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