[Federal Register Volume 85, Number 82 (Tuesday, April 28, 2020)]
[Notices]
[Pages 23553-23557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08942]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33848; File No. 812-14905]
FS Credit Income Fund, et al.
April 22, 2020.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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Notice of an application for an order under section 17(d) of the
Investment Company Act of 1940 (the ``Act'') and rule 17d-1 under the
Act permitting certain joint transactions otherwise prohibited by
section 17(d) of the Act and rule 17d-1 under the Act.
Summary of Application: Applicants request an order to permit certain
closed-end investment companies to co-invest in portfolio companies
with each other and with affiliated investment funds.
Applicants: FS Credit Income Fund (``FSC''), FS Credit Income Advisor,
LLC (``FSC Advisor''), GoldenTree Asset Management Credit Advisor LLC
(``GTAM Credit''), GoldenTree Loan Management LP (``GLM''), GoldenTree
Asset Management LP (``GTAM''), GoldenTree Master Fund, Ltd.,
GoldenTree Partners, LP, GoldenTree Offshore Fund, Ltd., GoldenTree
Offshore Intermediate Fund, LP, GoldenTree Select Partners, LP,
GoldenTree Select Offshore Fund, Ltd., GoldenTree Select Offshore
Intermediate Fund, LP, GoldenTree Entrust Intermediate Fund SPC
(Segregated Portfolio I), GoldenTree Entrust Offshore Fund SPC
(Segregated Portfolio I), GoldenTree Entrust Master Fund SPC
(Segregated Portfolio I), GT NM, L.P., GoldenTree Credit Opportunities
Master Fund, Ltd., GoldenTree Credit Opportunities, LP, GoldenTree
Credit Opportunities, Ltd., GoldenTree Multi-Sector Master Fund ICAV,
GoldenTree Multi-Sector, LP, GoldenTree Multi-Sector Cayman Ltd.,
GoldenTree NJ Distressed Fund 2015 LP, GoldenTree Emerging Markets
Master Fund ICAV, GoldenTree Emerging Markets Fund ICAV, GoldenTree
High Yield Value Master ICAV, GoldenTree High Yield Value Fund Offshore
(Strategic) Ltd., GoldenTree Multi-Sector Fund Offshore ERISA Ltd.,
GoldenTree Loan Opportunities IX Ltd., GoldenTree Loan Opportunities X
Ltd., GoldenTree Loan Opportunities XII Ltd., GoldenTree Loan Financing
I, Ltd., GoldenTree Structured Products Opportunities Offshore Fund
Extension Holdings LLC, GoldenTree Structured Products Opportunities
Domestic Fund Extension Holdings LLC, GoldenTree Structured Products
Opportunities Fund Extension Holdings LLC, GoldenTree Structured
Products--C LP, Guadalupe Fund, LP, Gresham Multi-Sector Credit Fund,
Ltd., GoldenTree 2017 K-SC, Ltd, GoldenTree Distressed Master Fund III
Ltd, GoldenTree Distressed Fund III LP, GoldenTree Distressed Master
(ECI) Fund III LP, GoldenTree Distressed Fund 2014 LP, GoldenTree
Distressed Master Fund 2014 Ltd., GoldenTree Distressed Master (ECI)
Fund 2014 LP, GoldenTree Distressed Debt Master Fund LP, GoldenTree
Distressed Debt Fund LP, GoldenTree Distressed Debt Master (ECI) Fund
LP, Laurelin 2016-1 DAC, Ginkgo Tree, LLC, GoldenTree Co-Invest Fund II
LP, GoldenTree Co-Invest Fund II Ltd., GoldenTree Co-Invest Master Fund
II Ltd., GoldenTree V1 Fund, LP, GoldenTree V1 Master Fund, LP, GT
Credit Fund LP (the ``GTAM Private Funds''), GoldenTree Loan Management
US CLO 1, Ltd., GoldenTree Loan Management US CLO 2, Ltd., GoldenTree
Loan Management US CLO 3, Ltd., GoldenTree Loan Opportunities XI, Ltd.,
GoldenTree Loan Management EUR CLO 1 DAC, GoldenTree Loan Management
(US Feeder), LP, GoldenTree Loan Management (Offshore Feeder), LP, GLM
EUR BAR WH DAC, GLM EUR CB WH DAC, GLM EUR MS WH DAC, GLM MS WH, Ltd.,
GoldenTree Loan Management US CLO 4, Ltd., GoldenTree Loan Management
US CLO 5, Ltd., GoldenTree Loan Management EUR CLO 2 DAC, GoldenTree
Loan Management EUR CLO 3 DAC, GoldenTree Distressed Onshore Master
Fund III LP, GoldenTree Distressed Parallel Fund III LP, GoldenTree
Loan Management US CLO 6, Ltd., GoldenTree Loan Management US CLO 7,
Ltd., GoldenTree Loan Management US CLO 8, Ltd., GoldenTree Loan
Management EUR CLO 4 DAC (the ``GLM Private Funds,'' together with the
GTAM Private Funds, the ``Private Funds'').
Filing Dates: The application was filed on May 15, 2018, and amended
on December 13, 2018, December 5, 2019 and March 10, 2020.
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 emailing the Commission's
Secretary at [email protected] and serving Applicants with a
copy of the request email. Hearing requests should be received by the
Commission by 5:30 p.m. on May 18, 2020, 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 emailing the
Commission's Secretary.
ADDRESSES: The Comission: [email protected]. Applicants: FS
Credit Income Advisor, LLC, Attn: Neal Helbe,
[email protected]; GoldenTree Asset Management LP, Attn:
Barry Ritholz, [email protected].
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817, or Kaitlin C. Bottock, Branch Chief, at (202) 551-6825
(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 website 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.
[[Page 23554]]
Applicants' Representations
1. FSC is a Delaware Statutory Trust and is a non-diversified,
closed-end management investment company that operates as an interval
fund pursuant to Rule 23c-3 under the Act. FSC's Objectives and
Strategies \1\ are to provide attractive total returns, which will
include current income and capital appreciation, by investing, under
normal market conditions, at least 80% of its assets (including
borrowings for investment purposes) in debt obligations. FSC has a
board of trustees, a majority of which is comprised of members who are
not ``interested persons'' within the meaning of section 2(a)(19) of
the Act (the ``Non-Interested Trustees''). No Non-Interested Trustee
will have any direct or indirect financial interest in any Co-
Investment Transaction (as defined below) or any interest in any
portfolio company, other than indirectly through share ownership (if
any) in FSC or a Future Regulated Fund (as defined below).
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\1\ ``Objectives and Strategies'' means, with respect to a
Regulated Fund (as defined below), the investment objectives and
strategies of such Regulated Fund, as described in such Regulated
Fund's registration statement, other filings the Regulated Fund has
made with the Commission under the Act, under the Securities Act of
1933, as amended (``1933 Act'') or under the Securities Exchange Act
of 1934, as amended, or in the Regulated Fund's reports to
shareholders.
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2. Each of the GTAM Private Funds and the GLM Private Funds are
entities that would be an investment company but for section 3(c)(1) or
3(c)(7) of the Act.
3. FSC Advisor, a Delaware limited liability company, is an
investment adviser registered with the Commission under the Investment
Advisers Act of 1940 (``Advisers Act''). FSC Advisor serves as
investment adviser to FSC and has engaged GTAM Credit to serve as sub-
adviser to FSC.
4. GTAM Credit, a Delaware limited liability company, is an
investment adviser registered under the Advisers Act. GTAM Credit
identifies investment opportunities and executes on its trading
strategies for FSC subject to guidelines agreed to by FSC Advisor and
GTAM Credit. FSC Advisor is not an affiliated person (as defined in
Section 2(a)(3) of the Act) of GTAM Credit and is not responsible for
making or ratifying any investment decisions made by GTAM Credit.
5. GTAM, a Delaware limited partnership, is an investment adviser
registered with the Commission under the Advisers Act. GTAM serves as
investment adviser to each of the GTAM Private Funds.
6. GLM, a Cayman Islands limited partnership, is an investment
adviser registered with the Commission under the Advisers Act. GLM
serves as the investment adviser to each of the GLM Private Funds.
7. Applicants seek an order (``Order'') to permit one or more
Regulated Funds \2\ and/or one or more Affiliated Funds \3\ 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 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; \4\ 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 a Wholly-Owned Investment
Subsidiary (as defined below)) participates 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 a Wholly-Owned
Investment Subsidiary (defined below)) 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.\5\
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\2\ ``Regulated Fund'' means FSC and any Future Regulated Fund.
``Future Regulated Fund'' means any closed-end investment management
company (a) that is registered under the Act, (b) whose investment
adviser (and any sub-adviser, if any) is a GTAM Adviser, and (c)
that intends to participate in the Co-Investment Program. The term
``FS Adviser'' means (a) FSC Advisor and (b) any future investment
adviser that controls, is controlled by or is under common control
with FSC Advisor, is registered as an investment adviser under the
Advisers Act and is not a Regulated Fund or a subsidiary of a
Regulated Fund. The term ``GTAM Adviser'' means (a) GTAM, GTAM
Credit, or GLM and (b) any future investment adviser that controls,
is controlled by or is under common control with GTAM, GTAM Credit,
or GLM, is registered as an investment adviser under the Advisers
Act and is not a Regulated Fund or a subsidiary of a Regulated Fund.
The term ``Adviser'' means (a) a FS Adviser or (b) a GTAM Adviser;
provided that a GTAM Adviser serving as a sub-adviser to an
Affiliated Fund (defined below) is included in this term only if (i)
the investment adviser is also a GTAM Adviser and (ii) such Adviser
controls the entity. Applicants state that the FS Advisers will only
be subject to conditions 2(c)(iv), 13 and 14 of the application.
\3\ ``Affiliated Fund'' means the Private Funds and any Future
Affiliated Fund. ``Future Affiliated Fund'' means any entity (a)
whose investment adviser (and any sub-adviser, if any) is a GTAM
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.
\4\ The term ``private placement transactions'' means
transactions in which the offer and sale of securities by the issuer
are exempt from registration under the 1933 Act.
\5\ 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.
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8. Applicants state that FSC Advisor has delegated responsibility
for the Co-Investment Program to GTAM Credit. Applicants further state
that GTAM Credit has sole responsibility for causing FSC and any
Affiliated Fund to enter into a Potential Co-Investment Transaction and
is responsible for ensuring that the GTAM Adviser, the Regulated Funds,
and any Affiliated Funds comply with the conditions of the application.
9. Applicants state that a Regulated Fund may, from time to time,
form one or more Wholly-Owned Investment Subsidiaries.\6\ 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
rule 17d-1. Applicants request that each Wholly-Owned Investment
Subsidiary be permitted to participate in Co-Investment Transactions in
lieu of its parent Regulated Fund and that the Wholly-Owned Investment
Subsidiary'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 Subsidiary 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 Subsidiary.
The Regulated Fund's Board would make all relevant determinations under
the conditions with regard to a Wholly-Owned Investment Subsidiary's
participation in
[[Page 23555]]
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 Subsidiary 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 Subsidiaries, the
Board will also be informed of, and take into consideration, the
relative participation of the Regulated Fund and the Wholly-Owned
Investment Subsidiary.
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\6\ The term ``Wholly-Owned Investment Subsidiary'' 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 and incur debt (which is
or would be consolidated with other indebtedness of such Regulated
Fund for financial reporting or compliance purposed under the Act)
on behalf of the Regulated Fund; (iii) with respect to which the
Regulated Fund's board of trustees (``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 sections 3(c)(1) or 3(c)(7)
of the Act.
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10. When considering Potential Co-Investment Transactions for any
Regulated Fund, the applicable Adviser will consider only the
Objectives and Strategies, investment policies, investment positions,
capital available for investment (``Available Capital''), and other
pertinent factors applicable to that Regulated Fund. Each Adviser, as
applicable, undertakes to perform these duties consistently for each
Regulated Fund, as applicable, regardless of which of them serves as
investment adviser for these entities. The participation of a Regulated
Fund in a Potential Co-Investment Transaction may only be approved by
both a majority of the trustees of the Board who have no financial
interest in such transaction, plan or arrangement and a majority of
such trustees who are Non-Interested Trustees (a ``Required
Majority''),\7\ eligible to vote on that Co-Investment Transaction (the
``Eligible Trustees'').\8\
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\7\ ``Required Majority'' has the meaning provided in Section
57(o) of the Act. The trustees of a Regulated Fund that make up the
Required Majority will be determined as if the Regulated Fund were a
business development company (``BDC'') subject to Section 57(o).
\8\ The term ``Eligible Trustees'' means the trustees who are
eligible to vote under Section 57(o) as if the Regulated Fund were a
BDC subject to Section 57(o).
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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 Regulated Fund's Adviser will
present each Potential Co-Investment Transaction and the proposed
allocation to the Regulated Fund's Eligible Trustees, and the Required
Majority will approve each Co-Investment Transaction prior to any
investment by the participating Regulated Fund.
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. Applicants also represent that if the Advisers, the principals
of the Advisers (``Principals'') or any person controlling, controlled
by, or under common control with an Adviser or the Principals, and the
Affiliated Funds (collectively, the ``Holders'') own in the aggregate
more than 25% of the outstanding voting shares of a Regulated Fund (the
``Shares''), then the Holders will vote such Shares as required under
condition 14. Applicants believe this condition will ensure that the
Non-Interested Trustees will act independently in evaluating the Co-
Investment Program, because the ability of an Adviser and its
principals to influence the Non-Interested Trustees by a suggestion,
explicit or implied, that the Non-Interested Trustees can be removed
will be limited significantly. Applicants represent that the Non-
Interested Trustees will evaluate and approve any such independent
third party, taking into account 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
affiliated persons of a registered investment company from
participating in joint transactions with the company unless the
Commission has granted an order permitting such transactions. 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.
2. Applicants state that in the absence of the requested relief,
the Regulated Funds would be, in some circumstances, limited in their
ability to participate in attractive and appropriate investment
opportunities. Applicants believe that the proposed terms and
conditions 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 on a basis 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 an 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, the
Regulated Fund's Adviser will make an independent determination of the
appropriateness of the investment for the Regulated Fund in light of
the Regulated Fund's then-current circumstances.
2. (a) If the Adviser deems a Regulated Fund's participation in any
Potential Co-Investment Transaction to be appropriate for the Regulated
Fund, it will then determine an appropriate level of investment for the
Regulated Fund.
(b) If the aggregate amount recommended by the applicable Adviser
to be invested by the applicable 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 participant's Available Capital, up
to the amount proposed to be invested by each. The applicable Adviser
will provide the Eligible Trustees of each participating Regulated Fund
with information concerning each participating party's Available
Capital to assist the Eligible Trustees 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 applicable Adviser will distribute written information
concerning the Potential Co-Investment Transaction
[[Page 23556]]
(including the amount proposed to be invested by each participating
Regulated Fund and Affiliated Fund) to the Eligible Trustees 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 Regulated Fund's shareholders; and
(B) the Regulated Fund's then-current Objectives and Strategies;
(iii) the investment by any other Regulated Funds or 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 any other Regulated Funds or Affiliated
Funds; provided that if any other Regulated Funds or Affiliated Funds,
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) He Eligible Trustees will have the right to ratify the
selection of such director or board observer, if any;
(B) the applicable Adviser 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 any
Regulated Fund receives in connection with the right of the Affiliated
Fund or 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
Fund in accordance with the amount of each party's investment; and
(iv) the proposed investment by the Regulated Fund will not benefit
the Advisers, any Affiliated Funds or 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) 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 applicable Adviser 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.
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, an Affiliated Fund
or any affiliated person of another Regulated Fund or Affiliated Fund
is an existing investor.
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\9\ This exception applies only to Follow-On Investments by a
Regulated Fund in issuers in which the Regulated Fund already holds
investments.
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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 Adviser 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 will provide its written recommendation
as to the Regulated Fund's participation to the Eligible Trustees, 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 Regulated Fund desires to make a
Follow-On Investment in a portfolio company whose securities were
acquired in a Co-Investment Transaction, the applicable Adviser will:
(i) Notify each Regulated Fund that participated in the co-
investment
[[Page 23557]]
transaction of the proposed Follow-On Investment 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 will provide its written
recommendation as to the Regulated Fund's participation to the Eligible
Trustees, 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 Regulated
Funds' and the Affiliated Funds' outstanding investments immediately
preceding the Follow-On Investment; and
(ii) the aggregate amount recommended by the applicable GTAM
Adviser to be invested by the applicable Regulated Fund in the Follow-
On Investment, together with the amount proposed to be invested by
other participating Regulated Funds and Affiliated Funds, collectively,
in the same transaction, exceeds the amount of the investment
opportunity, then the investment opportunity will be allocated among
them pro rata based on each participant's Available Capital, 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 Trustees 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 any other Regulated Funds or Affiliated Funds that
the Regulated Fund considered but declined to participate in, so that
the Non-Interested Trustees 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 Trustees
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 Trustee 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 1933 Act) will, to the
extent not payable by the Advisers under their respective investment
advisory agreements with 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 excluding broker's fees contemplated section 17(e) of the Act)
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 Co-
Investment 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 the 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 investment
advisory agreements between such Adviser and the Regulated Fund or
Affiliated Fund).
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\10\ The Applicants are not requesting, and the staff is not
providing, any relief for transaction fees received in connection
with any Co-Investment Transaction.
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14. If the Holders own in the aggregate more than 25% of the Shares
of a Regulated Fund, then the Holders will vote such Shares as directed
by an independent third party when voting on (1) the election of
directors; (2) the removal of one or more directors; or (3) any other
matter under either the Act or applicable state law affecting the
Board's composition, size or manner of election.
15. Each Regulated Fund's chief compliance officer, as defined in
rule 38a-1(a)(4) under the Act, will prepare an annual report for the
Board of such Regulated Fund that evaluates (and documents the basis of
that evaluation) the Regulated Fund's compliance with the terms and
conditions of the application and procedures established to achieve
such compliance.
For the Commission, by the Division of Investment Management,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-08942 Filed 4-27-20; 8:45 am]
BILLING CODE 8011-01-P