80 FR 31432 - Benefit Street Partners BDC, Inc., et al.; Notice of Application
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 105 (June 2, 2015)
Federal Register Volume 80, Issue 105 (June 2, 2015)
| Page Range | 31432-31437 | |
| FR Document | 2015-13321 |
[Federal Register Volume 80, Number 105 (Tuesday, June 2, 2015)] [Notices] [Pages 31432-31437] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-13321] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. IC-31651; File No. 812-14126] Benefit Street Partners BDC, Inc., et al.; Notice of Application May 27, 2015. AGENCY: Securities and Exchange Commission (``Commission''). ACTION: Notice of application for an order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the ``Act'') 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-1 under the Act. ----------------------------------------------------------------------- Summary of Application: Applicants request an order to permit certain business development companies (``BDC'') and closed-end management investment companies to co-invest in portfolio companies with each other and with affiliated investment funds. Applicants: Benefit Street Partners BDC, Inc. (``BSP BDC''), Providence Flexible Credit Allocation Fund (``Providence Flexible Credit''), Griffin-Benefit Street Partners BDC Corp. (``Griffin BSP,'' and with BSP BDC and Providence Flexible Credit, the ``Existing Regulated Funds''), Providence TMT Debt Opportunity Fund II L.P. (``Fund II''), PECM Strategic Funding L.P. (``Strategic Funding''), Providence Debt Fund III L.P. (``Fund III''), Providence Debt Fund III Master (Non- U.S.) L.P. (``Fund III Offshore''), Benefit Street Partners Capital Opportunity Fund L.P. (``BSP Capital Fund''), Benefit Street Partners SMA LM L.P (``Benefit Street LM''), Benefit Street Partners SMA-C L.P. (``Benefit Street SMA-C,'' and with Fund II, Strategic Funding, Fund III, Fund III Offshore, BSP Capital Fund and Benefit Street LM, the ``Existing Affiliated Funds''), Providence Equity Capital Markets L.L.C. (``Fund II Affiliated Adviser''), Benefit Street Partners L.L.C. (``BSP Adviser'') and Griffin Capital BDC Advisor, LLC (``GBA''). Filing Dates: The application was filed on February 26, 2013, and amended on January 31, 2014, July 23, 2014, December 18, 2014 and April 22, 2015. Hearing or Notification of Hearing: An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on June 22, 2015, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, hearing requests should state the nature of the writer's interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F St. NE., Washington, DC 20549-1090. Applicants: 9 West 57th Street, 49th Floor, New York, NY 10019. FOR FURTHER INFORMATION CONTACT: David J. Marcinkus, Senior Counsel, at (202) 551-6882 or David P. Bartels, Branch Chief, at (202) 551-6821 (Chief Counsel's Office, Division of Investment Management). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or for an applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090. Applicants' Representations 1. BSP BDC is a Maryland corporation organized as a closed-end management investment company that intends to elect to be regulated as a BDC under section 54(a) of the Act.\1\ BSP BDC's Objectives and Strategies \2\ are to generate both current income and capital appreciation by primarily investing in secured debt, unsecured debt, as well as related equity securities issued by private U.S. middle market companies. The board of directors (``Board'') of BSP BDC will be comprised of five directors, three of whom will be persons who are not ``interested persons'' of BSP BDC as defined in section 2(a)(19) of the Act (``Non-Interested Directors''). --------------------------------------------------------------------------- \1\ 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 sections 55(a)(1) through 55(a)(3) of the Act and makes available significant managerial assistance with respect to the issuers of such securities. \2\ ``Objectives and Strategies'' means a Regulated Fund's investment objectives and strategies, as described in the Regulated Fund's registration statement on Form N-2, other filings the Regulated Fund has made with the Commission under the Securities Act of 1933 (the ``Securities Act''), or under the Securities Exchange Act of 1934, and the Regulated Fund's reports to shareholders. --------------------------------------------------------------------------- 2. Providence Flexible Credit is a Massachusetts business trust organized as closed-end investment company registered under the Act. Providence Flexible Credit's Objectives and Strategies are to seek total return through a combination of current income and capital appreciation. Providence Flexible Credit will seek to achieve its investment objective by investing primarily in a portfolio of (i) secured loans made primarily to companies whose debt is below investment grade quality; (ii) corporate bonds that are expected to be primarily high yield issues of below investment grade quality; and (iii) debt investment opportunities in middle market companies in the United States that are of below investment grade quality. Providence Flexible Credit will have a Board with a majority of trustees that are Non-Interested Directors. 3. Griffin BSP is a Maryland corporation organized as a closed-end management investment company that has elected to be regulated as a BDC under the Act. Griffin BSP's Objectives and Strategies are to generate both current income and capital appreciation. Applicants state that Griffin BSP seeks to achieve its investment objective by investing in secured and unsecured debt, as well as [[Page 31433]] equity and equity related securities issued by private U.S. companies primarily in the middle market or public U.S. companies with market equity capitalization of less than $250 million. Griffin BSP's Board consists of five members, a majority of whom are Non-Interested Directors. 4. Each of the Affiliated Funds would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act. Fund II is a Cayman Islands limited partnership which seeks to make debt investments primarily in small to mid-sized companies primarily in the media, entertainment, education, communications and information industries. Strategic Funding is a Cayman Islands limited partnership which seeks to invest in distressed companies in non-control transactions, secured and unsecured instruments in syndicated transactions, and privately negotiated debt deals primarily in U.S.-based middle market companies across various industries. Fund III is a Delaware limited partnership which seeks to make debt investments primarily in U.S.-based middle market companies across various industries. Fund III Offshore is a Cayman Islands limited partnership which seeks to make debt investments primarily in small to mid-sized companies across various industries. BSP Capital Fund is a Delaware limited partnership which seeks to make debt investments primarily in small to mid-sized companies across various industries. Benefit Street LM is a Delaware limited partnership which seeks to make debt investments in U.S.-based middle market companies, larger cap issuers and real estate related companies across various industries and related equity securities. Benefit Street SMA-C is a Delaware limited partnership which seeks to make debt investments primarily in secured debt, unsecured debt, and related equity securities issued by primarily U.S.-based companies of any size capitalization and real estate related companies across various industries and related equity securities. 5. Fund II Affiliated Adviser and BSP Adviser are each Delaware limited liability companies registered as investment advisers under the Investment Advisers Act of 1940 (the ``Advisers Act''). Applicants state that Fund II Affiliated Adviser and BSP Adviser are controlled by the same individuals (the ``Principals'') and are thus affiliated persons of each other as described by section 2(a)(3)(C) of the Act. Fund II Affiliated Adviser serves as investment adviser to Fund II and Strategic Funding. BSP Adviser serves as investment adviser to BSP BDC, Providence Flexible Credit, Fund III, Fund III Offshore, Benefit Street LM, BSP Capital Fund and Benefit Street SMA-C. 6. GBA is a Delaware limited liability company registered as an investment adviser under the Advisers Act. GBA serves as investment adviser to Griffin BSP. In addition, BSP Adviser serves as sub-adviser to Griffin BSP. Applicants state that GBA and BSP Adviser are not affiliated persons as defined by the Act. 7. Applicants seek an order (``Order'') to permit one or more Regulated Funds \3\ and/or one or more Affiliated Funds \4\ 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 57(a)(4) and rule 17d-1 by (a) co-investing with each other in securities issued by issuers in private placement transactions in which an Adviser negotiates terms in addition to price; \5\ and (b) making additional investments in securities of such issuers, including through the exercise of warrants, conversion privileges, and other rights to purchase securities of the issuers (``Follow-On Investments''). ``Co- Investment Transaction'' means any transaction in which a Regulated Fund (or its Wholly-Owned Investment Sub, as defined below) participated together with one or more other Regulated Funds and/or one or more Affiliated Funds in reliance on the requested Order. ``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.\6\ --------------------------------------------------------------------------- \3\ ``Regulated Fund'' means any of the Existing Regulated Funds and any Future Regulated Fund. ``Future Regulated Fund'' means any 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 is a Providence Adviser, and (c) that intends to participate in the Co-Investment Program. The term ``Providence Adviser'' means (a) BSP Adviser and (b) any future investment adviser, other than Providence Equity Partners L.L.C., that controls, is controlled by or is under common control with BSP Adviser and is registered under the Advisers Act. The term ``Adviser'' means any Providence Adviser and GBA. Providence Equity Partners L.L.C. is excluded from the definition of Adviser because none of its clients will participate in any Co-Investment Transaction. \4\ ``Affiliated Fund'' means (a) the Existing Affiliated Funds and (b) any Future Affiliated Fund. ``Future Affiliated Fund'' means any entity (a) whose investment adviser is a Providence Adviser, (b) that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act, and (c) that intends to participate in the Co- Investment Program. \5\ The term ``private placement transactions'' means transactions in which the offer and sale of securities by the issuer are exempt from registration under the Securities Act. \6\ All existing entities that currently intend to rely upon the requested Order have been named as applicants. Any other existing or future entity that subsequently relies on the Order will comply with the terms and conditions of the application. --------------------------------------------------------------------------- 8. Applicants state that a Regulated Fund may, from time to time, form a Wholly-Owned Investment Sub.\7\ Such a subsidiary would be prohibited from investing in a Co-Investment Transaction with any Affiliated Fund or Regulated 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 its parent Regulated Fund and that the Wholly- Owned Investment Sub's participation in any such transaction be treated, for purposes of the requested 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 Fund's investments and, therefore, no conflicts of interest could arise between the Regulated Fund and the Wholly-Owned Investment Sub. The Regulated Fund's Board would make all relevant determinations under the conditions with regard to a Wholly-Owned Investment Sub's participation in a Co-Investment Transaction, and the Regulated Fund's Board would be informed of, and take into consideration, any proposed use of a Wholly-Owned Investment Sub in the Regulated Fund's place. If the Regulated Fund proposes to participate in the same Co-Investment Transaction with any of its Wholly-Owned Investment Subs, the Board will also be informed of, and take into consideration, the relative participation of the Regulated Fund and the Wholly-Owned Investment Sub. --------------------------------------------------------------------------- \7\ The term ``Wholly-Owned Investment Sub'' means an entity (i) that is wholly-owned by a Regulated Fund (with the Regulated Fund at all times holding, beneficially and of record, 100% of the voting and economic interests); (ii) whose sole business purpose is to hold one or more investments on behalf of the Regulated Fund; (iii) with respect to which the Regulated Fund's Board has the sole authority to make all determinations with respect to the entity's participation under the conditions of the application; and (iv) that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act. --------------------------------------------------------------------------- 9. When considering Potential Co-Investment Transactions for any Regulated Fund, the Adviser (or [[Page 31434]] Advisers if there are more than one) will consider only the Objectives and Strategies, investment policies, investment positions, capital available for investment, and other pertinent factors applicable to that Regulated Fund. The Advisers expect that any portfolio company that is an appropriate investment for a Regulated Fund should also be an appropriate investment for one or more other Regulated Funds and/or one or more Affiliated Funds, with certain exceptions based on available capital or diversification. The Regulated Funds, however, will not be obligated to invest, or co-invest, when investment opportunities are referred to them. 10. Applicants state that GBA will be investment adviser to Griffin BSP, while BSP Adviser will be sub-adviser. Applicants represent that although BSP Adviser will identify and recommend investments for Griffin BSP, GBA will have ultimate authority to approve or reject the investments proposed by BSP Adviser, subject to the oversight of Griffin-BSP's Board. Applicants further represent that each of BSP Adviser and GBA has adopted allocation policies and procedures which are designed to allocate investment opportunities fairly and equitably among their clients over time. Applicants state that in the case of a Potential Co-Investment Transaction, BSP Adviser will apply its allocation policies and procedures in determining the proposed allocation for Griffin BSP consistent with the requirements of condition 2(a). Applicants further submit that if GBA approves the investment for Griffin BSP, the investment and all relevant allocation information would then be presented to Griffin BSP's Board for its approval in accordance with the conditions to the application. Applicants state that they believe the investment process between BSP Adviser and GBA, prior to seeking approval from Griffin BSP's Board (which is in addition to, rather than in lieu of, the procedures required under the conditions of the application), is significant and provides for additional procedures and processes to ensure that Griffin BSP is being treated fairly in respect of Potential Co-Investment Transactions. 11. Other than pro rata dispositions and Follow-On Investments as provided in conditions 7 and 8, and after making the determinations required in conditions 1 and 2(a), the applicable Adviser(s) will present each Potential Co-Investment Transaction and the proposed allocation to the directors of the Board eligible to vote under section 57(o) of the Act (``Eligible Directors''), and the ``required majority,'' as defined in section 57(o) of the Act (``Required Majority'') \8\ will approve each Co-Investment Transaction prior to any investment by the participating Regulated Fund. --------------------------------------------------------------------------- \8\ 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). --------------------------------------------------------------------------- 12. With respect to the pro rata dispositions and Follow-On Investments provided in conditions 7 and 8, a Regulated Fund may participate in a pro rata disposition or Follow-On Investment without obtaining prior approval of the Required Majority if, among other things: (i) The proposed participation of each Regulated Fund and Affiliated Fund in such disposition is proportionate to its outstanding investments in the issuer immediately preceding the disposition or Follow-On Investment, as the case may be; and (ii) the Board of the Regulated Fund has approved that Regulated Fund's participation in pro rata dispositions and Follow-On Investments as being in the best interests of the Regulated Fund. If the Board does not so approve, any such disposition or Follow-On Investment will be submitted to the Regulated Fund's Eligible Directors. The Board of any Regulated Fund may at any time rescind, suspend or qualify its approval of pro rata dispositions and Follow-On Investments with the result that all dispositions and/or Follow-On Investments must be submitted to the Eligible Directors. 13. No Non-Interested Director of a Regulated Fund will have a financial interest in any Co-Investment Transaction, other than indirectly through share ownership in one of the Regulated Funds. 14. Under condition 15, if the Providence Advisers, the Principals, or any person controlling, controlled by, or under common control with the Providence Advisers or the Principals, and the Affiliated Funds (collectively, the ``Holders'') own in the aggregate more than 25% of the outstanding voting securities of a Regulated Fund (``Shares''), then the Holders will vote such Shares as directed by an independent third party when voting on matters specified in the condition. Applicants believe that this condition will ensure that the Non- Interested Directors will act independently in evaluating the Co- Investment Program, because the ability of the Providence Advisers or the Principals to influence the Independent Directors by a suggestion, explicit or implied, that the Non-Interested Directors can be removed will be limited significantly. Applicants represent that the Non- Interested Directors will evaluate and approve any such voting trust or proxy adviser, taking into accounts its qualifications, reputation for independence, cost to the shareholders, and other factors that they deem relevant. Applicants' Legal Analysis 1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit participation by a registered investment company and an affiliated person 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. Section 17(d) of the Act and rule 17d-1 under the Act are applicable to Regulated Funds that are registered closed-end investment companies. Similarly, with regard to BDCs, section 57(a)(4) of the Act generally prohibits certain persons specified in section 57(b) from participating in joint transactions with the BDC or a company controlled by the BDC in contravention of rules as prescribed by the Commission. Section 57(i) of the Act provides that, until the Commission prescribes rules under section 57(a)(4), the Commission's rules under section 17(d) of the Act applicable to registered closed-end investment companies will be deemed to apply to transactions subject to section 57(a)(4). Because the Commission has not adopted any rules under section 57(a)(4), rule 17d-1 also applies to joint transactions with Regulated Funds that are BDCs. 2. In passing upon applications under rule 17d-1, the Commission considers whether the company's participation in the joint transaction is consistent with the 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. 3. Under section 57(b)(2) of the Act, any person who is directly or indirectly controlling, controlled by, or under common control with a BDC is subject to section 57(a)(4). Applicants submit that each of the Affiliated Funds and the Regulated Funds (excluding Griffin BSP) could be deemed to be a person related to each other Regulated Fund (excluding Griffin BSP) in a manner described by section 57(b) by virtue of being under common control. In addition, section 57(b) applies to any investment adviser to a Regulated Fund, including subadvisers. Applicants submit that BSP Adviser, in its role as subadviser to Griffin BSP, could be deemed to be a person related to Griffin BSP in a manner described in section [[Page 31435]] 57(b). Therefore, BSP Adviser and any control affiliate of BSP Adviser (such as the Regulated Funds and the Affiliated Funds) could be prohibited from participating in the Co-Investment Program with Griffin BSP by section 57(a)(4) and Rule 17d-1. 4. Applicants state that in the absence of the requested relief, in some circumstances the Regulated Funds would be limited in their ability to participate in attractive and appropriate investment opportunities. Applicants believe that the proposed terms and conditions of the application will ensure that the Co-Investment Transactions are consistent with the protection of each Regulated Fund's shareholders and with the purposes intended by the policies and provisions of the Act. Applicants state that the Regulated Funds' participation in the Co-Investment Transactions will be consistent with the provisions, policies, and purposes of the Act and would be done in a manner that is not different from, or less advantageous than, that of other participants. Applicants' Conditions Applicants agree that the Order will be subject to the following conditions: 1. Each time a Providence Adviser considers a Potential Co- Investment Transaction for an Affiliated Fund or another Regulated Fund that falls within a Regulated Fund's then-current Objectives and Strategies, each Adviser to the Regulated Fund will make an independent determination of the appropriateness of the investment for such Regulated Fund in light of the Regulated Fund's then-current circumstances. 2. (a) If each Adviser to a Regulated Fund deems the participation in any Potential Co-Investment Transaction to be appropriate for the Regulated Fund, the Adviser (or Advisers if there are more than one) will then determine an appropriate level of investment for the Regulated Fund. (b) If the aggregate amount recommended by the Adviser (or Advisers if there are more than one) to a Regulated Fund to be invested by the Regulated Fund in the Potential Co-Investment Transaction, together with the amount proposed to be invested by the other participating Regulated Funds and Affiliated Funds, collectively, in the same transaction, exceeds the amount of the investment opportunity, the investment opportunity will be allocated among them pro rata based on each party's net asset value, up to the amount proposed to be invested by each. The Adviser (or Advisers if there are more than one) to each participating Regulated Fund will provide the Eligible Directors of each participating Regulated Fund with information concerning each participating party's net asset value to assist the Eligible Directors with their review of the Regulated Fund's investments for compliance with these allocation procedures. (c) After making the determinations required in conditions 1 and 2(a), the Adviser to the Regulated Fund (or Advisers if there are more than one) will distribute written information concerning the Potential Co-Investment Transaction (including the amount proposed to be invested by each participating Regulated Fund and Affiliated Fund) to the Eligible Directors of each participating Regulated Fund for their consideration. A Regulated Fund will co-invest with one or more other Regulated Funds and/or one or more Affiliated Funds only if, prior to the Regulated Fund's participation in the Potential Co-Investment Transaction, a Required Majority concludes that: (i) The terms of the Potential Co-Investment Transaction, including the consideration to be paid, are reasonable and fair to the Regulated Fund and its shareholders and do not involve overreaching in respect of the Regulated Fund or its shareholders on the part of any person concerned; (ii) the Potential Co-Investment Transaction is consistent with: (A) the interests of the shareholders of the Regulated Fund; and (B) the Regulated Fund's then-current Objectives and Strategies; (iii) the investment by any other Regulated Funds or any Affiliated Funds 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 other Regulated Funds or Affiliated Funds; provided that, if 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 company's board of directors or the right to have a board observer or any similar right to participate in the governance or management of the portfolio company, such event shall not be interpreted to prohibit the Required Majority from reaching the conclusions required by this condition (2)(c)(iii), if: (A) The Eligible Directors will have the right to ratify the selection of such director or board observer, if any; (B) the Adviser to the Regulated Fund (or Advisers if there are more than one) agrees to, and does, provide periodic reports to the Regulated Fund's 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 (C) any fees or other compensation that any Affiliated Fund or any Regulated Fund or any affiliated person of any Affiliated Fund or Regulated Fund receives in connection with the right of an Affiliated Fund or a Regulated Fund 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 the participating Affiliated Funds (who each may, in turn, share its portion with its affiliated persons) and the participating Regulated Funds in accordance with the amount of each party's investment; and (iv) the proposed investment by the Regulated Fund will not benefit the Advisers, the Affiliated Funds or the other Regulated 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 13, (B) to the extent permitted by section 17(e) or 57(k) of the Act, 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)(C). 3. 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. The Adviser to the Regulated Fund (or Advisers if there are more than one) will present to the Board of each Regulated Fund, on a quarterly basis, a record of all investments in Potential Co-Investment Transactions made by any of the other Regulated Funds or Affiliated Funds during the preceding quarter that fell within the Regulated Fund's then-current Objectives and Strategies that were not made available to the Regulated Fund, and an explanation of why the investment opportunities were not offered to the Regulated Fund. All information presented to the 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. [[Page 31436]] 5. Except for Follow-On Investments made in accordance with condition 8,\9\ a Regulated Fund will not invest in reliance on the Order in any issuer in which another Regulated Fund, Affiliated Fund, or any affiliated person of another Regulated Fund or Affiliated Fund is an existing investor. --------------------------------------------------------------------------- \9\ This exception applies only to Follow-On Investments by a Regulated Fund in issuers in which that Regulated Fund already holds investments. --------------------------------------------------------------------------- 6. A Regulated Fund will not participate in any Potential Co- Investment Transaction unless the terms, conditions, price, class of securities to be purchased, settlement date, and registration rights will be the same for each participating Regulated Fund and Affiliated Fund. The grant to an Affiliated Fund or another Regulated Fund, but not the Regulated Fund, of the right to nominate a director for election to a portfolio company's 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 6, if conditions 2(c)(iii)(A), (B) and (C) are met. 7. (a) If any Affiliated Fund or any Regulated Fund elects to sell, exchange or otherwise dispose of an interest in a security that was acquired in a Co-Investment Transaction, the applicable Advisers will: (i) Notify each Regulated Fund that participated in the Co- Investment Transaction of the proposed disposition at the earliest practical time; and (ii) formulate a recommendation as to participation by each Regulated Fund in the disposition. (b) 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 participating Affiliated Funds and Regulated Funds. (c) A Regulated Fund may participate in such disposition without obtaining prior approval of the Required Majority if: (i) the proposed participation of each Regulated Fund and each Affiliated Fund in such disposition is proportionate to its outstanding investments in the issuer immediately preceding the disposition; (ii) 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 (iii) the Board of the Regulated Fund is provided on a quarterly basis with a list of all dispositions made in accordance with this condition. In all other cases, the Adviser to the Regulated Fund (or Advisers if there are more than one) will provide its written recommendation as to the Regulated Fund's 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 Fund's best interests. (d) Each Affiliated Fund and each Regulated Fund will bear its own expenses in connection with any such disposition. 8. (a) If any Affiliated Fund or any Regulated Fund desires to make a Follow-On Investment in a portfolio company whose securities were acquired in a Co-Investment Transaction, the applicable Advisers will: (i) Notify each Regulated Fund that participated in the Co- Investment Transaction of the proposed transaction at the earliest practical time; and (ii) formulate a recommendation as to the proposed participation, including the amount of the proposed Follow-On Investment, by each Regulated Fund. (b) A Regulated Fund may participate in such Follow-On Investment without obtaining prior approval of the Required Majority if: (i) The proposed participation of each Regulated Fund and each Affiliated Fund in such investment is proportionate to its outstanding investments in the issuer immediately preceding the Follow-On Investment; and (ii) 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 the application). In all other cases, the Adviser to the Regulated Fund (or Advisers if there are more than one) will provide its written recommendation as to the Regulated Fund's participation to the Eligible Directors, and the Regulated Fund will participate in such Follow-On Investment solely to the extent that a Required Majority determines that it is in the Regulated Fund's best interests. (c) If, with respect to any Follow-On Investment: (i) The amount of the opportunity is not based on the Affiliated Funds' and the Regulated Funds' outstanding investments immediately preceding the Follow-On Investment; and (ii) the aggregate amount recommended by the Adviser(s) to be invested by each Regulated Fund in the Follow-On Investment, together with the amount proposed to be invested by the participating Affiliated Funds in the same transaction, exceeds the amount of the opportunity; then the amount invested by each such party will be allocated among them pro rata based on each party's net asset value, up to the amount proposed to be invested by each. (d) 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 the application. 9. The Non-Interested Directors of each Regulated Fund will be provided quarterly for review 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 Non-Interested Directors may determine whether all investments made during the preceding quarter, including those investments that the Regulated Fund considered but declined to participate in, comply with the conditions of the Order. In addition, the Non-Interested Directors will consider at least annually the continued appropriateness for the Regulated Fund of participating in new and existing Co-Investment Transactions. 10. 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) of the Act. 11. No Non-Interested Director of a Regulated Fund will also be a director, general partner, managing member or principal, or otherwise an ``affiliated person'' (as defined in the Act) of an Affiliated Fund. 12. 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 investment advisory agreements with the Affiliated Funds and the Regulated Funds, be shared by the Regulated Funds and the Affiliated Funds in proportion to the relative amounts of the securities held or to be acquired or disposed of, as the case may be. 13. Any transaction fee \10\ (including break-up or commitment fees but [[Page 31437]] excluding broker's fees contemplated by section 17(e) or 57(k) of the Act, as applicable), received in connection with a Co-Investment Transaction will be distributed to the participating Regulated Funds and Affiliated Funds 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 such Adviser at a bank or banks having the qualifications prescribed in section 26(a)(1) of the Act, and the account will earn a competitive rate of interest that will also be divided pro rata among the participating Regulated Funds and Affiliated Funds based on the amounts they invest in such Co-Investment Transaction. None of the Affiliated Funds, the Advisers, the other Regulated Funds or any affiliated person of the Regulated Funds or Affiliated Funds will receive additional compensation or remuneration of any kind as a result of or in connection with a Co-Investment Transaction (other than (a) in the case of the Regulated Funds and Affiliated Funds, the pro rata transaction fees described above and fees or other compensation described in condition 2(c)(iii)(C), and (b) in the case of an Adviser, investment advisory fees paid in accordance with the agreement between the Adviser and the Regulated Fund or Affiliated Fund). --------------------------------------------------------------------------- \10\ Applicants are not requesting and the staff of the Commission is not providing any relief for transaction fees received in connection with any Co-Investment Transaction. --------------------------------------------------------------------------- 14. The Advisers will maintain written policies and procedures reasonably designed to ensure compliance with the foregoing conditions. These policies and procedures will require, among other things, that GBA will be notified of all Potential Co-Investment Transactions that fall within Griffin BSP's then-current Objectives and Strategies and will be given sufficient information to make its independent determination and recommendations under conditions 1, 2(a), 7 and 8. 15. If the Holders own in the aggregate more than 25% of the outstanding Shares of a Regulated Fund, then the Holders will vote such Shares as directed by an independent third party (such as the trustee of a voting trust or a proxy adviser) when voting on (1) the election of directors; (2) the removal of one or more directors; or (3) any matters requiring approval by the vote of a majority of the outstanding voting securities, as defined in section 2(a)(42) of the Act. For the Commission, by the Division of Investment Management, under delegated authority. Robert W. Errett, Deputy Secretary. [FR Doc. 2015-13321 Filed 6-1-15; 8:45 am] BILLING CODE 8011-01-P
![31432 Federal Register / Vol. 80, No. 105 / Tuesday, June 2, 2015 / Notices
amendments, all written statements Flexible Credit’’), Griffin-Benefit Street www.sec.gov/search/search.htm or by
with respect to the proposed rule Partners BDC Corp. (‘‘Griffin BSP,’’ and calling (202) 551–8090.
change that are filed with the with BSP BDC and Providence Flexible
Applicants’ Representations
Commission, and all written Credit, the ‘‘Existing Regulated Funds’’),
communications relating to the Providence TMT Debt Opportunity 1. BSP BDC is a Maryland corporation
proposed rule change between the Fund II L.P. (‘‘Fund II’’), PECM Strategic organized as a closed-end management
Commission and any person, other than Funding L.P. (‘‘Strategic Funding’’), investment company that intends to
those that may be withheld from the Providence Debt Fund III L.P. (‘‘Fund elect to be regulated as a BDC under
public in accordance with the III’’), Providence Debt Fund III Master section 54(a) of the Act.1 BSP BDC’s
provisions of 5 U.S.C. 552, will be (Non-U.S.) L.P. (‘‘Fund III Offshore’’), Objectives and Strategies 2 are to
available for Web site viewing and Benefit Street Partners Capital generate both current income and
printing in the Commission’s Public Opportunity Fund L.P. (‘‘BSP Capital capital appreciation by primarily
Reference Room, 100 F Street NE., Fund’’), Benefit Street Partners SMA LM investing in secured debt, unsecured
Washington, DC 20549, on official L.P (‘‘Benefit Street LM’’), Benefit Street debt, as well as related equity securities
business days between the hours of Partners SMA–C L.P. (‘‘Benefit Street issued by private U.S. middle market
10:00 a.m. and 3:00 p.m. Copies of such SMA–C,’’ and with Fund II, Strategic companies. The board of directors
filing also will be available for Funding, Fund III, Fund III Offshore, (‘‘Board’’) of BSP BDC will be
inspection and copying at the principal BSP Capital Fund and Benefit Street comprised of five directors, three of
office of the Exchange. All comments LM, the ‘‘Existing Affiliated Funds’’), whom will be persons who are not
received will be posted without change; Providence Equity Capital Markets ‘‘interested persons’’ of BSP BDC as
the Commission does not edit personal L.L.C. (‘‘Fund II Affiliated Adviser’’), defined in section 2(a)(19) of the Act
identifying information from Benefit Street Partners L.L.C. (‘‘BSP (‘‘Non-Interested Directors’’).
Adviser’’) and Griffin Capital BDC 2. Providence Flexible Credit is a
submissions. You should submit only
Advisor, LLC (‘‘GBA’’). Massachusetts business trust organized
information that you wish to make
FILING DATES: The application was filed as closed-end investment company
available publicly. All submissions
on February 26, 2013, and amended on registered under the Act. Providence
should refer to File Number SR–NYSE–
January 31, 2014, July 23, 2014, Flexible Credit’s Objectives and
2015–25 and should be submitted on or
December 18, 2014 and April 22, 2015. Strategies are to seek total return
before June 23, 2015.
through a combination of current
For the Commission, by the Division of HEARING OR NOTIFICATION OF HEARING: An
income and capital appreciation.
Trading and Markets, pursuant to delegated order granting the requested relief will
Providence Flexible Credit will seek to
authority.12 be issued unless the Commission orders
achieve its investment objective by
Robert W. Errett, a hearing. Interested persons may
investing primarily in a portfolio of (i)
Deputy Secretary. request a hearing by writing to the
secured loans made primarily to
Commission’s Secretary and serving
[FR Doc. 2015–13326 Filed 6–1–15; 8:45 am] companies whose debt is below
applicants with a copy of the request,
BILLING CODE 8011–01–P investment grade quality; (ii) corporate
personally or by mail. Hearing requests
bonds that are expected to be primarily
should be received by the Commission
high yield issues of below investment
SECURITIES AND EXCHANGE by 5:30 p.m. on June 22, 2015, and
grade quality; and (iii) debt investment
COMMISSION should be accompanied by proof of
opportunities in middle market
service on applicants, in the form of an
[Release No. IC–31651; File No. 812–14126] companies in the United States that are
affidavit or, for lawyers, a certificate of
of below investment grade quality.
service. Pursuant to rule 0–5 under the
Benefit Street Partners BDC, Inc., et Providence Flexible Credit will have a
Act, hearing requests should state the
al.; Notice of Application Board with a majority of trustees that
nature of the writer’s interest, any facts
are Non-Interested Directors.
May 27, 2015. bearing upon the desirability of a 3. Griffin BSP is a Maryland
AGENCY: Securities and Exchange hearing on the matter, the reason for the corporation organized as a closed-end
Commission (‘‘Commission’’). request, and the issues contested. management investment company that
ACTION: Notice of application for an
Persons who wish to be notified of a has elected to be regulated as a BDC
order under sections 17(d) and 57(i) of hearing may request notification by under the Act. Griffin BSP’s Objectives
the Investment Company Act of 1940 writing to the Commission’s Secretary. and Strategies are to generate both
(the ‘‘Act’’) and rule 17d–1 under the ADDRESSES: Secretary, U.S. Securities current income and capital
Act to permit certain joint transactions and Exchange Commission, 100 F St. appreciation. Applicants state that
otherwise prohibited by sections 17(d) NE., Washington, DC 20549–1090. Griffin BSP seeks to achieve its
and 57(a)(4) of the Act and rule 17d–1 Applicants: 9 West 57th Street, 49th investment objective by investing in
under the Act. Floor, New York, NY 10019. secured and unsecured debt, as well as
FOR FURTHER INFORMATION CONTACT:
SUMMARY OF APPLICATION: Applicants David J. Marcinkus, Senior Counsel, at 1 Section 2(a)(48) defines a BDC to be any closed-
request an order to permit certain (202) 551–6882 or David P. Bartels, end investment company that operates for the
purpose of making investments in securities
business development companies Branch Chief, at (202) 551–6821 (Chief described in sections 55(a)(1) through 55(a)(3) of the
(‘‘BDC’’) and closed-end management Counsel’s Office, Division of Investment
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Act and makes available significant managerial
investment companies to co-invest in Management). assistance with respect to the issuers of such
securities.
portfolio companies with each other and SUPPLEMENTARY INFORMATION: The 2 ‘‘Objectives and Strategies’’ means a Regulated
with affiliated investment funds. following is a summary of the Fund’s investment objectives and strategies, as
APPLICANTS: Benefit Street Partners BDC, application. The complete application described in the Regulated Fund’s registration
Inc. (‘‘BSP BDC’’), Providence Flexible may be obtained via the Commission’s statement on Form N–2, other filings the Regulated
Fund has made with the Commission under the
Credit Allocation Fund (‘‘Providence Web site by searching for the file Securities Act of 1933 (the ‘‘Securities Act’’), or
number, or for an applicant using the under the Securities Exchange Act of 1934, and the
12 17 CFR 200.30–3(a)(12). Company name box, at http:// Regulated Fund’s reports to shareholders.
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![Federal Register / Vol. 80, No. 105 / Tuesday, June 2, 2015 / Notices 31437
excluding broker’s fees contemplated by For the Commission, by the Division of The purpose of Form N–4 is to meet
section 17(e) or 57(k) of the Act, as Investment Management, under delegated the filing and disclosure requirements of
applicable), received in connection with authority. the Securities Act and the Investment
a Co-Investment Transaction will be Robert W. Errett, Company Act and to enable filers to
distributed to the participating Deputy Secretary. provide investors with information
Regulated Funds and Affiliated Funds [FR Doc. 2015–13321 Filed 6–1–15; 8:45 am] necessary to evaluate an investment in
on a pro rata basis based on the amounts BILLING CODE 8011–01–P a security. The information required to
they invested or committed, as the case be filed with the Commission permits
may be, in such Co-Investment verification of compliance with
Transaction. If any transaction fee is to SECURITIES AND EXCHANGE securities law requirements and assures
be held by an Adviser pending COMMISSION the public availability and
consummation of the transaction, the dissemination of the information.
fee will be deposited into an account [Extension: Form N–4; OMB Control No. The estimated annual number of
maintained by such Adviser at a bank or 3235–0318, SEC File No. 270–282] filings on Form N–4 is 210 initial
banks having the qualifications registration statements and 1,443 post-
Submission for OMB Review; effective amendments. The estimated
prescribed in section 26(a)(1) of the Act,
and the account will earn a competitive Comment Request average number of portfolios per filing
rate of interest that will also be divided Upon Written Request, Copies Available is one, both for initial registration
pro rata among the participating From: Securities and Exchange statements and post-effective
Regulated Funds and Affiliated Funds Commission, Office of FOIA Services, amendments on Form N–4.
based on the amounts they invest in 100 F Street NE., Washington, DC Accordingly, the estimated number of
such Co-Investment Transaction. None 20549–2736. portfolios referenced in initial Form N–
of the Affiliated Funds, the Advisers, 4 filings annually is 210 and the
Notice is hereby given that, pursuant
the other Regulated Funds or any estimated number of portfolios
to the Paperwork Reduction Act of 1995
affiliated person of the Regulated Funds referenced in post-effective amendment
(44 U.S.C. 3501 et seq.), the Securities
or Affiliated Funds will receive filings on Form N–4 annually is 1,443.
and Exchange Commission (the
additional compensation or The estimate of the annual hour burden
‘‘Commission’’) has submitted to the
remuneration of any kind as a result of for Form N–4 is approximately 278.5
Office of Management and Budget hours per initial registration statement
or in connection with a Co-Investment
(‘‘OMB’’) a request for extension of the and 197.25 hours per post-effective
Transaction (other than (a) in the case
previously approved collection of amendment, for a total of 343,116.75
of the Regulated Funds and Affiliated
information discussed below. hours ((210 initial registration
Funds, the pro rata transaction fees
The collection of information is statements × 278.5 hours) + (1,443 post-
described above and fees or other
entitled: ‘‘Form N–4 (17 CFR 239.17b) effective amendments × 197.25 hours)).
compensation described in condition
under the Securities Act of 1933 and (17 The current estimated annual cost
2(c)(iii)(C), and (b) in the case of an
CFR 274.11c) under the Investment burden for preparing an initial Form
Adviser, investment advisory fees paid
in accordance with the agreement Company Act of 1940, registration N–4 filing is $23,013 per portfolio and
between the Adviser and the Regulated statement of separate accounts the current estimated annual cost
Fund or Affiliated Fund). organized as unit investment trust.’’ burden for preparing a post-effective
14. The Advisers will maintain Form N–4 is the form used by insurance amendment filing on Form N–4 is
written policies and procedures company separate accounts organized as $21,813 per portfolio. The Commission
reasonably designed to ensure unit investment trusts that offer variable estimates that, on an annual basis, 210
compliance with the foregoing annuity contracts to register as portfolios will be referenced in initial
conditions. These policies and investment companies under the Form N–4 filings and 1,443 portfolios
procedures will require, among other Investment Company Act of 1940 (15 will be referenced in post-effective
things, that GBA will be notified of all U.S.C. 80a–1 et seq.) and/or to register amendment filings on Form N–4. Thus,
Potential Co-Investment Transactions their securities under the Securities Act the estimated total annual cost burden
that fall within Griffin BSP’s then- of 1933 (15 U.S.C. 77a et seq.). Section allocated to Form N–4 would be
current Objectives and Strategies and 5 of the Securities Act (15 U.S.C. 77e) $36,308,889 ((210 × $23,013) + (1,443 ×
will be given sufficient information to requires the filing of a registration $21,813)).
make its independent determination statement prior to the offer of securities Providing the information required by
and recommendations under conditions to the public and that the registration Form N–4 is mandatory. Responses will
1, 2(a), 7 and 8. statement be effective before any not be kept confidential. Estimates of
15. If the Holders own in the aggregate securities are sold, and Section 8 of the average burden hours are made solely
more than 25% of the outstanding Investment Company Act (15 U.S.C. for the purposes of the Paperwork
Shares of a Regulated Fund, then the 80a–8) provides for the registration of Reduction Act, and are not derived from
Holders will vote such Shares as investment companies. Pursuant to a comprehensive or even a
directed by an independent third party Form N–4, separate accounts organized representative survey or study of the
(such as the trustee of a voting trust or as unit investment trusts that offer costs of Commission rules and forms.
a proxy adviser) when voting on (1) the variable annuity contracts provide An agency may not conduct or sponsor,
investors with a prospectus and a and a person is not required to respond
asabaliauskas on DSK5VPTVN1PROD with NOTICES
election of directors; (2) the removal of
one or more directors; or (3) any matters statement of additional information to, a collection of information unless it
requiring approval by the vote of a covering essential information about a displays a currently valid control
majority of the outstanding voting separate account. Section 5(b) of the number.
securities, as defined in section 2(a)(42) Securities Act requires that investors be The public may view the background
of the Act. provided with a prospectus containing documentation for this information
the information required in a collection at the following Web site,
transaction fees received in connection with any registration statement prior to or at the www.reginfo.gov. Comments should be
Co-Investment Transaction. time of sale or delivery of securities. directed to: (i) Desk Officer for the
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Document Created: 2015-12-15 15:12:35
Document Modified: 2015-12-15 15:12:35
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Notice of application for an order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the ``Act'') 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-1 under the Act. | |
| Dates | The application was filed on February 26, 2013, and amended on January 31, 2014, July 23, 2014, December 18, 2014 and April 22, 2015. | |
| Contact | David J. Marcinkus, Senior Counsel, at (202) 551-6882 or David P. Bartels, Branch Chief, at (202) 551-6821 (Chief Counsel's Office, Division of Investment Management). | |
| FR Citation | 80 FR 31432 |
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