82 FR 49880 - Blackstone/GSO Floating Rate Enhanced Income Fund, et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 207 (October 27, 2017)

[Federal Register Volume 82, Number 207 (Friday, October 27, 2017)]
[Notices]
[Pages 49880-49882]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-23368]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32866; 812-14796]


Blackstone/GSO Floating Rate Enhanced Income Fund, et al.

October 23, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for an order under sections 6(c) and 23(c)(3) 
of the Investment Company Act of 1940 (the ``Act'') for an exemption 
from rule 23c-3 under the Act.

Summary of Application: Applicants request an order under sections 6(c) 
and 23(c)(3) of the Act for an exemption from certain provisions of 
rule 23c-3 to permit certain registered closed-end investment companies 
to make repurchase offers on a monthly basis.

Applicants: Blackstone/GSO Floating Rate Enhanced Income Fund 
(``BGFREI''), GSO/Blackstone Debt Funds Management LLC (the 
``Adviser''), and Blackstone Advisory Partners L.P. (the 
``Distributor'').

Filing Dates: The application was filed on July 3, 2017 and amended on 
October 17, 2017.

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 November 17, 2017, and should be accompanied by proof of 
service on the 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 
Street NE., Washington, DC 20549-1090; Applicants: 345 Park Avenue, 
31st Floor, New York, NY 10154.

FOR FURTHER INFORMATION CONTACT: Asen Parachkevov, Senior Counsel, or 
David Marcinkus, Branch Chief, at (202) 551-6821 (Division of 
Investment Management, Chief Counsel's Office).

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. BGFREI is a Delaware statutory trust that is registered under 
the Act as a continuously offered, non-diversified, closed-end 
management investment company that will be operated as an

[[Page 49881]]

interval fund. BGFREI's investment objective is to provide attractive 
income with low sensitivity to rising interest rates. The Adviser is a 
Delaware limited liability company and is registered as an investment 
adviser under the Investment Advisers Act of 1940. The Adviser serves 
as investment adviser to BGFREI. The Distributor is a Delaware 
partnership, is a registered broker-dealer and a member of the 
Financial Industry Regulatory Authority, Inc. (``FINRA''), and is 
BGFREI's principal underwriter and distributor.
    2. Applicants request that any relief granted also apply to any 
registered closed-end management investment company that operates as an 
interval fund pursuant to rule 23c-3 for which the Adviser or any 
entity controlling, controlled by, or under common control with the 
Adviser, or any successor in interest to any such entity,\1\ acts as 
investment adviser (the ``Future Funds'', together with BGFREI, the 
``Funds'', and each, individually, a ``Fund'').\2\
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    \1\ A successor in interest is limited to an entity that results 
from a reorganization into another jurisdiction or a change in the 
type of business organization.
    \2\ All entities currently intending to rely on the requested 
relief have been named as applicants. Any entity that relies on the 
requested order in the future will do so only in accordance with the 
terms and conditions of the application.
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    3. BGFREI's investment objective is to provide attractive income 
with low sensitivity to rising interest rates. BGFREI has applied for 
exemptive relief from the Commission to permit BGFREI to issue multiple 
classes of shares and to impose asset-based distribution fees and an 
early withdrawal charge.\3\ BGFREI currently intends to offer three 
classes of shares, Class T, Class D and Class I, to the public at net 
asset value plus any applicable sales charge. From time to time the 
Funds may create additional classes of shares, the terms of which may 
differ from BGFREI's Class T, Class D and Class I shares. BGFREI's 
common shares are not listed on any securities exchange, and BGFREI 
anticipates that no secondary market will develop for the common 
shares.
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    \3\ See In the Matter of Blackstone/GSO Floating Rate Enhanced 
Income Fund, et al., File Number 812-14795.
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    4. Applicants request an order to permit each Fund to offer to 
repurchase a portion of its common shares at one-month intervals, 
rather than the three, six, or twelve-month intervals specified by rule 
23c-3.
    5. Each Fund will disclose in its prospectus and annual reports its 
fundamental policy to make monthly offers to repurchase a portion of 
its common shares at net asset value, less deduction of a repurchase 
fee, if any, as permitted by rule 23c-3(b)(1), and the imposition of 
early withdrawal charges to the extent permitted pursuant to exemptive 
relief granted by the Commission. The fundamental policy will be 
changeable only by a majority vote of the holders of such Fund's 
outstanding voting securities. Under the fundamental policy, the 
repurchase offer amount will be determined by the board of trustees of 
the applicable Fund (``Board'') prior to each repurchase offer. Each 
Fund will comply with rule 23c-3(b)(8)'s requirements with respect to 
its trustees who are not interested persons of such Fund, within the 
meaning of section 2(a)(19) of the Act (``Disinterested Trustees'') and 
their legal counsel. Under its fundamental policy, each Fund will make 
monthly offers to repurchase not less than 5% of its outstanding shares 
at the time of the repurchase request deadline. The repurchase offer 
amounts for the then-current monthly period, plus the repurchase offer 
amounts for the two monthly periods immediately preceding the then-
current monthly period, will not exceed 25% of the outstanding common 
shares of the applicable Fund.
    6. The prospectus of each Fund will state the means to determine 
the repurchase request deadline and the maximum number of days between 
each repurchase request deadline and the repurchase pricing date. Each 
Fund's repurchase pricing date normally will be the same date as the 
repurchase request deadline and pricing will be determined after close 
of business on that date.
    7. Pursuant to rule 23c-3(b)(1), each Fund will repurchase shares 
for cash on or before the repurchase payment deadline, which will be no 
later than seven calendar days after the repurchase pricing date. 
BGFREI (and any Future Fund) currently intends to make payment on the 
next business day following the repurchase pricing date. Each Fund will 
make payment for shares repurchased in the previous month's repurchase 
offer at least five business days before sending notification of the 
next repurchase offer. BGFREI will, and a Future Fund may, deduct a 
repurchase fee in an amount not to exceed 2% from the repurchase 
proceeds payable to tendering shareholders, in compliance with rule 
23c-3(b)(1).
    8. Each Fund will provide common shareholders with notification of 
each repurchase offer no less than seven days and no more than fourteen 
days prior to the repurchase request deadline. The notification will 
include all information required by rule 23c-3(b)(4)(i). Each Fund will 
file the notification and the Form N-23c-3 with the Commission within 
three business days after sending the notification to its respective 
common shareholders.
    9. The Funds will not suspend or postpone a repurchase offer except 
pursuant to the vote of a majority of its Disinterested Trustees, and 
only under the limited circumstances specified in rule 23c-3(b)(3)(i). 
The Funds will not condition a repurchase offer upon tender of any 
minimum amount of shares. In addition, each Fund will comply with the 
pro ration and other allocation requirements of rule 23c-3(b)(5) if 
common shareholders tender more than the repurchase offer amount. 
Further, each Fund will permit tenders to be withdrawn or modified at 
any time until the repurchase request deadline, but will not permit 
tenders to be withdrawn or modified thereafter.
    10. From the time a Fund sends its notification to shareholders of 
the repurchase offer until the repurchase pricing date, a percentage of 
such Fund's assets equal to at least 100% of the repurchase offer 
amount will consist of: (a) Assets that can be sold or disposed of in 
the ordinary course of business at approximately the price at which 
such Fund has valued such investment within a period equal to the 
period between the repurchase request deadline and the repurchase 
payment deadline; or (b) assets that mature by the next repurchase 
payment deadline. In the event the assets of a Fund fail to comply with 
this requirement, the Board will cause such Fund to take such action as 
it deems appropriate to ensure compliance.
    11. In compliance with the asset coverage requirements of section 
18 of the Act, any senior security issued by, or other indebtedness of, 
a Fund will either mature by the next repurchase pricing date or 
provide for such Fund's ability to call, repay or redeem such senior 
security or other indebtedness by the next repurchase pricing date, 
either in whole or in part, without penalty or premium, as necessary to 
permit that Fund to complete the repurchase offer in such amounts 
determined by its Board.
    12. The Board of each Fund will adopt written procedures to ensure 
that such Fund's portfolio assets are sufficiently liquid so that it 
can comply with its fundamental policy on repurchases and the liquidity 
requirements of rule 23c-3(b)(10)(i). The Board of each Fund will 
review the overall composition of the portfolio and make and approve 
such changes to the procedures as it deems necessary.

[[Page 49882]]

Applicants' Legal Analysis

    1. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction, or any class or classes of 
persons, securities, or transactions, from any provision of the Act or 
rule thereunder, if and to the extent that such exemption is necessary 
or appropriate in the public interest and consistent with the 
protection of investors and the purposes fairly intended by the policy 
and provisions of the Act.
    2. Section 23(c) of the Act provides in relevant part that no 
registered closed-end investment company shall purchase any securities 
of any class of which it is the issuer except: (a) On a securities 
exchange or other open market; (b) pursuant to tenders, after 
reasonable opportunity to submit tenders given to all holders of 
securities of the class to be purchased; or (c) under such other 
circumstances as the Commission may permit by rules and regulations or 
orders for the protection of investors.
    3. Rule 23c-3 under the Act permits a registered closed-end 
investment company to make repurchase offers for its common stock at 
net asset value at periodic intervals pursuant to a fundamental policy 
of the investment company. ``Periodic interval'' is defined in rule 
23c-3(a)(1) as an interval of three, six, or twelve months. Rule 23c-
3(b)(4) requires that notification of each repurchase offer be sent to 
shareholders no less than 21 calendar days and no more than 42 calendar 
days before the repurchase request deadline.
    4. Applicants request an order pursuant to sections 6(c) and 23(c) 
of the Act exempting them from rule 23c-3(a)(1) to the extent necessary 
to permit the Funds to make monthly repurchase offers. Applicants also 
request an exemption from the notice provisions of rule 23c-3(b)(4) to 
the extent necessary to permit each Fund to send notification of an 
upcoming repurchase offer to shareholders at least seven days but no 
more than fourteen calendar days in advance of the repurchase request 
deadline.
    5. Applicants contend that monthly repurchase offers are in the 
shareholders' best interests and consistent with the policies 
underlying rule 23c-3. Applicants assert that monthly repurchase offers 
will provide investors with more liquidity than quarterly repurchase 
offers. Applicants assert that shareholders will be better able to 
manage their investments and plan transactions, because if they decide 
to forego a repurchase offer, they will only need to wait one month for 
the next offer. Applicants also contend that the portfolio of each Fund 
will be managed to provide ample liquidity for monthly repurchase 
offers. Applicants do not believe that a change to monthly repurchases 
would necessitate any change in portfolio management practices of any 
of the Funds in order to satisfy rule 23c-3. In fact, applicants expect 
limited or no impact on overall portfolio management or performance of 
such Funds upon converting to monthly offers and believe that it may be 
easier to manage the cash of the portfolio for the smaller monthly 
offers compared to the larger quarterly ones.
    6. Applicants propose to send notification to shareholders at least 
seven days, but no more than fourteen calendar days, in advance of a 
repurchase request deadline. Applicants assert that, because BGFREI 
(and any Future Fund) currently intends to make payment on the next 
business day following the pricing date, the entire procedure can be 
completed before the next notification is sent out to shareholders; 
thus avoiding any overlap. Applicants believe that these procedures 
will eliminate any possibility of investor confusion. Applicants also 
state that monthly repurchase offers will be a fundamental feature of 
the Funds, and their prospectuses will provide a clear explanation of 
the repurchase program.
    7. Applicants submit that for the reasons given above the requested 
relief is appropriate in the public interest and is consistent with the 
protection of investors and the purposes fairly intended by the policy 
and provisions of the Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief shall 
be subject to the following conditions:
    1. BGFREI (and any Future Fund relying on this relief) will make a 
repurchase offer pursuant to rule 23c-3(b) for a repurchase offer 
amount of not less than 5% in any one-month period. In addition, the 
repurchase offer amount for the then-current monthly period, plus the 
repurchase offer amounts for the two monthly periods immediately 
preceding the then-current monthly period, will not exceed 25% of 
BGFREI's (or Future Fund's, as applicable) outstanding common shares. 
BGFREI (and any Future Fund relying on this relief) may repurchase 
additional tendered shares pursuant to rule 23c-3(b)(5) only to the 
extent the percentage of additional shares so repurchased does not 
exceed 2% in any three-month period.
    2. Payment for repurchased shares will occur at least five business 
days before notification of the next repurchase offer is sent to 
shareholders of BGFREI (or Future Fund relying on this relief).

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-23368 Filed 10-26-17; 8:45 am]
BILLING CODE 8011-01-P