Transaction activity of the Regulated Funds respective BDC Downstream Funds to ensure that no pattern of abuse was extant.
A Regulated Fund may participate in Pro Rata Dispositions and Pro Rata
Follow-On
Investments (as each
term is defined below) without obtaining prior approval of the Required Majority in accordance with Conditions 6(c)(i) and 8(b)(i).
All Regulated Funds and Affiliated Funds participating in a
Co-Investment
Transaction will invest at
the same time, for the same price and with the same terms, conditions, class, registration rights and any other rights, so that none of them receives terms more favorable than any other. However, the settlement date for an Affiliated Fund in a
Co-Investment
Transaction may occur up to ten business days after the settlement date for the Regulated Fund, and vice versa, for one of two reasons. First, this may occur when the Affiliated Fund or Regulated Fund
is not yet fully funded because, when the Affiliated Fund or Regulated Fund desires to make an investment, it must call capital from its investors to obtain the financing to make the investment, and in these instances, the notice requirement to call
capital could be as much as ten business days. Accordingly, if a fund has called committed capital from its investors but the investors have not yet funded the capital calls, it may need to delay settlement during the notice period. Second, delayed
settlement may also occur where, for tax or regulatory reasons, an Affiliated Fund or Regulated Fund does not purchase new issuances immediately upon issuance but only after a short seasoning period of up to ten business days. Nevertheless, in all
cases, (i) the date on which the commitment of the Affiliated Funds and Regulated Funds is made will be the same even where the settlement date is not, and (ii) the earliest settlement date and the latest settlement date of any Affiliated
Fund or Regulated Fund participating in the transaction will occur within ten business days of each other.
15
Applicants believe that an earlier or later settlement date does not create any additional risk
for the Regulated Funds. As described above, the date of commitment will be the same and all other terms, including price, will be the same. Further, the investments by the Regulated Funds and the Affiliated Funds will be independent from each
other, and a Regulated Fund would never take on the risk of holding more of a given security than it would prefer to hold in the event that an Affiliated Fund or another Regulated Fund did not settle as expected.
3.
|
Permitted
Follow-On
Investments and Approval of
Follow-On
Investments
|
From time to time the Regulated Funds and Affiliated Funds
may have opportunities to make
Follow-On
Investments in an issuer in which a Regulated Fund and one or more other Regulated Funds and/or Affiliated Funds previously have invested and continue to hold an
investment. If the Order is granted,
Follow-On
Investments will be made in a manner that, over time, is fair and equitable to all of the Regulated Funds and Affiliated Funds and in accordance with the proposed
procedures discussed above and with the Conditions of the Order.
The Order would divide
Follow-On
Investments into two categories depending on whether the Regulated Funds and Affiliated Funds holding investments in the issuer previously participated in a
Co-Investment
Transaction with respect to the issuer
and continue to hold any securities acquired in a
Co-Investment
Transaction for that issuer. If such Regulated Funds and Affiliated Funds have previously participated in a
Co-Investment
Transaction with respect to the issuer and only such funds are participating in the
Follow-On
Investment, then the terms and approval of the
Follow-On
Investment would be subject to the process discussed in Section III.A.3.a. below and governed by Condition 8. These
Follow-On
Investments are referred to as
Standard Review
Follow-Ons.
If such Regulated Funds and Affiliated Funds hold
Pre-Boarding
Investments and have not previously participated in a
Co-Investment
Transaction with respect to the issuer and only such funds are participating in the
Follow-On
Investment, then the terms and approval of the
Follow-On
Investment would be subject to the onboarding process discussed in Section III.A.3.b. below and governed by Condition 9. These
Follow-On
Investments are
referred to as Enhanced Review
Follow-Ons.
|
(a)
|
Standard Review
Follow-Ons
|
A Regulated Fund may invest in Standard Review
Follow-Ons
either with the approval of
the Required Majority using the procedures required under Condition 8(c) or, where certain additional requirements are met, without Board approval under Condition 8(b).
A Regulated Fund may participate in a Standard Review
Follow-On
without obtaining the prior approval
of the Required Majority if it is (i) a Pro Rata
Follow-On
Investment or (ii) a
Non-Negotiated
Follow-On
Investment.
A
Pro Rata
Follow-On
Investment
is a
Follow-On
Investment (i) in which the participation of each Affiliated Fund and each Regulated Fund is proportionate to its outstanding investments in the issuer or security, as appropriate,
18
immediately preceding the
Follow-On
Investment, and (ii) in the case of a Regulated Fund, a majority
of the Board has approved the Regulated Funds participation in the pro rata
Follow-On
Investments as being in the best interests of the Regulated Fund. The Regulated Funds Board may refuse to
approve, or at any time rescind, suspend or qualify, their approval of Pro Rata
Follow-On
Investments, in which case all subsequent
Follow-On
Investments will be
submitted to the Regulated Funds Eligible Directors in accordance with Condition 8(c).
16
A
Non-Negotiated
Follow-On
Investment
is a
Follow-On
Investment in which a Regulated Fund participates together with one or more Affiliated Funds and/or one or more other
Regulated Funds (i) in which the only term negotiated by or on behalf of the funds is price and (ii) with respect to which, if the transaction were considered on its own, the funds would be entitled to rely on one of the JT
No-Action
Letters.
Applicants believe that these Pro Rata and
Non-Negotiated
Follow-On
Investments do not present a significant opportunity for overreaching on the part of any Adviser and thus do not warrant the time or the
attention of the Board. Pro Rata
Follow-On
Investments and
Non-Negotiated
Follow-On
Investments remain subject to the
Boards periodic review in accordance with Condition 10.
|
(b)
|
Enhanced Review
Follow-Ons
|
One or more Regulated Funds and/or one or more Affiliated Funds holding
Pre-Boarding
Investments may
have the opportunity to make a
Follow-On
Investment that is a Potential
Co-Investment
Transaction in an issuer with respect to which they have not previously
participated in a
Co-Investment
Transaction. In these cases, the Regulated Funds and Affiliated Funds may rely on the Order to make such
Follow-On
Investment subject to
the requirements of Condition 9. These enhanced review requirements constitute an onboarding process whereby Regulated Funds and Affiliated Funds may utilize the Order to participate in
Co-Investment
Transactions even though they already hold
Pre-Boarding
Investments. For a given issuer, the participating Regulated Funds and Affiliated Funds need to
comply with these requirements only for the first
Co-Investment
Transaction. Subsequent
Co-Investment
Transactions with respect to the issuer will be governed by
Condition 8 under the standard review process.
The Regulated Funds and Affiliated Funds may be presented with opportunities to sell, exchange or otherwise dispose of securities in a
transaction that would be prohibited by Rule
17d-1
or Section 57(a)(4), as applicable. If the Order is granted, such Dispositions will be made in a manner that, over time, is fair and equitable to all of
the Regulated and Affiliated Funds and in accordance with procedures set forth in the proposed Conditions to the Order and discussed below.
The Order would divide these Dispositions into two categories: (i) if the Regulated Funds and Affiliated Funds holding investments in the
issuer have previously participated in a
Co-Investment
Transaction with respect to the issuer and continue to hold any securities acquired in a
Co-Investment
Transaction
for such issuer, then the terms and approval of the Disposition (hereinafter referred to as
Standard Review Dispositions
) would be subject to the process discussed in Section III.A.4.a. below and governed by Condition 6;
and (ii) if the Regulated Funds and Affiliated Funds have not previously participated in a
Co-Investment
Transaction with respect to the issuer, then the terms and approval of the Disposition (hereinafter
referred to as
Enhanced Review Dispositions
) would be subject to the same onboarding process discussed in Section III.A.4.b. above and governed by Condition 7.
17
|
(a)
|
Standard Review Dispositions
|
A Regulated Fund may participate in a Standard Review Disposition either with the approval of the Required Majority using the standard
procedures required under Condition 6(d) or, where certain additional requirements are met, without Board approval under Condition 6(c).
A Regulated Fund may participate in a Standard Review Disposition without obtaining the prior approval of the Required Majority if
(i) the Disposition is a Pro Rata Disposition or (ii) the securities are Tradable Securities and the Disposition meets the other requirements of Condition 6(c)(ii).
A
Pro Rata Disposition
is a Disposition (i) in which the participation of each Affiliated Fund and each
Regulated Fund is proportionate to its outstanding investment in the security subject to Disposition immediately preceding the Disposition;
19
and (ii) in the case of a Regulated Fund, a
majority of the Board has approved the Regulated Funds participation in pro rata Dispositions as being in the best interests of the Regulated Fund. The Regulated Funds Board may refuse to approve, or at any time rescind, suspend or
qualify, their approval of Pro Rata Dispositions, in which case all subsequent Dispositions will be submitted to the Regulated Funds Eligible Directors.
In the case of a Tradable Security, approval of the required majority is not required for the Disposition if: (x) the Disposition is not
to the issuer or any affiliated person of the issuer;
20
and (y) the security is sold for cash in a transaction in which the only term negotiated by or on behalf of the participating Regulated
Funds and Affiliated Funds is price. Pro Rata Dispositions and Dispositions of a Tradable Security remain subject to the Boards periodic review in accordance with Condition 10.
|
(b)
|
Enhanced Review Dispositions
|
One or more Regulated Funds and one or more Affiliated Funds that have not previously participated in a
Co-Investment
Transaction with respect to an issuer may have the opportunity to make a Disposition of
Pre-Boarding
Investments in a Potential
Co-Investment
Transaction. In these cases, the Regulated Funds and Affiliated Funds may rely on the Order to make such Disposition subject to the requirements of Condition 7. As discussed above, with respect to
investment in a given issuer, the participating Regulated Funds and Affiliated Funds need only complete the onboarding process for the first
Co-Investment
Transaction, which may be an Enhanced Review
Follow-On
or an Enhanced Review Disposition.
21
Subsequent
Co-Investment
Transactions with respect to the issuer will be
governed by Condition 6 or 8 under the standard review process.
20
|
In the case of a Tradable Security, Dispositions to the issuer or an affiliated person of the issuer are not
permitted so that funds participating in the Disposition do not benefit to the detriment of Regulated Funds that remain invested in the issuer. For example, if a Disposition of a Tradable Security were permitted to be made to the issuer, the issuer
may be reducing its short term assets (i.e., cash) to pay down long term liabilities.
|
21
|
However, with respect to an issuer, if a Regulated Funds first
Co-Investment
Transaction is an Enhanced Review Disposition, and the Regulated Fund does not dispose of its entire position in the Enhanced Review Disposition, then before such Regulated Fund may complete its
first Standard Review
Follow-On
in such issuer, the Eligible Directors must review the proposed
Follow-On
Investment not only on a stand-alone basis but also in relation
to the total economic exposure in such issuer (i.e., in combination with the portion of the
Pre-Boarding
Investment not disposed of in the Enhanced Review Disposition), and the other terms of the investments.
This additional review is required because such findings were not required in connection with the prior Enhanced Review Disposition, but they would have been required had the first
Co-Investment
Transaction
been an Enhanced Review
Follow-On.
|
18
5.
|
Use of Wholly-Owned Investment Subs
|
A Regulated Fund may, from time to time, form one or more Wholly-Owned Investment Subs. Such a subsidiary may be prohibited from investing in a
Co-Investment
Transaction with a Regulated Fund (other than its parent) or any Affiliated Fund because it would be a company controlled by its parent Regulated Fund for purposes of Section 57(a)(4) and
Rule
17d-1.
Applicants request that each Wholly-Owned Investment Sub be permitted to participate in
Co-Investment
Transactions in lieu of the Regulated Fund that owns it
and that the Wholly-Owned Investment Subs participation in any such transaction be treated, for purposes of the Order, as though the parent Regulated Fund were participating directly.
Applicants represent that this treatment is justified because a Wholly-Owned Investment Sub would have no purpose other than serving as a
holding vehicle for the Regulated Funds investments and, therefore, no conflicts of interest could arise between the parent Regulated Fund and the Wholly-Owned Investment Sub. The Board of the parent Regulated Fund would make all relevant
determinations under the Conditions with regard to a Wholly-Owned Investment Subs participation in a
Co-Investment
Transaction, and the Board would be informed of, and take into consideration, any
proposed use of a Wholly-Owned Investment Sub in the Regulated Funds place. If the parent Regulated Fund proposes to participate in the same
Co-Investment
Transaction with any of its Wholly-Owned
Investment Subs, the Board of the parent Regulated Fund will also be informed of, and take into consideration, the relative participation of the Regulated Fund and the Wholly-Owned Investment Sub. Each of SVCP, TCPC Funding, TCPC SBIC and TCPC SBIC
GP is a Wholly-Owned Investment Sub of TCPC.
Applicants note that an entity could not be both a Wholly-Owned Investment Sub and a BDC
Downstream Fund because, in the former case, the Board of the parent Regulated Fund makes any determinations regarding the subsidiarys investments while, in the latter case, the Independent Party makes such determinations.
1.
|
Section 17(d) and Section
57(a)(4)
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Section 17(d) of the Act generally prohibits an affiliated person (as defined in Section 2(a)(3) of the Act), or an affiliated person
of such affiliated person, of a registered investment company acting as principal, from effecting any transaction in which the registered investment company is a joint or a joint and several participant, in contravention of such rules as the
Commission may prescribe for the purpose of limiting or preventing participation by the registered investment company on a basis different from or less advantageous than that of such other participant.
19
Similarly, with regard to BDCs, Section 57(a)(4) prohibits certain persons specified in
Section 57(b) from participating in a joint transaction with the BDC, or a company controlled by the BDC, in contravention of rules as prescribed by the Commission. In particular, Section 57(a)(4) applies to:
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|
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Any director, officer, employee, or member of an advisory board of a BDC or any person (other than the BDC
itself) who is an affiliated person of the forgoing pursuant to Section 2(a)(3)(C); or
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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);
22
or any person who is an affiliated person of any of the forgoing within the meaning of Section 2(a)(3)(C) or (D).
|
Pursuant to the foregoing application of Section 57(a)(4), BDC Downstream Funds on the one hand and other Regulated Funds and Affiliated
Funds on the other, may not
co-invest
absent the availability of an applicable rule under the Act or an exemptive order because the BDC Downstream Funds are controlled by a BDC and the Affiliated Funds and
other Regulated Funds are included in Section 57(b).
Section 2(a)(3)(C) defines an affiliated person of another
person to include any person directly or indirectly controlling, controlled by, or under common control with, such other person. Section 2(a)(3)(D) defines any officer, director, partner, copartner, or employee of an affiliated
person as an affiliated person. 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 that
company. Under Section 2(a)(9) a person who beneficially owns, either directly or through one or more controlled companies, more than 25% of the voting securities of a company is presumed to control such company. The Commission and its staff
have indicated on a number of occasions their belief that an investment adviser that provides discretionary investment management services to a fund and that sponsored, selected the initial directors, and provides administrative or other
non-advisory
services to the fund, controls such fund, absent compelling evidence to the contrary.
23
Rule
17d-1
generally prohibits an affiliated person (as defined in Section 2(a)(3)), or an
affiliated person of such affiliated person, of a registered investment company acting as principal, from effecting any transaction in which the registered investment company, or a company controlled by such registered company, is a joint or a joint
and several participant, in contravention of such rules as the Commission may prescribe for the purpose of limiting or preventing participation by the registered investment company on a basis different from or less advantageous than that of such
first or second tier affiliate. Rule
17d-1
generally prohibits participation by a registered investment company and an affiliated person (as defined in Section 2(a)(3)) or principal underwriter for that
investment company, or an affiliated person of such affiliated person or principal underwriter, in any joint enterprise or other joint arrangement or profit-sharing plan, as defined in the rule, without prior approval by the Commission
by order upon application.
22
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Also excluded from this category by Rule
57b-1
is any person who would
otherwise be included (a) solely because that person is directly or indirectly controlled by a business development company, or (b) solely because that person is, within the meaning of Section 2(a)(3)(C) or (D), an affiliated person
of a person described in (a) above.
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23
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See
,
e.g.
, SEC Rel. No.
IC-4697
(Sept. 8, 1966)
(For purposes of Section 2(a)(3)(C), affiliation based upon control would depend on the facts of the given situation, including such factors as extensive interlocks of officers, directors or key personnel, common investment advisers or
underwriters, etc.); Lazard Freres Asset Management, SEC
No-Action
Letter (pub. avail. Jan. 10, 1997) (While, in some circumstances, the nature of an advisory relationship may give an adviser
control over its clients management or policies, whether an investment company and another entity are under common control is a factual question
). Depending on the nature of an Advisers
sub-advisory
role with an Affiliated Fund, it could be deemed to control such Affiliated Fund, which would necessitate the requested relief.
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20
Rule
17d-1
was promulgated by the
Commission pursuant to Section 17(d) and made applicable to persons subject to Sections 57(a) and (d) by Section 57(i) to the extent specified therein. Section 57(i) provides that, until the Commission prescribes rules under
Sections 57(a) and (d), the Commissions rules under Section 17(d) applicable to registered
closed-end
investment companies will be deemed to apply to persons subject to the prohibitions of
Section 57(a) or (d). Because the Commission has not adopted any rules under Section 57(a) or (d), Rule
17d-1
applies to persons subject to the prohibitions of Section 57(a) or (d).
Applicants seek relief pursuant to Rule
17d-1,
which permits the Commission to authorize joint
transactions upon application. In passing upon applications filed pursuant to Rule
17d-1,
the Commission is directed by Rule
17d-1(b)
to consider whether the
participation of a registered investment company or controlled company thereof in the joint enterprise or joint arrangement under scrutiny is consistent with provisions, policies and purposes of the Act and the extent to which such participation is
on a basis different from or less advantageous than that of other participants.
The Commission has stated that Section 17(d), upon
which Rule
17d-1
is based, and upon which Section 57(a)(4) was modeled, was designed to protect investment companies from self-dealing and overreaching by insiders. The Commission has also taken notice
that there may be transactions subject to these prohibitions that do not present the dangers of overreaching.
24
The Court of Appeals for the Second Circuit has enunciated a like rationale for the
purpose behind Section 17(d): The objective of [Section] 17(d)
is to prevent
injuring the interest of stockholders of registered investment companies by causing the company to participate on a basis different from or less
advantageous than that of such other participants.
25
Furthermore, Congress acknowledged that the protective system established by the enactment of Section 57 is similar to that
applicable to registered investment companies under Section 17, and rules thereunder, but is modified to address concerns relating to unique characteristics presented by business development companies.
26
Applicants believe that the Conditions would ensure that the conflicts of interest
that Section 17(d) and Section 57(a)(4) were designed to prevent would be addressed and the standards for an order under Rule
17d-1
and Section 57(i) would be met.
24
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See Protecting Investors: A Half-Century of Investment Company Regulation
, 1504 Fed. Sec. L. Rep., Extra
Edition (May 29, 1992) at 488
et seq
.
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25
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Securities and Exchange Commission v. Talley Industries, Inc.
, 399 F.2d 396, 405 (2d Cir. 1968),
cert.
denied
, 393 U.S. 1015 (1969).
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26
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H.Rep.
No. 96-1341,
96th Cong., 2d Sess. 45 (1980)
reprinted in
1980 U.S.C.C.A.N. 4827.
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21
Co-Investment
Transactions are prohibited by either or both of Rule
17d-1
and Section 57(a)(4) without a prior exemptive order of the Commission to the extent that the Affiliated Funds and the Regulated Funds participating in such transactions fall within the category of
persons described by Rule
17d-1
and/or Section 57(b), as modified by Rule
57b-1
thereunder, as applicable,
vis-à-vis
each participating Regulated Fund.
Each of the participating Regulated Funds
and Affiliated Funds may be deemed to be affiliated persons
vis-à-vis
a Regulated Fund within the meaning of Section 2(a)(3) by reason of common control
because (i) BlackRock Capital Advisor or an Adviser controlled by BlackRock Capital Advisor manages each of the Existing Affiliated Funds and may be deemed to control the Existing Affiliated Funds, and an Adviser will advise or
sub-advise
and will control any future Affiliated Fund (or the
Co-Investment
Program thereof for future Affiliated Funds that are
sub-advised
by an Adviser), (ii) BlackRock Capital Advisor or an Adviser controlled by BlackRock Capital Advisor serves or will serve as investment adviser or
sub-adviser
to each of the Regulated Funds, including BCIC, TCPC, and BCSF and may be deemed to control the Regulated Funds, and (iii) each BDC Downstream Fund, including the BCIC Downstream Fund, is,
and, in the future will be, deemed to be controlled by an Adviser, its parent BDC or certain of its parent BDCs subsidiaries. Thus, each of the Affiliated Funds could be deemed to be a person related to the BDC Regulated Funds or the BDC
Downstream Funds in a manner described by Section 57(b) and related to other Regulated Funds in a manner described by Rule
17d-1;
and therefore the prohibitions of Rule
17d-1
and Section 57(a)(4) would apply respectively to prohibit the Affiliated Funds from participating in
Co-Investment
Transactions with the Regulated Funds. Each
Regulated Fund would also be related to each other Regulated Fund in a manner described by 57(b) or Rule
17d-1,
as applicable, and thus prohibited from participating in
Co-Investment
Transactions with each other.
The Commission has issued numerous exemptive orders under the Act permitting registered investment companies and BDCs to
co-invest
with affiliated persons, including precedents involving
sub-advisers.
27
Applicants submit that the procedures
set forth as conditions for the relief requested herein are consistent with, or expand, the range of investor protection found in the cited orders.
27
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See, e.g.,
AB Private Credit Investors Corp., et al.
(File
No. 812-14925)
Investment Company Act Rel. Nos. 33152 (July 9, 2018) (notice) and 33191 (August 6, 2018) (order);
Blackstone / GSO Floating Rate Enhanced Income Fund, et al.
(File
No. 812-14835)
Investment Company Act Rel. Nos. 33149 (July 6, 2018) (notice) and 33186 (July 31,2018);
Benefit Street Partners BDC, Inc., et al.
(File
No. 812-14601)
Investment Company Act Rel. Nos. 33068 (April 6, 2018) (notice) and 33090 (May 1, 2018) (order);
Triloma EIG Energy Income Fund, et al.
(File
No. 812-14848)
Investment Company Act Rel. Nos. 33047 (March 14, 2018) (notice) and 33070 (April 10, 2018) (order);
Corporate Capital Trust, Inc., et al.
(File
No. 812-14882)
Investment Company Act Rel. Nos. 33043 (March 8, 2018) (notice) and 33064 (April 3, 2018) (order);
Alcentra Capital Corporation, et al.
(File
No. 812-14760)
Investment Company Act Rel. Nos. 33038 (February 28, 2018) (notice) and 33059 (March 27, 2018) (order);
TriplePoint Venture Growth BDC Corp., et al.
(File
No. 812-14773)
Investment Company Act Rel. Nos. 33037 (February 28, 2018) (notice) and 33060 (March 28, 2018) (order);
Bain Capital Specialty Finance, Inc., et al.
(File
No. 812-14766)
Investment Company Act Rel. Nos. 33031 (February 23, 2018) (notice) and 33051 (March 22, 2018) (order);
Guggenheim Credit Income Fund, et al.
(File
No. 812-14831)
Investment Company Act Rel. Nos. 32960 (January 3, 2018) (notice) and 32996 (January 30, 2018) (order);
TCG BDC, Inc., et al.
(File
No. 812-14798)
Investment Company Act Rel. Nos. 32945 (December 20, 2017) (notice) and 32969 (January 17, 2018) (order).
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22
IV.
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STATEMENT IN SUPPORT OF RELIEF REQUESTED
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In accordance with Rule
17d-1
(made applicable to transactions subject to Section 57(a) by
Section 57(i)), the Commission may grant the requested relief as to any particular joint transaction if it finds that the participation of the Regulated Funds in the joint transaction is consistent with the provisions, policies and purposes of
the Act and is not on a basis different from or less advantageous than that of other participants. Applicants submit that allowing the
Co-Investment
Transactions described in this Application is justified on
the basis of (i) the potential benefits to the Regulated Funds and the shareholders thereof and (ii) the protections found in the Conditions.
As required by Rule
17d-1(b),
the Conditions ensure that the terms on which
Co-Investment
Transactions may be made will be consistent with the participation of the Regulated Funds being on a basis that it is neither different from nor less advantageous than other participants, thus
protecting the equity holders of any participant from being disadvantaged. The Conditions ensure that all
Co-Investment
Transactions are reasonable and fair to the Regulated Funds and their shareholders and do
not involve overreaching by any person concerned, including the Advisers.
In the absence of the relief sought hereby, in many circumstances the Regulated Funds would be limited in their ability to participate in
attractive and appropriate investment opportunities. Section 17(d), Section 57(a)(4) and Rule
17d-1
should not prevent BDCs and registered
closed-end
investment companies from making investments that are in the best interests of their shareholders.
Each Regulated Fund and its
shareholders will benefit from the ability to participate in
Co-Investment
Transactions. The Board, including the Required Majority, of each Regulated Fund has determined that it is in the best interests of
the Regulated Fund to participate in
Co-Investment
Transactions because, among other matters, (i) the Regulated Fund should be able to participate in a larger number and greater variety of transactions;
(ii) the Regulated Fund should be able to participate in larger transactions; (iii) the Regulated Fund should be able to participate in all opportunities approved by a Required Majority or otherwise permissible under the Order rather than
risk underperformance through rotational allocation of opportunities among the Regulated Funds; (iv) the Regulated Fund and any other Regulated Funds participating in the proposed investment should have greater bargaining power, more control
over the investment and less need to bring in other external investors or structure investments to satisfy the different needs of external investors; (v) the Regulated Fund should be able to obtain greater attention and better deal flow from
investment bankers and others who act as sources of investments; and (vi) the Conditions are fair to the Regulated Funds and their shareholders.
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B.
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Protective Representations And Conditions
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The Conditions ensure that the proposed
Co-Investment
Transactions are consistent with the protection
of each Regulated Funds shareholders and with the purposes intended by the policies and provisions of the Act. Specifically, the Conditions incorporate the following critical protections: (i) all Regulated Funds participating in the
Co-Investment
Transactions will invest at the same time (except that, subject to the limitations in the Conditions, the settlement date for an Affiliated Fund in a
Co-Investment
Transaction may occur up to ten business days after the settlement date for the Regulated Fund, and vice versa), for the same price and with the same terms, conditions, class, registration rights
and any other rights, so that none of them receives terms more favorable than any other; (ii) a Required Majority of each Regulated Fund must approve various investment decisions (not including transactions completed on a pro rata basis
pursuant to Conditions 6(c)(i) and 8(b)(i) or otherwise not requiring Board approval) with respect to such Regulated Fund in accordance with the Conditions; and (iii) the Regulated Funds are required to retain and maintain certain records.
Applicants believe that participation by the Regulated Funds in Pro Rata
Follow-On
Investments and Pro
Rata Dispositions, as provided in Conditions 6(c)(i) and 8(b)(i), is consistent with the provisions, policies and purposes of the Act and will not be made on a basis different from or less advantageous than that of other participants. A formulaic
approach, such as pro rata investment or disposition eliminates the possibility for overreaching and unnecessary prior review by the Board. Applicants note that the Commission has adopted a similar pro rata approach in the context of Rule
23c-2,
which relates to the redemption by a
closed-end
investment company of less than all of a class of its securities, indicating the general fairness and lack of
overreaching that such approach provides.
Applicants also believe that the participation by the Regulated Funds in
Non-Negotiated
Follow-On
Investments and in Dispositions of Tradable Securities without the approval of a Required Majority is consistent with the provisions, policies and
purposes of the Act as there is no opportunity for overreaching by affiliates.
If an Adviser, its principals, or any person controlling,
controlled by, or under common control with the Adviser or its principals, and the Affiliated Funds (collectively, the
Holders
) own in the aggregate more than 25 percent of the outstanding voting shares of a Regulated
Fund (the
Shares
), then the Holders will vote such Shares as required under Condition 15.
Applicants believe
that this Condition will ensure that the Independent Directors will act independently in evaluating
Co-Investment
Transactions, because the ability of the Adviser or its principals to influence the Independent
Directors by a suggestion, explicit or implied, that the Independent Directors can be removed if desired by the Holders will be limited significantly. The Independent Directors shall evaluate and approve any independent party, taking into accounts
its qualifications, reputation for independence, cost to the shareholders, and other factors that they deem relevant.
In sum, the
Applicants believe that the Conditions would ensure that each Regulated Fund that participates in any type of
Co-Investment
Transaction does not participate on a basis different from, or less advantageous
than, that of such other participants for purposes of Section 17(d) or Section 57(a)(4) and the Rules under the Act. As a result, Applicants believe that the participation of the Regulated Funds in
Co-Investment
Transactions in accordance with the Conditions would be consistent with the provisions, policies, and purposes of the Act, and would be done in a manner that was not different from, or less
advantageous than, the other participants.
24
Applicants agree that any Order granting the requested relief shall be subject to the following Conditions:
1.
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Identification and Referral of Potential
Co-Investment
Transactions
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(a) The Advisers will establish, maintain and implement policies and procedures reasonably designed to
ensure that each Adviser is promptly notified of all Potential
Co-Investment
Transactions that fall within the then-current Objectives and Strategies and Board-Established Criteria of any Regulated Fund the
Adviser manages.
(b) When an Adviser to a Regulated Fund is notified of a Potential
Co-Investment
Transaction under Condition 1(a), the Adviser will make an independent determination of the appropriateness of the investment for the Regulated Fund in light of the Regulated Funds then-current circumstances.
28
2.
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Board Approvals of
Co-Investment
Transactions
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(a) If the Adviser deems a Regulated Funds participation in any Potential
Co-Investment
Transaction to be appropriate for the Regulated Fund, it will then determine an appropriate level of investment for the Regulated Fund.
(b) If the aggregate amount recommended by the Advisers to be invested in the Potential
Co-Investment
Transaction by the participating Regulated Funds and any participating Affiliated Funds, collectively, exceeds the amount of the investment opportunity, the investment opportunity will be allocated among them pro rata based on the size of the
Internal Orders, as described in section III.A.1.b. above. Each Adviser to a participating Regulated Fund will promptly notify and provide the Eligible Directors with information concerning the Affiliated Funds and Regulated Funds
order sizes to assist the Eligible Directors with their review of the applicable Regulated Funds investments for compliance with these Conditions.
(c) After making the determinations required in Condition 1(b) above, each Adviser to a participating Regulated Fund will distribute written
information concerning the Potential
Co-Investment
Transaction (including the amount proposed to be invested by each participating Regulated Fund and each participating Affiliated Fund) to the Eligible
Directors of its participating Regulated Fund(s) for their consideration. A Regulated Fund will enter into a
Co-Investment
Transaction with one or more other Regulated Funds or Affiliated Funds only if, prior
to the Regulated Funds participation in the Potential
Co-Investment
Transaction, a Required Majority concludes that:
28
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BAL and any investment adviser to an Affiliated Fund or a Regulated Entity whose sub-adviser is an
Adviser will not source any Potential Co-Investment Transactions under the requested Order.
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25
(i) the terms of the transaction, including the consideration to be paid, are
reasonable and fair to the Regulated Fund and its equity holders and do not involve overreaching in respect of the Regulated Fund or its equity holders on the part of any person concerned;
(ii) the transaction is consistent with:
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(A)
|
the interests of the Regulated Funds equity holders; and
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(B)
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the Regulated Funds then-current Objectives and Strategies;
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(iii) the investment by any other Regulated Fund(s) or Affiliated Fund(s) would not disadvantage the Regulated Fund, and
participation by the Regulated Fund would not be on a basis different from, or less advantageous than, that of any other Regulated Fund(s) or Affiliated Fund(s) participating in the transaction;
provided
that the Required Majority shall not
be prohibited from reaching the conclusions required by this Condition 2(c)(iii) if:
(A) the settlement date for another
Regulated Fund or an Affiliated Fund in a
Co-Investment
Transaction is later than the settlement date for the Regulated Fund by no more than ten business days or earlier than the settlement date for the
Regulated Fund by no more than ten business days, in either case, so long as: (x) the date on which the commitment of the Affiliated Funds and Regulated Funds is made is the same; and (y) the earliest settlement date and the latest
settlement date of any Affiliated Fund or Regulated Fund participating in the transaction will occur within ten business days of each other; or
(B) any other Regulated Fund or Affiliated Fund, but not the Regulated Fund itself, gains the right to nominate a director for
election to a portfolio companys board of directors, the right to have a board observer or any similar right to participate in the governance or management of the portfolio company so long as: (x) the Eligible Directors will have the
right to ratify the selection of such director or board observer, if any; (y) the Adviser agrees to, and does, provide periodic reports to the Regulated Funds Board 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 portfolio company; and (z) any fees or other compensation that any other Regulated Fund or Affiliated Fund or any
affiliated person of any other Regulated Fund or Affiliated Fund receives in connection with the right of one or more Regulated Funds or Affiliated Funds to nominate a director or appoint a board observer or otherwise to participate in the
governance or management of the portfolio company will be shared proportionately among any participating Affiliated Funds (who may, in turn, share their portion with their affiliated persons) and any participating Regulated Fund(s) in accordance
with the amount of each such partys investment; and
26
(iv) the proposed investment by the Regulated Fund will not involve compensation,
remuneration or a direct or indirect
29
financial benefit to the Advisers, any other Regulated Fund, the Affiliated Funds or any affiliated person of any of them (other than the parties to the
Co-Investment
Transaction), except (A) to the extent permitted by Condition 14, (B) to the extent permitted by Section 17(e) or 57(k), as applicable, (C) indirectly, as a result of an interest in the
securities issued by one of the parties to the
Co-Investment
Transaction, or (D) in the case of fees or other compensation described in Condition 2(c)(iii)(B)(z).
3.
Right to Decline
. Each Regulated Fund has the right to decline to participate in any Potential
Co-Investment
Transaction or to invest less than the amount proposed.
4.
General Limitation
. Except for
Follow-On
Investments made in accordance with Conditions 8 and 9 below,
30
a Regulated Fund will not invest in reliance on the Order in any issuer in which a Related Party has an investment.
5.
Same Terms and Conditions
.
A Regulated Fund will not participate in any Potential
Co-Investment
Transaction unless (i) the terms, conditions, price, class of securities to be purchased, date on which the commitment is entered into and registration rights (if any) will be the same for each participating Regulated Fund and Affiliated Fund
and (ii) the earliest settlement date and the latest settlement date of any participating Regulated Fund or Affiliated Fund will occur as close in time as practicable and in no event more than ten business days apart. The grant to one or more
Regulated Funds or Affiliated Funds, but not the respective Regulated Fund, of the right to nominate a director for election to a portfolio companys 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 portfolio company will not be interpreted so as to violate this Condition 5, if Condition 2(c)(iii)(B) is met.
6.
Standard Review Dispositions
.
(a)
General
. If any Regulated Fund or Affiliated Fund elects to sell, exchange or otherwise dispose of an interest in a security and one or more Regulated Funds and Affiliated Funds have previously participated in a
Co-Investment
Transaction with respect to the issuer, then:
(i) the Adviser to
such Regulated Fund or Affiliated Fund will notify each Regulated Fund that holds an investment in the issuer of the proposed Disposition at the earliest practical time; and
(ii) the Adviser to each Regulated Fund that holds an investment in the issuer will formulate a recommendation as to
participation by such Regulated Fund in the Disposition.
29
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For example, procuring the Regulated Funds investment in a Potential
Co-Investment
Transaction to permit an affiliate to complete or obtain better terms in a separate transaction would constitute an indirect financial benefit.
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30
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This exception applies only to
Follow-On
Investments by a Regulated
Fund in issuers in which that Regulated Fund already holds investments.
|
27
(b)
Same Terms and Conditions
. Each Regulated Fund will have the right to participate in
such Disposition on a proportionate basis, at the same price and on the same terms and conditions as those applicable to the Affiliated Funds and any other Regulated Fund.
(c)
No Board Approval Required
. A Regulated Fund may participate in such a Disposition without obtaining prior approval of the Required
Majority if:
(i) (A) the participation of each Regulated Fund and Affiliated Fund in such Disposition is proportionate to
its then-current holding of the security (or securities) of the issuer that is (or are) the subject of the Disposition;
31
(B) the Board of the Regulated Fund has approved as being in the best
interests of the Regulated Fund the ability to participate in such Dispositions on a pro rata basis (as described in greater detail in the Application); and (C) the Board of the Regulated Fund is provided on a quarterly basis with a list of all
Dispositions made in accordance with this Condition; or
(ii) each security is a Tradable Security and (A) the
Disposition is not to the issuer or any affiliated person of the issuer; and (B) the security is sold for cash in a transaction in which the only term negotiated by or on behalf of the participating Regulated Funds and Affiliated Funds is
price.
(d)
Standard Board Approval
. In all other cases, the Adviser will provide its written recommendation as to the Regulated
Funds participation to the Eligible Directors and the Regulated Fund will participate in such Disposition solely to the extent that a Required Majority determines that it is in the Regulated Funds best interests.
7.
Enhanced Review Dispositions
.
(a)
General
. If any Regulated Fund or Affiliated Fund elects to sell, exchange or otherwise dispose of a
Pre-Boarding
Investment in a Potential
Co-Investment
Transaction and the Regulated Funds and Affiliated Funds have not previously participated in a
Co-Investment
Transaction with respect to the issuer:
(i) the Adviser to such Regulated
Fund or Affiliated Fund will notify each Regulated Fund that holds an investment in the issuer of the proposed Disposition at the earliest practical time;
(ii) the Adviser to each Regulated Fund that holds an investment in the issuer will formulate a recommendation as to
participation by such Regulated Fund in the Disposition; and
(iii) the Advisers will provide to the Board of each
Regulated Fund that holds an investment in the issuer all information relating to the existing investments in the issuer of the Regulated Funds and Affiliated Funds, including the terms of such investments and how they were made, that is necessary
for the Required Majority to make the findings required by this Condition.
31
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In the case of any Disposition, proportionality will be measured by each participating Regulated Funds
and Affiliated Funds outstanding investment in the security in question immediately preceding the Disposition.
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28
(b)
Enhanced Board Approval
. The Adviser will provide its written recommendation as to the
Regulated Funds participation to the Eligible Directors, and the Regulated Fund will participate in such Disposition solely to the extent that a Required Majority determines that:
(i) the Disposition complies with Condition 2(c)(i), (ii), (iii)(A), and (iv).
(ii) the making and holding of the
Pre-Boarding
Investments were not prohibited by
Section 57 or Rule
17d-1,
as applicable, and records the basis for the finding in the Board minutes.
(c)
Additional Requirements:
The Disposition may only be completed in reliance on the Order if:
(i)
Same Terms and Conditions
. Each Regulated Fund has the right to participate in such Disposition on a proportionate
basis, at the same price and on the same terms and Conditions as those applicable to the Affiliated Funds and any other Regulated Fund;
(ii)
Original Investments
. All of the Affiliated Funds and Regulated Funds investments in the issuer are
Pre-Boarding
Investments;
(iii)
Advice of counsel
. Independent counsel to the
Board advises that the making and holding of the investments in the
Pre-Boarding
Investments were not prohibited by Section 57 (as modified by Rule
57b-1)
or Rule
17d-1,
as applicable;
(iv)
Multiple Classes of Securities.
All Regulated Funds
and Affiliated Funds that hold
Pre-Boarding
Investments in the issuer immediately before the time of completion of the
Co-Investment
Transaction hold the same security
or securities of the issuer. For the purpose of determining whether the Regulated Funds and Affiliated Funds hold the same security or securities, they may disregard any security held by some but not all of them if, prior to relying on the Order,
the Required Majority is presented with all information necessary to make a finding, and finds, that: (x) any Regulated Funds or Affiliated Funds holding of a different class of securities (including for this purpose a security with
a different maturity date) is immaterial
32
in amount, including immaterial relative to the size of the issuer; and (y) the Board records
the basis for any such finding in its minutes. In addition, securities that differ only in respect of issuance date, currency, or denominations may be treated as the same security; and
(v)
No control
. The Affiliated Funds, the other Regulated Funds and their affiliated persons (within
the meaning of Section 2(a)(3)(C) of the Act), individually or in the aggregate, do not control the issuer of the securities (within the meaning of Section 2(a)(9) of the Act).
32
|
In determining whether a holding is immaterial for purposes of the Order, the Required Majority
will consider whether the nature and extent of the interest in the transaction or arrangement is sufficiently small that a reasonable person would not believe that the interest affected the determination of whether to enter into the transaction or
arrangement or the terms of the transaction or arrangement.
|
29
8.
|
Standard Review
Follow-Ons
.
|
(a)
General
. If any Regulated Fund or Affiliated Fund desires to make a
Follow-On
Investment in
an issuer and the Regulated Funds and Affiliated Funds holding investments in the issuer previously participated in a
Co-Investment
Transaction with respect to the issuer:
(i) the Adviser to each such Regulated Fund or Affiliated Fund will notify each Regulated Fund that holds securities of the
portfolio company of the proposed transaction at the earliest practical time; and
(ii) the Adviser to each Regulated Fund
that holds an investment in the issuer will formulate a recommendation as to the proposed participation, including the amount of the proposed investment, by such Regulated Fund.
(b)
No Board Approval Required
. A Regulated Fund may participate in the
Follow-On
Investment
without obtaining prior approval of the Required Majority if:
(i) (A) the proposed participation of each Regulated Fund
and each Affiliated Fund in such investment is proportionate to its outstanding investments in the issuer or the security at issue, as appropriate,
33
immediately preceding the
Follow-On
Investment; and (B) the Board of the Regulated Fund has approved as being in the best interests of the Regulated Fund the ability to participate in
Follow-On
Investments on a pro rata basis (as described in greater detail in this Application); or
(ii) it is a
Non-Negotiated
Follow-On
Investment.
(c)
Standard Board Approval
. In all other cases, the Adviser will provide its written recommendation as to the
Regulated Funds participation to the Eligible Directors and the Regulated Fund will participate in such
Follow-On
Investment solely to the extent that a Required Majority makes the determinations set
forth in Condition 2(c). If the only previous
Co-Investment
Transaction with respect to the issuer was an Enhanced Review Disposition the Eligible Directors must complete this review of the proposed
Follow-On
Investment both on a stand-alone basis and together with the
Pre-Boarding
Investments in relation to the total economic exposure and other terms of the investment.
(d)
Allocation
. If, with respect to any such
Follow-On
Investment:
(i) the amount of the opportunity proposed to be made available to any Regulated Fund is not based on the Regulated Funds
and the Affiliated Funds outstanding investments in the issuer or the security at issue, as appropriate, immediately preceding the
Follow-On
Investment; and
33
|
To the extent that a
Follow-On
Investment opportunity is in a security
or arises in respect of a security held by the participating Regulated Funds and Affiliated Funds, proportionality will be measured by each participating Regulated Funds and Affiliated Funds outstanding investment in the security in
question immediately preceding the
Follow-On
Investment using the most recent available valuation thereof. To the extent that a
Follow-On
Investment opportunity relates
to an opportunity to invest in a security that is not in respect of any security held by any of the participating Regulated Funds or Affiliated Funds, proportionality will be measured by each participating Regulated Funds and Affiliated
Funds outstanding investment in the issuer immediately preceding the
Follow-On
Investment using the most recent available valuation thereof.
|
30
(ii) the aggregate amount recommended by the Advisers to be invested in the
Follow-On
Investment by the participating Regulated Funds and any participating Affiliated Funds, collectively, exceeds the amount of the investment opportunity, then the
Follow-On
Investment opportunity will be allocated among them pro rata based on the size of the Internal Orders, as described in section III.A.1.b. above.
(e)
Other Conditions
. The acquisition of
Follow-On
Investments as permitted by this Condition
will be considered a
Co-Investment
Transaction for all purposes and subject to the other Conditions set forth in this application.
9.
|
Enhanced Review
Follow-Ons
.
|
(a)
General
. If any Regulated Fund or Affiliated Fund desires to make a
Follow-On
Investment in
an issuer that is a Potential
Co-Investment
Transaction and the Regulated Funds and Affiliated Funds holding investments in the issuer have not previously participated in a
Co-Investment
Transaction with respect to the issuer:
(i) the Adviser to each such
Regulated Fund or Affiliated Fund will notify each Regulated Fund that holds securities of the portfolio company of the proposed transaction at the earliest practical time;
(ii) the Adviser to each Regulated Fund that holds an investment in the issuer will formulate a recommendation as to the
proposed participation, including the amount of the proposed investment, by such Regulated Fund; and
(iii) the Advisers
will provide to the Board of each Regulated Fund that holds an investment in the issuer all information relating to the existing investments in the issuer of the Regulated Funds and Affiliated Funds, including the terms of such investments and how
they were made, that is necessary for the Required Majority to make the findings required by this Condition.
(b)
Enhanced Board
Approval
. The Adviser will provide its written recommendation as to the Regulated Funds participation to the Eligible Directors, and the Regulated Fund will participate in such
Follow-On
Investment
solely to the extent that a Required Majority reviews the proposed
Follow-On
Investment both on a stand-alone basis and together with the
Pre-Boarding
Investments in
relation to the total economic exposure and other terms and makes the determinations set forth in Condition 2(c). In addition, the
Follow-On
Investment may only be completed in reliance on the Order if the
Required Majority of each participating Regulated Fund determines that the making and holding of the
Pre-Boarding
Investments were not prohibited by Section 57 (as modified by Rule
57b-1)
or Rule
17d-1,
as applicable. The basis for the Boards findings will be recorded in its minutes.
31
(c)
Additional Requirements
. The
Follow-On
Investment may only be completed in reliance on the Order if:
(i)
Original Investments
. All of the Affiliated
Funds and Regulated Funds investments in the issuer are
Pre-Boarding
Investments;
(ii)
Advice of counsel
. Independent counsel to the Board advises that the making and holding of the investments in the
Pre-Boarding
Investments were not prohibited by Section 57 (as modified by Rule
57b-1)
or Rule
17d-1,
as applicable;
(iii)
Multiple Classes of Securities
. All Regulated Funds and Affiliated Funds that hold
Pre-Boarding
Investments in the issuer immediately before the time of completion of the
Co-Investment
Transaction hold the same security or securities of the issuer. For
the purpose of determining whether the Regulated Funds and Affiliated Funds hold the same security or securities, they may disregard any security held by some but not all of them if, prior to relying on the Order, the Required Majority is presented
with all information necessary to make a finding, and finds, that: (x) any Regulated Funds or Affiliated Funds holding of a different class of securities (including for this purpose a security with a different maturity date) is
immaterial in amount, including immaterial relative to the size of the issuer; and (y) the Board records the basis for any such finding in its minutes. In addition, securities that differ only in respect of issuance date, currency, or
denominations may be treated as the same security; and
(iv)
No control
. The Affiliated Funds, the other Regulated
Funds and their affiliated persons (within the meaning of Section 2(a)(3)(C) of the Act), individually or in the aggregate, do not control the issuer of the securities (within the meaning of Section 2(a)(9) of the Act).
(d)
Allocation
. If, with respect to any such
Follow-On
Investment:
(i) the amount of the opportunity proposed to be made available to any Regulated Fund is not based on the Regulated Funds
and the Affiliated Funds outstanding investments in the issuer or the security at issue, as appropriate, immediately preceding the
Follow-On
Investment; and
(ii) the aggregate amount recommended by the Advisers to be invested in the
Follow-On
Investment by the participating Regulated Funds and any participating Affiliated Funds, collectively, exceeds the amount of the investment opportunity, then the
Follow-On
Investment opportunity will be
allocated among them pro rata based on the size of the Internal Orders, as described in section III.A.1.b. above.
(e)
Other
Conditions
. The acquisition of
Follow-On
Investments as permitted by this Condition will be considered a
Co-Investment
Transaction for all purposes and subject to
the other Conditions set forth in this application.
10.
|
Board Reporting, Compliance and Annual
Re-Approval
.
|
(a) Each Adviser to a Regulated Fund will present to the Board of each Regulated Fund, on a quarterly basis, and at such
other times as the Board may request, (i) a record of all investments in Potential
Co-Investment
Transactions made by any of the other Regulated Funds or any of the Affiliated Funds during the preceding
quarter that fell within the Regulated Funds then-current Objectives and Strategies and Board-Established Criteria that were not made available to the Regulated Fund, and an explanation of why such investment opportunities were not made
available to the Regulated Fund; (ii) a record of all
Follow-On
Investments in and Dispositions of investments in any issuer in which the Regulated Fund holds any investments by any Affiliated Fund or
other Regulated Fund during the prior quarter; and (iii) all information concerning Potential
Co-Investment
Transactions and
Co-Investment
Transactions, including
investments made by other Regulated Funds or Affiliated Funds that the Regulated Fund considered but declined to participate in, so that the Independent Directors, may determine whether all Potential
Co-Investment
Transactions and
Co-Investment
Transactions during the preceding quarter, including those investments that the Regulated Fund considered but declined to
participate in, comply with the Conditions.
32
(b) All information presented to the Regulated Funds Board pursuant to this Condition will
be kept for the life of the Regulated Fund and at least two years thereafter, and will be subject to examination by the Commission and its staff.
(c) Each Regulated Funds chief compliance officer, as defined in rule
38a-1(a)(4),
will prepare
an annual report for its Board each year that evaluates (and documents the basis of that evaluation) the Regulated Funds compliance with the terms and Conditions of the Application and the procedures established to achieve such compliance. In
the case of a BDC Downstream Fund that does not have a chief compliance officer, the chief compliance officer of the BDC that controls the BDC Downstream Fund will prepare the report for the relevant Independent Party.
(d) The Eligible Directors will consider at least annually: (i) the continued appropriateness for the Regulated Fund of participating in
new and existing
Co-Investment
Transactions; and (ii) the continued appropriateness of any Board-Established Criteria.
11.
Record Keeping
. Each Regulated Fund will maintain the records required by Section 57(f)(3) of the Act as if each of the Regulated Funds were a
BDC and each of the investments permitted under these Conditions were approved by the Required Majority under Section 57(f).
12.
Director
Independence
. No Independent Director (including the
non-interested
members of any Independent Party) of a Regulated Fund will also be a director, general partner, managing member or principal, or
otherwise be an affiliated person (as defined in the Act) of any Affiliated Fund.
13.
Expenses
. The expenses, if any, associated with
acquiring, holding or disposing of any securities 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) will, to the extent not payable by the Advisers under their respective advisory agreements with the Regulated Funds and the Affiliated Funds, be shared by the Regulated Funds and the participating Affiliated Funds in proportion to
the relative amounts of the securities held or being acquired or disposed of, as the case may be.
33
14.
Transaction Fees
.
34
Any transaction fee
(including
break-up,
structuring, monitoring or commitment fees but excluding brokerage or underwriting compensation permitted by Section 17(e) or 57(k)) received in connection with any
Co-Investment
Transaction will be distributed to the participants on a pro rata basis based on the amounts they invested or committed, as the case may be, in such
Co-Investment
Transaction. If any transaction fee is to be held by an Adviser pending consummation of the transaction, the fee will be deposited into an account maintained by the Adviser at a bank or banks
having the qualifications prescribed in Section 26(a)(1), and the account will earn a competitive rate of interest that will also be divided pro rata among the participants. None of the Advisers, the Affiliated Funds, the other Regulated Funds
or any affiliated person of the Affiliated Funds or the Regulated Funds will receive any additional compensation or remuneration of any kind as a result of or in connection with a
Co-Investment
Transaction
other than (i) in the case of the Regulated Funds and the Affiliated Funds, the pro rata transaction fees described above and fees or other compensation described in Condition 2(c)(iii)(B)(z), (ii) brokerage or underwriting compensation
permitted by Section 17(e) or 57(k) or (iii) in the case of the Advisers, investment advisory compensation paid in accordance with investment advisory agreements between the applicable Regulated Fund(s) or Affiliated Fund(s) and its
Adviser.
15.
Independence
. If the Holders own in the aggregate more than 25 percent of the Shares of a Regulated Fund, then the Holders will
vote such Shares as directed by an independent third party when voting on (1) the election of directors; (2) the removal of one or more directors; or (3) any other matter under either the Act or applicable State law affecting the
Boards composition, size or manner of election.
Please address all communications concerning this Application and the Notice and Order to:
|
|
|
Laurence D. Paredes
General Counsel
BlackRock Capital
Investment Corporation
40 East 52
nd
Street
New York, NY 10022
(212)
810-5800
|
|
Howard M. Levkowitz
Managing Director
Tennenbaum Capital Partners, LLC
2951 28th Street, Suite 1000
Santa Monica, California 90405
(310)
566-1000
Elizabeth
Greenwood
Managing Director
Tennenbaum Capital Partners, LLC
2951 28th Street, Suite 1000
Santa
Monica, California 90405
(310)
566-1000
|
34
|
Applicants are not requesting and the Commission is not providing any relief for transaction fees received in
connection with any
Co-Investment
Transaction.
|
34
Please address any questions, and a copy of any communications, concerning this Application, the
Notice and Order to:
|
|
|
Cynthia M. Krus, Esq.
Steven B. Boehm, Esq.
Anne G. Oberndorf, Esq.
Eversheds
Sutherland (US) LLP
700 Sixth Street, NW, Suite 700
Washington, DC 20001-3980
(202)
383-0100
(202)
637-3593
(fax)
|
|
Michael Hoffman
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212)
735-3000
|
35
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 21
st
day of September 2018.
|
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|
|
|
|
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BlackRock Capital Investment Corporation
|
|
|
|
|
|
By:
|
|
/s/ Laurence D. Paredes
|
|
|
|
|
Name: Laurence D. Paredes
|
|
|
|
|
Title: General Counsel
|
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|
|
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BlackRock Credit Strategies Fund
|
|
|
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|
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By:
|
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/s/ John M. Perlowski
|
|
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|
|
Name: John M. Perlowski
|
|
|
|
|
Title: President
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|
|
|
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BlackRock Capital Investment Advisors, LLC
|
|
|
|
|
|
By:
|
|
/s/ Laurence D. Paredes
|
|
|
|
|
Name: Laurence D. Paredes
|
|
|
|
|
Title: Managing Director
|
|
|
|
|
BlackRock Advisors, LLC
|
|
|
|
|
|
By:
|
|
/s/ Laurence D. Paredes
|
|
|
|
|
Name: Laurence D. Paredes
|
|
|
|
|
Title: Managing Director
|
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|
|
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Middle Market Senior Fund, L.P.
|
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|
|
By: Middle Market Senior Fund (GenPar), LLC
|
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|
|
|
By: BlackRock Financial Management, Inc., its sole member
|
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|
|
|
|
By:
|
|
/s/ Aaron Kless
|
|
|
|
|
Name: Aaron Kless
|
|
|
|
|
Title: Managing Director
|
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|
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Gordon Brothers Finance Company
|
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By:
|
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/s/ Gene Martin
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Name: Gene Martin
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Title: Chief Executive Officer
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1
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BLACKROCK TCP CAPITAL
CORP.
|
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By:
|
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/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Chief Executive Officer and Director
|
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|
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SPECIAL VALUE CONTINUATION PARTNERS LLC
|
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|
|
|
|
|
|
By:
|
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/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Chief Executive Officer and Director
|
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|
|
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TENNENBAUM CAPITAL PARTNERS,
LLC
|
|
|
|
|
|
|
|
By:
|
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/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Managing Director
|
|
TENNENBAUM OPPORTUNITIES PARTNERS V, LP, TENNENBAUM OPPORTUNITIES FUND V, LLC, Tennenbaum Heartland
Co-Invest,
LP, SEB DIP Investor, LP, SPECIAL VALUE EXPANSION FUND, LLC, SPECIAL
VALUE OPPORTUNITIES FUND, LLC, SVOF/MM, LLC, TCP DIRECT LENDING FUND
VIII-S,
LLC, TCP DIRECT LENDING FUND
VIII-T,
LLC, TCP DLF VIII 2018 CLO LLC, TCP ENHANCED YIELD
FUNDING I, LLC, TCP RAINIER, LLC, TCP DIRECT LENDING FUND VIII, LLC, TCP DIRECT LENDING FUND
VIII-L,
LLC, TCP DIRECT LENDING FUND
VIII-A,
LLC, TCPC SBIC, LP, TENNENBAUM
ENERGY OPPORTUNITIES CO., LLC, TENNENBAUM ENERGY OPPORTUNITIES FUND, LP, TENNENBAUM ENHANCED YIELD FUND I, LLC, TENNENBAUM OPPORTUNITIES FUND VI, LLC, TCP WATERMAN FUND, LLC, TENNENBAUM SENIOR LOAN FUND III, LP, TENNENBAUM SENIOR LOAN FUNDING III,
LLC, TENNENBAUM SENIOR LOAN FUND
IV-A,
LP, TENNENBAUM SENIOR LOAN FUND
IV-B,
LP, TENNENBAUM SPECIAL SITUATIONS FUND IX, LLC, TENNENBAUM SPECIAL SITUATIONS FUND
IX-A,
LLC,
|
2
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|
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TENNENBAUM SPECIAL SITUATIONS FUND
IX-S,
L.P., TENNENBAUM SENIOR LOAN FUND II, LP, TENNENBAUM SENIOR LOAN FUND V, LLC, TCPC FUNDING I, LLC, TENNENBAUM ENHANCED YIELD OPERATING I,
LLC, TCP WATERMAN CLO, LLC, TENNENBAUM SENIOR LOAN OPERATING III, LLC, TENNENBAUM SENIOR LOAN SPV
IV-A,
LLC, TCPC SBIC GP, LLC, TCP DIRECT LENDING FUND
VIII-N,
LLC
|
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By:
|
|
/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Authorized Person
|
|
TCP DIRECT LENDING FUND VIII L (IRELAND), TCP DIRECT LENDING FUND VIII U (IRELAND), TENNENBAUM SPECIAL SITUATIONS
IX-C,
L.P., TENNENBAUM SPECIAL SITUATIONS
IX-O,
L.P.,
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|
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BY:
|
|
TENNENBAUM CAPITAL PARTNERS, LLC
|
ITS: INVESTMENT MANAGER
|
|
|
By:
|
|
/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Managing Director
|
|
TCP WHITNEY CLO, LTD
|
|
|
BY:
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SERIES I OF SVOF/MM, LLC
|
ITS; INVESTMENT MANAGER
|
|
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By:
|
|
/s/ Howard
M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Managing Director
|
|
TCP WHITNEY CLO, LLC
|
BY: TCP WHITNEY CLO, LTD., Sole Member
|
BY: SERIES I OF SVOF/MM, LLC
|
ITS: INVESTMENT MANAGER
|
3
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|
|
|
|
|
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By:
|
|
/s/ Howard
M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Managing Director
|
4
VERIFICATION
The undersigned states that he has duly executed the attached application dated as of September 21, 2018 for and on behalf of each entity
listed below; that he is the authorized person of each such entity; and that all action by officers, directors, and other bodies necessary to authorize the undersigned 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.
|
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|
|
Blackrock Capital Investment Corporation
|
|
|
By:
|
|
/s/ Laurence D. Paredes
|
|
|
Name:
|
|
Laurence D. Paredes
|
|
|
Title:
|
|
General Counsel
|
|
BlackRock Credit Strategies Fund
|
|
|
By:
|
|
/s/ John M. Perlowski
|
|
|
Name:
|
|
John M. Perlowski
|
|
|
Title:
|
|
President
|
|
BlackRock Capital Investment Advisors, LLC
|
|
|
By:
|
|
/s/ Laurence D. Paredes
|
|
|
Name:
|
|
Laurence D. Paredes
|
|
|
Title:
|
|
Managing Director
|
|
BlackRock Advisors, LLC
|
|
|
By:
|
|
/s/ Laurence D. Paredes
|
|
|
Name:
|
|
Laurence D. Paredes
|
|
|
Title:
|
|
Managing Director
|
|
Middle Market Senior Fund, L.P.
|
|
By: Middle Market Senior Fund (GenPar), LLC
|
|
By: BlackRock Financial Management, Inc., its sole member
|
|
|
By:
|
|
/s/ Aaron Kless
|
|
|
Name:
|
|
Aaron Kless
|
|
|
Title:
|
|
Managing Director
|
5
|
|
|
|
|
|
Gordon Brothers Finance Company
|
|
|
By:
|
|
/s/ Gene Martin
|
|
|
Name: Gene Martin
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
|
|
BLACKROCK TCP CAPITAL CORP.
|
|
|
By:
|
|
/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Chief Executive Officer and Director
|
|
|
|
|
|
|
SPECIAL VALUE CONTINUATION PARTNERS LLC
|
|
|
By:
|
|
/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Chief Executive Officer and Director
|
|
|
|
|
|
|
TENNENBAUM CAPITAL PARTNERS, LLC
|
|
|
By:
|
|
/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Managing Director
|
|
|
|
|
|
|
TENNENBAUM OPPORTUNITIES PARTNERS V, LP, TENNENBAUM OPPORTUNITIES FUND V, LLC, TENNENBAUM HEARTLAND
CO-INVEST,
LP, SEB DIP INVESTOR, LP, SPECIAL VALUE EXPANSION FUND, LLC, SPECIAL
VALUE OPPORTUNITIES FUND, LLC, SVOF/MM, LLC, TCP DIRECT LENDING FUND
VIII-S,
LLC, TCP DIRECT LENDING FUND
VIII-T,
LLC, TCP DLF VIII 2018 CLO LLC, TCP ENHANCED YIELD
FUNDING I, LLC, TCP RAINIER, LLC, TCP DIRECT LENDING FUND VIII, LLC, TCP DIRECT LENDING FUND
VIII-L,
LLC, TCP DIRECT LENDING FUND
VIII-A,
LLC, TCPC SBIC, LP, TENNENBAUM
ENERGY OPPORTUNITIES CO., LLC, TENNENBAUM ENERGY OPPORTUNITIES FUND, LP, TENNENBAUM ENHANCED YIELD FUND I, LLC, TENNENBAUM OPPORTUNITIES FUND VI, LLC, TCP WATERMAN FUND, LLC, TENNENBAUM SENIOR LOAN FUND III, LP,
|
6
|
|
|
|
|
TENNENBAUM SENIOR LOAN FUNDING III, LLC, TENNENBAUM SENIOR LOAN FUND
IV-A,
LP, TENNENBAUM SENIOR LOAN FUND
IV-B,
LP, TENNENBAUM SPECIAL
SITUATIONS FUND IX, LLC, TENNENBAUM SPECIAL SITUATIONS FUND
IX-A,
LLC, TENNENBAUM SPECIAL SITUATIONS FUND
IX-S,
L.P., TENNENBAUM SENIOR LOAN FUND II, LP, TENNENBAUM
SENIOR LOAN FUND V, LLC, TCPC FUNDING I, LLC, TENNENBAUM ENHANCED YIELD OPERATING I, LLC, TCP WATERMAN CLO, LLC, TENNENBAUM SENIOR LOAN OPERATING III, LLC, TENNENBAUM SENIOR LOAN SPV
IV-A,
LLC, TCPC SBIC GP,
LLC, TCP DIRECT LENDING FUND
VIII-N,
LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Howard M. Levkowitz
|
|
|
|
|
Name: Howard M. Levkowitz
|
|
|
|
|
Title: Authorized Person
|
|
|
|
|
|
|
TCP DIRECT LENDING FUND VIII L (IRELAND), TCP DIRECT LENDING FUND VIII U (IRELAND), TENNENBAUM SPECIAL SITUATIONS
IX-C,
L.P., TENNENBAUM SPECIAL SITUATIONS
IX-O,
L.P.,
|
|
BY: TENNENBAUM CAPITAL PARTNERS, LLC
|
ITS: INVESTMENT MANAGER
|
|
|
By:
|
|
/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Managing Director
|
|
TCP WHITNEY CLO, LTD
|
|
BY: SERIES I OF SVOF/MM, LLC
|
ITS; INVESTMENT MANAGER
|
|
|
By:
|
|
/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Managing Director
|
7
|
|
|
TCP WHITNEY CLO, LLC
|
BY: TCP WHITNEY CLO, LTD., Sole Member
|
BY: SERIES I OF SVOF/MM, LLC
|
ITS: INVESTMENT MANAGER
|
|
|
By:
|
|
/s/ Howard M. Levkowitz
|
|
|
Name: Howard M. Levkowitz
|
|
|
Title: Managing Director
|
8
APPENDIX A
All Existing Affiliated Funds are advised by an Adviser as set forth below:
|
A.
|
Adviser is BlackRock Capital Advisor:
|
|
1.
|
Middle Market Senior Fund, L.P.
|
|
B.
|
Adviser is Series I of SVOF/MM, LLC
|
|
1.
|
TCP DLF VIII 2018 CLO LLC
|
|
3.
|
TCP WHITNEY CLO, LTD.
34
|
|
C.
|
Adviser is Tennenbaum Capital Partners, LLC
|
|
1.
|
TENNENBAUM OPPORTUNITIES PARTNERS V, LP
35
|
|
2.
|
TENNENBAUM OPPORTUNITIES FUND V, LLC
36
|
|
3.
|
TENNENBAUM HEARTLAND
CO-INVEST,
LP
|
|
7.
|
SPECIAL VALUE EXPANSION FUND, LLC
|
|
8.
|
SPECIAL VALUE OPPORTUNITIES FUND, LLC
|
|
11.
|
TCP DIRECT LENDING FUND VIII L (IRELAND)
37
|
|
12.
|
TCP DIRECT LENDING FUND VIII U (IRELAND)
|
|
13.
|
TCP DIRECT LENDING FUND
VIII-S,
LLC
|
|
14.
|
TCP DIRECT LENDING FUND
VIII-T,
LLC
38
|
|
15.
|
TCP ENHANCED YIELD FUNDING I, LLC
|
|
16.
|
TCP DIRECT LENDING FUND VIII, LLC
|
|
17.
|
TCP DIRECT LENDING FUND
VIII-L,
LLC
|
|
18.
|
TCP DIRECT LENDING FUND
VIII-A,
LLC
|
|
19.
|
TENNENBAUM ENERGY OPPORTUNITIES CO., LLC
|
|
20.
|
TENNENBAUM ENERGY OPPORTUNITIES FUND, LP
|
|
21.
|
TENNENBAUM ENHANCED YIELD FUND I, LLC
|
|
22.
|
TENNENBAUM OPPORTUNITIES FUND VI, LLC,
|
|
23.
|
TCP WATERMAN FUND, LLC
|
|
24.
|
TENNENBAUM SENIOR LOAN FUND III, LP
|
|
25.
|
TENNENBAUM SENIOR LOAN FUNDING III, LLC
|
|
26.
|
TENNENBAUM SENIOR LOAN FUND
IV-A,
LP
|
|
27.
|
TENNENBAUM SENIOR LOAN FUND
IV-B,
LP
|
|
28.
|
TENNENBAUM SPECIAL SITUATIONS FUND IX, LLC
|
34
|
TCP Whitney CLO, LLC is a wholly-owned subsidiary of TCP Whitney CLO Ltd. TCP Whitney CLO, LLC does not have an
investment advisor.
|
35
|
SVOF/MM, LLC serves as
sub-advisor.
|
36
|
SVOF/MM, LLC serves as
sub-advisor.
|
37
|
SVOF/MM, LLC serves as
sub-advisor.
|
38
|
SVOF/MM, LLC serves as
sub-advisor.
|
A-1
|
29.
|
TENNENBAUM SPECIAL SITUATIONS FUND
IX-A,
LLC
|
|
30.
|
TENNENBAUM SPECIAL SITUATIONS
IX-C,
L.P.
|
|
31.
|
TENNENBAUM SPECIAL SITUATIONS
IX-O,
L.P.
|
|
32.
|
TENNENBAUM SPECIAL SITUATIONS FUND
IX-S,
L.P.
|
|
33.
|
TENNENBAUM SENIOR LOAN FUND II, LP
|
|
34.
|
TENNENBAUM SENIOR LOAN FUND V, LLC
|
|
35.
|
TENNENBAUM ENHANCED YIELD OPERATING I, LLC
|
|
36.
|
TCP WATERMAN CLO, LLC
|
|
37.
|
TENNENBAUM SENIOR LOAN OPERATING III, LLC
|
|
38.
|
TENNENBAUM SENIOR LOAN SPV
IV-A,
LLC
|
|
39.
|
TCP DIRECT LENDING FUND
VIII-N,
LLC
|
A-2
APPENDIX B
Resolutions Adopted by the Board of Directors of
BlackRock Capital Investment Corporation
WHEREAS
, the Board believes it is in the best interests of BlackRock Capital Investment Corporation (the
Company
) to
file an application with the SEC for an order pursuant to Section 57(i) of the Investment Company Act of 1940, as amended (the
1940 Act
) and Rule 17d1 promulgated thereunder (the
Application
), to authorize the entering into of certain joint transactions and
co-investments
by the Company with certain entities which may be deemed to be affiliates of the
Company pursuant to the provisions of the 1940 Act, which such joint transactions and
co-investments
would otherwise be prohibited by Section 57(a)(4) of the 1940 Act, all as more fully set forth in the
draft Application that has been presented to the Board; and
WHEREAS
, the Board has reviewed the Application, a copy of which is
attached hereto as Exhibit A.
NOW, THEREFORE, BE IT RESOLVED
, that the President, Chief Executive Officer, Chief Financial
Officer, Secretary and Executive Vice President of the Company (each an
Authorized Officer
and, collectively, the
Authorized Officers
) be, and they hereby are, authorized, empowered and directed, in the name and
on behalf of the Company, to prepare or cause to be prepared, executed, delivered and filed with the SEC the Application, and to do or cause to be done such other acts or things and execute such other documents, including amendments to the
Application, as they deem necessary or desirable, with the advice of counsel, to cause the Application to conform to comments received from the Staff of the SEC and otherwise deemed necessary or advisable, including changes that may be required 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 Authorized 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 Authorized Officers be, and each of them hereby is,
authorized, empowered and directed, in the name and on behalf of the Company, to perform or cause to be performed all of the agreements and obligations of the Company in connection with the foregoing resolutions and to consummate the transactions
contemplated thereby, 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 or cause to be incurred and paid all fees and expenses and to engage such persons as the Authorized 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 Authorized 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 Authorized Officers authority therefore and the authorization, acceptance, adoption, ratification, approval and confirmation by the Company thereof.
(Adopted on July 18, 2018)
B-1
APPENDIX C
Resolutions Adopted by the Board of Directors of
BLACKROCK TCP CAPITAL CORP.
NOW, THEREFORE, BE IT RESOLVED, that the officers (the
Officers
) of BlackRock TCP Capital Corp. (the
Fund
) be, and it hereby is, authorized, empowered and directed, in the name and on behalf of the Fund, to cause to be prepared, executed, delivered and filed with the Securities and Exchange Commission (the
Commission
) an application for an order pursuant to Section 57(i) of the Investment Company Act and Rule
17d-l
promulgated under the Investment Company Act of 1940 (an
Application
), to authorize the entering into of certain joint transactions and
co-investments
by the Fund with certain entities which may be deemed to be affiliates of the Fund
pursuant to the provisions of the Investment Company Act of 1940, which such joint transactions and
co-investments
would otherwise be prohibited by Section 57(a)(4) of the Investment Company Act of 1940,
all as more fully set forth in the draft Application that has been presented to the Board, 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 Commission 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 Officer or Officers preparing the same shall approve, such approval to be conclusively evidenced by the filing of the Application;
RESOLVED FURTHER, that the Officers be, and each of them hereby is, authorized, empowered and directed, in the name and on behalf of the Fund,
to perform all of the agreements and obligations of the Fund in connection with the foregoing resolutions and to consummate the transactions contemplated thereby, 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 thereof and
the authorization, acceptance, adoption, ratification, approval and confirmation by the Fund thereof.
(Adopted on September 18, 2018)
C-1
APPENDIX D
Resolutions Adopted by the Sole Trustee of
BLACKROCK CREDIT STRATEGIES FUND
NOW, THEREFORE, BE IT RESOLVED
, that the officers (the Officers) of the Trust be, and they hereby are, authorized,
empowered and directed, in the name and on behalf of the Trust, to cause to be prepared, executed, delivered and filed with the Securities and Exchange Commission (the Commission) an application for an order pursuant to Sections 17(d)
and 57(i) of the Investment Company Act of 1940, as amended (the Investment Company Act), and Rule 17d-l promulgated under the Investment Company Act (the Co-Investment Application), to authorize the entering into of certain
joint transactions and co-investments by the Trust with certain entities which may be deemed to be affiliates of the Trust pursuant to the provisions of the Investment Company Act, which such joint transactions and coinvestments would
otherwise be prohibited by Sections 17(d) and 57(a)(4) of the Investment Company Act and Rule 17d-1 promulgated under the Investment Company Act, all as more fully set forth in the draft Co-Investment Application that has been presented to the sole
Trustee, and to do such other acts or things and execute such other documents, including amendments to the Co-Investment Application, as they deem necessary or desirable to cause the Co-Investment Application to conform to comments received from the
staff of the Commission and otherwise to comply with the Investment Company 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 filing of the Co-Investment Application.
(Adopted on September 20, 2018)
D-1
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