Triangle Capital Corporation, et al.; Notice of Application, 55564-55568 [E8-22508]
Download as PDF
<![CDATA[
55564
Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Notices
FORM SH INFORMATION TABLE—PAGE 6
SATURDAY–SUNDAY, [Month, Day, Year]
Name of Issuer
CUSIP
Short
Position
(Start of
Day)
Column 1
Column 2
Column 3
[FR Doc. E8–22509 Filed 9–24–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28383; 812–13355]
Triangle Capital Corporation, et al.;
Notice of Application
September 19, 2008.
Securities and Exchange
Commission (the ‘‘Commission’’).
AGENCY:
Notice of an application for an
order under sections 6(c), 12(d)(1)(J),
and 57(c) of the Investment Company
Act of 1940 (‘‘Act’’) granting exemptions
from sections 12(d)(1)(A) and (C), 18(a),
21(b), 57(a)(1)–(a)(3), and 61(a) of the
Act; under section 57(i) of the Act and
rule 17d–1 under the Act to permit
certain joint transactions otherwise
prohibited by section 57(a)(4) of the Act;
and under section 12(h) of the Securities
Exchange Act of 1934 (‘‘Exchange Act’’)
granting an exemption from section
13(a) of the Exchange Act.
mstockstill on PROD1PC66 with NOTICES
ACTION:
VerDate Aug<31>2005
17:50 Sep 24, 2008
Jkt 214001
Number of
Securities
Sold Short
(Day)
Value of
Securities
Sold Short
(Day)
Short
Position
(End of
Day)
Largest
Intra-Day
Short
Position
Time of Day
of Largest
Intra-Day
Short
Position
Column 4
Column 5
Column 6
Column 7
Column 8
Applicants,
Triangle Capital Corporation
(‘‘Triangle’’), Triangle Mezzanine Fund,
LLLP (‘‘Triangle SBIC’’), and New
Triangle GP, LLC (‘‘General Partner’’),
request an order permitting a business
development company (‘‘BDC’’) and its
wholly-owned small business
investment company (‘‘SBIC’’)
subsidiary to (1) engage in certain
transactions that otherwise would be
permitted if the BDC and its SBIC
subsidiary were one company, (2)
adhere to a modified asset coverage
requirement, and (3) file certain reports
on a consolidated basis.
SUMMARY OF APPLICATION:
The application was filed
on January 3, 2007 and amended on
November 5, 2007, and September 16,
2008.
FILING DATES:
HEARING OR NOTIFICATION OF HEARING:
An order granting the application 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 pm on October 10, 2008, and
PO 00000
Frm 00069
Fmt 4703
Sfmt 4703
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, 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.
Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090. Applicants, c/o Garland S. Tucker
III, Triangle Capital Corporation, 3700
Glenwood Avenue, Suite 530, Raleigh,
NC 27612.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Courtney S. Thornton, Senior Counsel,
at (202) 551–6812, or Mary Kay Frech,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Desk,
SUPPLEMENTARY INFORMATION:
E:\FR\FM\25SEN1.SGM
25SEN1
Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Notices
100 F Street, NE., Washington, DC
20549–0102 (tel. 202–551–5850).
mstockstill on PROD1PC66 with NOTICES
Applicants’ Representations
1. Triangle, a Maryland corporation
organized in October 2006, is an
internally managed, non-diversified,
closed-end investment company that
has elected to be regulated as a BDC
under the Act.1 In addition, Triangle
will elect to be treated for tax purposes
as a regulated investment company
(‘‘RIC’’) as defined under Subchapter M
of the Internal Revenue Code of 1986, as
amended. Triangle operates as a
specialty finance company that provides
customized financing solutions to lower
middle market companies that have
annual revenues between $10 and $100
million. Triangle’s investment objective
is to seek attractive returns by
generating current income from debt
investments and capital appreciation
from equity related investments.
2. Triangle has a seven member board
of directors (‘‘Board’’), four of whom are
not ‘‘interested persons’’ of Triangle
within the meaning of section 2(a)(19) of
the Act. Triangle is internally managed
by its executive officers under the
supervision of the Board. As a result,
Triangle does not pay external
investment advisory fees, but instead
incurs operating costs associated with
employing investment and portfolio
management professionals.
3. Triangle SBIC, a North Carolina
limited liability limited partnership, is
an SBIC licensed by the Small Business
Administration (‘‘SBA’’) to operate
under the Small Business Investment
Act of 1958. Triangle SBIC filed a
registration statement on Form N–5 with
the Commission and has elected to be
regulated as a BDC under the Act.
Triangle SBIC has the same investment
objectives and strategies as Triangle.
Triangle owns a 99.9 percent limited
partnership interest in Triangle SBIC,
and the General Partner, a whollyowned subsidiary of Triangle, owns a
0.1 percent general partnership interest
in Triangle SBIC. Triangle SBIC,
therefore, is functionally a 100 percent
owned subsidiary of Triangle, because
Triangle and the General Partner own
all of the equity and voting interest in
Triangle SBIC. Triangle SBIC is
consolidated with Triangle for financial
reporting purposes. Triangle SBIC has a
Board consisting of four persons who
are not interested persons of Triangle
1 Section 2(a)(48) of the Act 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.
VerDate Aug<31>2005
17:50 Sep 24, 2008
Jkt 214001
SBIC within the meaning of section
2(a)(19) of the Act and three persons
who are interested persons of Triangle
SBIC.
4. All investments for Triangle SBIC
are approved by the investment
committee of Triangle SBIC, which is a
committee of Triangle SBIC and is
subject to approval by the SBA. In
addition, Triangle and Triangle SBIC
have entered into a management
services agreement whereby Triangle
provides management services to
Triangle SBIC, including prospective
investment identification, due diligence
and analytical services, preparation of
reports, research and economic/
statistical data relating to potential and
existing investments for use by the
Triangle SBIC Board in overseeing the
Triangle SBIC investment portfolio,
monitoring of existing investments,
including enforcement of rights under
operative agreements, bookkeeping,
accounting and other administrative
services, preparation of financial reports
and tax returns, preparation of reports
filed with the SBA, provision of office
space and clerical staff, and
maintenance of relationships with
professionals retained by Triangle SBIC.
5. The General Partner is a limited
liability company organized under the
laws of the state of North Carolina. The
General Partner has irrevocably
delegated its authority to manage the
business and affairs of Triangle SBIC to
the Triangle SBIC Board. As a
consequence, the General Partner’s only
role is to perform certain ministerial
functions that result from decisions
made by the Triangle SBIC Board.
Applicants’ Legal Analysis
1. Applicants request an order under
sections 6(c), 12(d)(1)(J), 57(c) and 57(i)
of the Act and rule 17d–1 under the Act
granting exemptions from sections
12(d)(1), 18(a), 21(b), 57(a)(1), 57(a)(2),
57(a)(3), 57(a)(4) and 61(a) of the Act to
permit Triangle and Triangle SBIC to
engage in certain transactions that
otherwise would be permitted if
Triangle and Triangle SBIC were one
company and to permit Triangle to
adhere to a modified asset coverage
requirement. Applicants also request an
exemption under section 12(h) of the
Exchange Act for an exemption from
section 13(a) of the Exchange Act.
2. Section 12(d)(1)(A) of the Act,
made applicable to BDCs by section 60
of the Act, limits the amount of
securities a registered investment
company or BDC may hold of other
investment companies. Section
12(d)(1)(C) of the Act limits the amount
of securities of a closed-end investment
company that may be acquired by an
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
55565
investment company. Rule 60a–1
exempts a BDC’s acquisition of the
securities of a wholly-owned SBIC
subsidiary from sections 12(d)(1)(A) and
(C). Accordingly, the transfer of assets
from Triangle to Triangle SBIC will be
exempt from the provisions of sections
12(d)(1)(A) and 12(d)(1)(C) by virtue of
rule 60a–1. However, any loans or
advances by Triangle SBIC to Triangle
might be deemed to violate section
12(d)(1) if the loans or advances are
construed as purchases by Triangle
SBIC of the securities of Triangle.
3. Applicants request an exemption
under section 12(d)(1)(J) from section
12(d)(1) to permit the acquisition by
Triangle SBIC of any securities of
Triangle representing indebtedness.
Section 12(d)(1)(J) of the Act provides
that the Commission may exempt
persons or transactions from any
provision of section 12(d)(1) if and to
the extent such exception is consistent
with the public interest and the
protection of investors. Applicants state
that the requested relief meets this
standard because Triangle SBIC’s
wholly-owned subsidiary status and
consolidated financial reporting with
Triangle will both eliminate the
possibility of overreaching and prevent
confusion as to the financial status of
Triangle to Triangle’s stockholders, who
are the investors that the Act is intended
to protect.
4. Section 18(a) prohibits a registered
close-end investment company from
issuing any class of senior security or
selling any such security of which it is
the issuer unless the company complies
with the asset coverage requirements set
forth in that section. Section 61(a) of the
Act makes section 18 applicable to
BDCs, with certain modifications.
Section 18(k) exempts an investment
company operating as an SBIC from the
asset coverage requirements of section
18(a)(1)(A) and (B) (with respect to
senior securities representing
indebtedness).
5. Applicants state that a question
exists as to whether Triangle must
comply with the asset coverage
requirements of section 18(a) on a
consolidated basis because Triangle may
be deemed to be an indirect issuer of
senior securities issued by Triangle
SBIC. For Triangle to comply with these
asset coverage requirements would
mean that, with certain exceptions,
Triangle would treat as its own all assets
held directly by Triangle and Triangle
SBIC and any liabilities of Triangle
SBIC, including liabilities of Triangle
SBIC with respect to senior securities as
to which Triangle SBIC is exempt from
the asset coverage requirements of
section 18(a)(1)(A) and (B) by virtue of
E:\FR\FM\25SEN1.SGM
25SEN1
mstockstill on PROD1PC66 with NOTICES
55566
Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Notices
section 18(k). Accordingly, applicants
request relief under section 6(c) of the
Act from sections 18(a) and 61(a) of the
Act to permit Triangle to exclude from
its consolidated asset coverage ratio any
senior security representing
indebtedness that is issued by Triangle
SBIC.
6. Section 6(c) of the Act, in relevant
part, permits the Commission to exempt
any transaction or class of transactions
from any provision of the Act 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. Applicants state
that, without the requested relief from
sections 18(a) and 61(a), the ability of
Triangle SBIC to obtain the kind of
financing that would be available to
Triangle if it were to conduct the SBIC
operations itself would be restricted.
Moreover, the exclusion by Triangle
from its consolidated asset coverage
ratio of any senior security representing
indebtedness that is issued by Triangle
SBIC would not harm the public interest
because the SBA regulates the capital
structure of Triangle SBIC.
7. Sections 57(a)(1) and (2) of the Act
generally prohibit, with certain
exceptions, sales or purchases of any
security or other property between BDCs
and certain of their affiliates as
described in section 57(b) of the Act.
Section 57(b) includes a person, directly
or indirectly, either controlling,
controlled by or under common control
with the BDC. Applicants state that
Triangle directly owns all of the limited
partnership interests in Triangle SBIC
and indirectly owns all of the general
partnership interests in Triangle SBIC
through its 100% ownership of the
General Partner. Accordingly, Triangle
and Triangle SBIC are related to each
other in the manner set forth in section
57(b).
8. Applicants state that there may be
circumstances when it is in the interests
of Triangle and its stockholders that
Triangle SBIC invest in securities of an
issuer that may be deemed to be a
controlled affiliate of Triangle or that
Triangle invest in securities of an issuer
that may be deemed to be a controlled
affiliate of Triangle SBIC. Applicants
therefore request an exemption from
sections 57(a)(1) and 57(a)(2) of the Act
to permit any transaction solely between
Triangle and Triangle SBIC with respect
to the purchase or sale of securities or
other property. Applicants also seek an
exemption from these provisions to
allow any transaction involving Triangle
and/or Triangle SBIC and portfolio
affiliates of either or both of Triangle
VerDate Aug<31>2005
17:50 Sep 24, 2008
Jkt 214001
and/or Triangle SBIC. Applicants state
that the requested relief is intended only
to permit Triangle and Triangle SBIC to
do that which they otherwise would be
permitted to do if they were one
company.
9. Section 57(c) provides that the
Commission will exempt a proposed
transaction from the provisions of
section 57(a)(1), (2), and (3) of the Act
if the terms of the proposed transaction,
including the consideration to be paid
or received, are reasonable and fair and
do not involve overreaching of any
person concerned, and the proposed
transaction is consistent with the policy
of the BDC concerned and the general
purposes of the Act.
10. Applicants submit that the
requested relief from section 57(a)(1)
and (2) meets this standard. Applicants
represent that the proposed operation of
Triangle and Triangle SBIC as one
company will enhance the efficient
operations of both companies and allow
them to deal with portfolio companies
as if Triangle and Triangle SBIC were
one company. Applicants contend that
the terms of the proposed transactions
are reasonable and fair and do not
involve overreaching of Triangle or its
stockholders by any person, and that the
requested order would permit
applicants to carry out more effectively
their purposes and objectives of
investing primarily in small business
concerns. Applicants also state that
since Triangle SBIC will be a whollyowned subsidiary of Triangle and no
officers or directors of Triangle or
Triangle SBIC (or any controlling
persons or other ‘‘upstream affiliates’’ of
Triangle) will have any prohibited
financial interest in the transactions
described, there can be no overreaching
on the part of any persons in
transactions solely between Triangle
and Triangle SBIC. Finally, applicants
note that the proposed transactions are
consistent with the policy of Triangle
and Triangle SBIC as specified in filings
with the Commission and reports to
stockholders, as well as consistent with
the policies and provisions of the Act.
11. Section 57(a)(3) of the Act makes
it unlawful for certain affiliated persons
of a BDC, and certain affiliated persons
of those persons, to borrow money or
other property from such BDC or from
any company controlled by the BDC,
except as permitted by section 21(b) or
section 62. Section 21(b) of the Act
(made applicable to BDCs by section 62)
provides that it shall be unlawful for a
BDC to lend any money or property,
directly or indirectly, to any person that
controls or is under common control
with the BDC, except for loans to any
company that owns all of the
PO 00000
Frm 00071
Fmt 4703
Sfmt 4703
outstanding securities of the BDC (other
than directors’ qualifying shares).
12. Triangle is an affiliated person of
Triangle SBIC by reason of its direct
ownership of all of the limited
partnership interests in Triangle SBIC
and its indirect ownership of all of the
general partnership interests in Triangle
SBIC through its 100% ownership of the
General Partner. Triangle does not
directly own all of the outstanding
securities of Triangle SBIC because the
General Partner holds a 0.1 percent
general partnership interest in Triangle
SBIC and Triangle SBIC has issued SBAguaranteed debentures and, in the
future, may have other outstanding
securities in the form of indebtedness
not owned by Triangle. Triangle SBIC is
an affiliated person of Triangle because
it is deemed to be under the control of
Triangle.
13. Applicants state that there may be
instances when it would be in the best
interests of Triangle and its stockholders
for Triangle to make loans to Triangle
SBIC or for Triangle SBIC to make loans
to Triangle. Applicants note that, in the
case of loans from Triangle SBIC to
Triangle, the loans would be prohibited
by section 21(b) and section 57(a)(3)
because the borrower controls the
lender and the lender may have
outstanding securities not owned by the
borrower. Accordingly, applicants
request an order under section 6(c) to
exempt the lending of money or other
property by Triangle SBIC to Triangle
and by Triangle to Triangle SBIC from
the provisions of section 21(b).
Applicants argue that because these
transactions are solely between Triangle
and Triangle SBIC, its wholly-owned
subsidiary, they will have no
substantive economic effect and there
will be no basis for overreaching or
harm to the public interest. Applicants
also request an order under section 57(c)
to exempt the borrowing of money or
property by Triangle from Triangle SBIC
from the provisions of section 57(a)(3).
Applicants submit that the requested
relief meets the standards of section
57(c).
14. Section 17(d) of the Act and rule
17d–1 under the Act (made applicable
to BDCs by section 57(i)) prohibit
affiliated persons of a registered
investment company, or an affiliated
person of such person, acting as
principal, from participating in any joint
transaction or arrangement in which the
registered company or a company it
controls is a participant, unless the
Commission has issued an order
authorizing the arrangement. Section
57(a)(4) of the Act imposes substantially
the same prohibitions on joint
transactions involving any BDC and an
E:\FR\FM\25SEN1.SGM
25SEN1
mstockstill on PROD1PC66 with NOTICES
Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Notices
affiliated person of such BDC, or an
affiliated person of such affiliated
person, as specified in section 57(b) of
the Act. Section 57(i) of the Act
provides that rules and regulations
under section 17(d) of the Act will
apply to transactions subject to section
57(a)(4) in the absence of rules under
that section. The Commission has not
adopted rules under section 57(a)(4)
with respect to joint transactions and,
accordingly, the standards set forth in
rule 17d-1 govern applicants’ request for
relief.
15. Applicants request relief under
section 57(i) and rule 17d–1 to permit
any transaction solely between Triangle
and Triangle SBIC with respect to any
transfer of assets to Triangle SBIC or
operations thereafter, and any
transaction involving investments by
Triangle or Triangle SBIC in portfolio
companies in which either is or is
proposed to become an investor, but
only to the extent that the transaction
would not be prohibited if Triangle
SBIC were deemed to be part of
Triangle.
16. In determining whether to grant
an order under section 57(i) and rule
17d–1, the Commission considers
whether the participation of the BDC 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. Applicants note that the
proposed transactions are consistent
with the policy and provisions of the
Act and will enhance the interests of
Triangle’s stockholders while retaining
for them the important protections
afforded by the Act. In addition, because
the joint participants will conduct their
operations as though they comprise one
company, the participation of one will
not be on a basis different from or less
advantageous than the others.
Accordingly, applicants believe that the
standard for relief under section 57(i)
and rule 17d–1 is satisfied.
17. Section 54 of the Act provides that
a closed-end company may elect BDC
treatment under the Act if the company
has either a class of equity securities
registered under section 12 of the
Exchange Act or has filed a registration
statement pursuant to section 12 of the
Exchange Act for a class of its equity
securities. Section 12(g) of the Exchange
Act requires issuers with specified
assets and a specified number of
security holders to register under the
Exchange Act. As a BDC, Triangle has
registered its common stock under
section 12(b) of the Exchange Act. In
order to elect BDC treatment, Triangle
SBIC has voluntarily registered its
VerDate Aug<31>2005
17:50 Sep 24, 2008
Jkt 214001
securities under the Exchange Act, even
though it is not required to do so by
section 12(g) of the Exchange Act.
18. By filing a registration statement
under section 12 of the Exchange Act,
absent an exemption, Triangle SBIC
would be required by section 13(a) of
the Exchange Act to file periodically
with the Commission, even though
Triangle SBIC will have only one equity
holder. Accordingly, applicants request
an order under section 12(h) of the
Exchange Act exempting Triangle SBIC
from the reporting requirements of
section 13(a) of the Exchange Act to
permit it to file consolidated reports
with Triangle.
19. Section 12(h) of the Exchange Act
provides that the Commission may
exempt an issuer from section 13 of the
Exchange Act if the Commission finds
that by reason of the number of public
investors, amount of trading interest in
the securities, the nature and extent of
the activities of the issuer, income or
assets of the issuer, or otherwise, that
such action is not inconsistent with the
public interest or the protection of
investors. Triangle SBIC will have only
one investor, which is itself a reporting
company, and no public investors.
There will be no trading in Triangle
SBIC securities, so no public interest or
investor protective purpose will be
served by separate Triangle SBIC
reporting. Further, applicants state that
the nature and extent of Triangle SBIC’s
activities are such that its activities will
be fully reported through consolidated
reporting in accordance with normal
accounting rules. Accordingly,
applicants believe that the requested
exemption meets the standards of
section 12(h) of the Exchange Act.
Applicants’ Conditions
Applicants agree that the requested
order will be subject to the following
conditions:
A. Capital Structure Conditions
1. Triangle will at all times own and
hold, beneficially and of record, all of
the outstanding limited partnership
interests in Triangle SBIC and all of the
outstanding membership interests in the
General Partner, or otherwise own and
hold beneficially all of the outstanding
voting securities and other equity
interests in Triangle SBIC.
2. Triangle SBIC will have investment
policies not inconsistent with those of
Triangle, as set forth in Triangle’s
registration statement.
3. No person shall serve as a member
of the Board of Triangle SBIC unless
such person shall also be a member of
the Board of Triangle. The Board of
PO 00000
Frm 00072
Fmt 4703
Sfmt 4703
55567
Triangle SBIC will be appointed by the
equity owners of Triangle SBIC.
4. Triangle will not itself issue or sell
any senior security, and Triangle will
not cause or permit Triangle SBIC to
issue or sell any senior security of
which Triangle or Triangle SBIC is the
issuer except to the extent permitted by
section 18 (as modified for BDCs by
section 61) of the Act; provided that
immediately after the issuance or sale of
any such notes or evidence of
indebtedness by either Triangle or
Triangle SBIC, Triangle and Triangle
SBIC on a consolidated basis, and
Triangle individually, shall have the
asset coverage required by section 18(a)
(as modified by section 61(a)), except
that, in determining whether Triangle
and Triangle SBIC on a consolidated
basis have the asset coverage required
by section 61(a), any borrowings by
Triangle SBIC shall not be considered
senior securities and, for purposes of the
definition of ‘‘asset coverage’’ in section
18(h), shall be treated as indebtedness
not represented by senior securities.
5. Triangle will acquire securities of
Triangle SBIC representing
indebtedness only if, in each case, the
prior approval of the SBA has been
obtained. In addition, Triangle and
Triangle SBIC will purchase and sell
portfolio securities between themselves
only if, in each case, the prior approval
of the SBA has been obtained.
B. Consolidated Reporting
1. Triangle will: (a) File with the
Commission, on behalf of itself and
Triangle SBIC, all information and
reports required to be filed with the
Commission under the Exchange Act
and other applicable federal securities
laws, including information and
financial statements prepared solely on
a consolidated basis as to Triangle and
Triangle SBIC, such information and
reports to be in satisfaction of the
separate reporting obligations of
Triangle SBIC; and (b) provide to its
stockholders such information and
reports required to be disseminated to
Triangle’s stockholders, including
information and financial statements
prepared solely on a consolidated basis
as to Triangle and Triangle SBIC, such
reports to be in satisfaction of the
separate reporting obligations of
Triangle SBIC. Notwithstanding
anything in this condition, Triangle will
not be relieved of any of its reporting
obligations including, but not limited to,
any consolidating statements setting
forth the individual statements of
Triangle SBIC required by rule 6–03(c)
of Regulation S–X.
2. Triangle and Triangle SBIC may file
on a consolidated basis pursuant to the
E:\FR\FM\25SEN1.SGM
25SEN1
55568
Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Notices
above condition only so long as the
amount of Triangle’s total consolidated
assets invested in assets other than (a)
securities issued by Triangle SBIC or (b)
securities similar to those in which
Triangle SBIC invests, does not exceed
10%.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E8–22508 Filed 9–24–08; 8:45 am]
BILLING CODE 8010–01–P
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, 615 East Michigan
Street, Milwaukee, WI 53202.
FOR FURTHER INFORMATION CONTACT:
Steven I. Amchan, Attorney Adviser, at
(202) 551–6826, or Mary Kay Frech,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Room,
100 F Street, NE, Washington, DC
20549–1520 (telephone (202) 551–5850).
SUPPLEMENTARY INFORMATION:
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
28382; 812–13514]
Trust for Professional Managers, et al.;
Notice of Application
September 19, 2008.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from section 15(a) of the Act and rule
18f–2 under the Act, as well as from
certain disclosure requirements.
SUMMARY OF APPLICATION: Applicants
request an order that would permit them
to enter into and materially amend
subadvisory agreements without
shareholder approval and would grant
relief from certain disclosure
requirements.
APPLICANTS: Trust for Professional
Managers (the ‘‘Trust’’) and Ascentia
Capital Partners, LLC (the ‘‘Adviser’’).
FILING DATES: The application was filed
on March 31, 2008, and amended on
August 14, 2008. Applicants have
agreed to file an amendment during the
notice period, the substance of which is
reflected in this notice.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application 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 October 14, 2008, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
mstockstill on PROD1PC66 with NOTICES
AGENCY:
VerDate Aug<31>2005
17:50 Sep 24, 2008
Jkt 214001
Applicants’ Representations
1. The Trust, a Delaware statutory
trust organized as a series investment
company, is registered under the Act as
an open-end management investment
company and currently offers 22 series,
one of which, Ascentia Alternative
Strategies Fund, is advised by the
Adviser (the ‘‘Fund’’).1 The Adviser, a
limited liability company organized
under Nevada law, is registered as an
investment adviser under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’), and serves as
investment adviser to the Fund under
an investment advisory agreement with
the Trust (‘‘Advisory Agreement’’) that
has been approved by the shareholders
of the Fund and the Trust’s board of
trustees (‘‘Board’’), including a majority
of the trustees who are not ‘‘interested
persons,’’ as defined in section 2(a)(19)
of the Act, of either the Trust or the
Adviser (‘‘Independent Trustees’’).
2. Under the terms of the Advisory
Agreement, the Adviser provides the
1 Applicants request relief with respect to existing
and future series of the Trust and any other existing
or future registered open-end management
investment company or series thereof that: (a) Is
advised by the Adviser or a person controlling,
controlled by, or under common control with the
Adviser or its successors; (b) uses the management
structure described in the application; and (c)
complies with the terms and conditions of the
application (collectively, the ‘‘Funds’’). For
purposes of the requested order, ‘‘successor’’ is
limited to an entity or entities that result from a
reorganization into another jurisdiction or a change
in the type of business organization. The only
existing registered open-end management
investment company that currently intends to rely
on the requested order is named as an applicant. If
the name of any Fund contains the name of a
Subadviser (as defined below), the name of the
Adviser or the name of the entity controlling,
controlled by, or under common control with the
Adviser that serves as the primary adviser to the
Fund will precede the name of the Subadviser.
PO 00000
Frm 00073
Fmt 4703
Sfmt 4703
Fund with overall management services
and continuously reviews, supervises
and administers the Fund’s investment
program, subject to the supervision of,
and policies established by, the Board.
For the investment management
services it provides to the Fund, the
Adviser receives the fee specified in the
Advisory Agreement from the Fund.
The Advisory Agreement also permits
the Adviser, subject to the approval of
the Board and Fund shareholders, to
enter into investment subadvisory
agreements (‘‘Subadvisory Agreements’’)
with one or more subadvisers
(‘‘Subadvisers’’). The Adviser has
entered into Subadvisory Agreements
with various Subadvisers to provide
investment advisory services to the
Fund. Each Subadviser is, and every
future Subadviser will be, registered as
an investment adviser under the
Advisers Act. The Adviser monitors and
evaluates the Subadvisers and
recommends to the Board their hiring,
retention or termination. Subadvisers
recommended to the Board by the
Adviser are selected and approved by
the Board, including a majority of the
Independent Trustees. Each Subadviser
has discretionary authority to invest the
assets or a portion of the assets of a
particular Fund. The Adviser
compensates each Subadviser out of the
fees paid to the Adviser under the
Advisory Agreement.
3. Applicants request an order to
permit the Adviser, subject to Board
approval, to enter into and materially
amend Subadvisory Agreements
without obtaining shareholder approval.
The requested relief will not extend to
any Subadviser who is an affiliated
person, as defined in section 2(a)(3) of
the Act, of the Trust or of the Adviser,
other than by reason of serving as a
Subadviser to one or more Funds
(‘‘Affiliated Subadviser’’).
4. Applicants also request an
exemption from the various disclosure
provisions described below that may
require the Funds to disclose fees paid
by the Adviser to each Subadviser. An
exemption is requested to permit the
Trust to disclose for each Fund (as both
a dollar amount and as a percentage of
the Fund’s net assets): (a) The aggregate
fees paid to the Adviser and any
Affiliated Subadviser; and (b) the
aggregate fees paid to Subadvisers other
than Affiliated Subadvisers (‘‘Aggregate
Fee Disclosure’’). Any Fund that
employs an Affiliated Subadviser will
provide separate disclosure of any fees
paid to the Affiliated Subadviser.
Applicants’ Legal Analysis
1. Section 15(a) of the Act provides,
in relevant part, that it is unlawful for
E:\FR\FM\25SEN1.SGM
25SEN1
]]>Agencies
[Federal Register Volume 73, Number 187 (Thursday, September 25, 2008)]
[Notices]
[Pages 55564-55568]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-22508]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28383; 812-13355]
Triangle Capital Corporation, et al.; Notice of Application
September 19, 2008.
AGENCY: Securities and Exchange Commission (the ``Commission'').
ACTION: Notice of an application for an order under sections 6(c),
12(d)(1)(J), and 57(c) of the Investment Company Act of 1940 (``Act'')
granting exemptions from sections 12(d)(1)(A) and (C), 18(a), 21(b),
57(a)(1)-(a)(3), and 61(a) of the Act; under section 57(i) of the Act
and rule 17d-1 under the Act to permit certain joint transactions
otherwise prohibited by section 57(a)(4) of the Act; and under section
12(h) of the Securities Exchange Act of 1934 (``Exchange Act'')
granting an exemption from section 13(a) of the Exchange Act.
Summary of Application: Applicants, Triangle Capital Corporation
(``Triangle''), Triangle Mezzanine Fund, LLLP (``Triangle SBIC''), and
New Triangle GP, LLC (``General Partner''), request an order permitting
a business development company (``BDC'') and its wholly-owned small
business investment company (``SBIC'') subsidiary to (1) engage in
certain transactions that otherwise would be permitted if the BDC and
its SBIC subsidiary were one company, (2) adhere to a modified asset
coverage requirement, and (3) file certain reports on a consolidated
basis.
Filing Dates: The application was filed on January 3, 2007 and amended
on November 5, 2007, and September 16, 2008.
Hearing or Notification of Hearing: An order granting the application
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 pm
on October 10, 2008, and should be accompanied by proof of service on
applicants, in the form of an affidavit or, for lawyers, a certificate
of service. Hearing requests should state the nature of the writer's
interest, 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, c/o Garland S.
Tucker III, Triangle Capital Corporation, 3700 Glenwood Avenue, Suite
530, Raleigh, NC 27612.
FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel,
at (202) 551-6812, or Mary Kay Frech, Branch Chief, at (202) 551-6821
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
Commission's Public Reference Desk,
[[Page 55565]]
100 F Street, NE., Washington, DC 20549-0102 (tel. 202-551-5850).
Applicants' Representations
1. Triangle, a Maryland corporation organized in October 2006, is
an internally managed, non-diversified, closed-end investment company
that has elected to be regulated as a BDC under the Act.\1\ In
addition, Triangle will elect to be treated for tax purposes as a
regulated investment company (``RIC'') as defined under Subchapter M of
the Internal Revenue Code of 1986, as amended. Triangle operates as a
specialty finance company that provides customized financing solutions
to lower middle market companies that have annual revenues between $10
and $100 million. Triangle's investment objective is to seek attractive
returns by generating current income from debt investments and capital
appreciation from equity related investments.
---------------------------------------------------------------------------
\1\ Section 2(a)(48) of the Act 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. Triangle has a seven member board of directors (``Board''), four
of whom are not ``interested persons'' of Triangle within the meaning
of section 2(a)(19) of the Act. Triangle is internally managed by its
executive officers under the supervision of the Board. As a result,
Triangle does not pay external investment advisory fees, but instead
incurs operating costs associated with employing investment and
portfolio management professionals.
3. Triangle SBIC, a North Carolina limited liability limited
partnership, is an SBIC licensed by the Small Business Administration
(``SBA'') to operate under the Small Business Investment Act of 1958.
Triangle SBIC filed a registration statement on Form N-5 with the
Commission and has elected to be regulated as a BDC under the Act.
Triangle SBIC has the same investment objectives and strategies as
Triangle. Triangle owns a 99.9 percent limited partnership interest in
Triangle SBIC, and the General Partner, a wholly-owned subsidiary of
Triangle, owns a 0.1 percent general partnership interest in Triangle
SBIC. Triangle SBIC, therefore, is functionally a 100 percent owned
subsidiary of Triangle, because Triangle and the General Partner own
all of the equity and voting interest in Triangle SBIC. Triangle SBIC
is consolidated with Triangle for financial reporting purposes.
Triangle SBIC has a Board consisting of four persons who are not
interested persons of Triangle SBIC within the meaning of section
2(a)(19) of the Act and three persons who are interested persons of
Triangle SBIC.
4. All investments for Triangle SBIC are approved by the investment
committee of Triangle SBIC, which is a committee of Triangle SBIC and
is subject to approval by the SBA. In addition, Triangle and Triangle
SBIC have entered into a management services agreement whereby Triangle
provides management services to Triangle SBIC, including prospective
investment identification, due diligence and analytical services,
preparation of reports, research and economic/statistical data relating
to potential and existing investments for use by the Triangle SBIC
Board in overseeing the Triangle SBIC investment portfolio, monitoring
of existing investments, including enforcement of rights under
operative agreements, bookkeeping, accounting and other administrative
services, preparation of financial reports and tax returns, preparation
of reports filed with the SBA, provision of office space and clerical
staff, and maintenance of relationships with professionals retained by
Triangle SBIC.
5. The General Partner is a limited liability company organized
under the laws of the state of North Carolina. The General Partner has
irrevocably delegated its authority to manage the business and affairs
of Triangle SBIC to the Triangle SBIC Board. As a consequence, the
General Partner's only role is to perform certain ministerial functions
that result from decisions made by the Triangle SBIC Board.
Applicants' Legal Analysis
1. Applicants request an order under sections 6(c), 12(d)(1)(J),
57(c) and 57(i) of the Act and rule 17d-1 under the Act granting
exemptions from sections 12(d)(1), 18(a), 21(b), 57(a)(1), 57(a)(2),
57(a)(3), 57(a)(4) and 61(a) of the Act to permit Triangle and Triangle
SBIC to engage in certain transactions that otherwise would be
permitted if Triangle and Triangle SBIC were one company and to permit
Triangle to adhere to a modified asset coverage requirement. Applicants
also request an exemption under section 12(h) of the Exchange Act for
an exemption from section 13(a) of the Exchange Act.
2. Section 12(d)(1)(A) of the Act, made applicable to BDCs by
section 60 of the Act, limits the amount of securities a registered
investment company or BDC may hold of other investment companies.
Section 12(d)(1)(C) of the Act limits the amount of securities of a
closed-end investment company that may be acquired by an investment
company. Rule 60a-1 exempts a BDC's acquisition of the securities of a
wholly-owned SBIC subsidiary from sections 12(d)(1)(A) and (C).
Accordingly, the transfer of assets from Triangle to Triangle SBIC will
be exempt from the provisions of sections 12(d)(1)(A) and 12(d)(1)(C)
by virtue of rule 60a-1. However, any loans or advances by Triangle
SBIC to Triangle might be deemed to violate section 12(d)(1) if the
loans or advances are construed as purchases by Triangle SBIC of the
securities of Triangle.
3. Applicants request an exemption under section 12(d)(1)(J) from
section 12(d)(1) to permit the acquisition by Triangle SBIC of any
securities of Triangle representing indebtedness. Section 12(d)(1)(J)
of the Act provides that the Commission may exempt persons or
transactions from any provision of section 12(d)(1) if and to the
extent such exception is consistent with the public interest and the
protection of investors. Applicants state that the requested relief
meets this standard because Triangle SBIC's wholly-owned subsidiary
status and consolidated financial reporting with Triangle will both
eliminate the possibility of overreaching and prevent confusion as to
the financial status of Triangle to Triangle's stockholders, who are
the investors that the Act is intended to protect.
4. Section 18(a) prohibits a registered close-end investment
company from issuing any class of senior security or selling any such
security of which it is the issuer unless the company complies with the
asset coverage requirements set forth in that section. Section 61(a) of
the Act makes section 18 applicable to BDCs, with certain
modifications. Section 18(k) exempts an investment company operating as
an SBIC from the asset coverage requirements of section 18(a)(1)(A) and
(B) (with respect to senior securities representing indebtedness).
5. Applicants state that a question exists as to whether Triangle
must comply with the asset coverage requirements of section 18(a) on a
consolidated basis because Triangle may be deemed to be an indirect
issuer of senior securities issued by Triangle SBIC. For Triangle to
comply with these asset coverage requirements would mean that, with
certain exceptions, Triangle would treat as its own all assets held
directly by Triangle and Triangle SBIC and any liabilities of Triangle
SBIC, including liabilities of Triangle SBIC with respect to senior
securities as to which Triangle SBIC is exempt from the asset coverage
requirements of section 18(a)(1)(A) and (B) by virtue of
[[Page 55566]]
section 18(k). Accordingly, applicants request relief under section
6(c) of the Act from sections 18(a) and 61(a) of the Act to permit
Triangle to exclude from its consolidated asset coverage ratio any
senior security representing indebtedness that is issued by Triangle
SBIC.
6. Section 6(c) of the Act, in relevant part, permits the
Commission to exempt any transaction or class of transactions from any
provision of the Act 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. Applicants state that, without the requested
relief from sections 18(a) and 61(a), the ability of Triangle SBIC to
obtain the kind of financing that would be available to Triangle if it
were to conduct the SBIC operations itself would be restricted.
Moreover, the exclusion by Triangle from its consolidated asset
coverage ratio of any senior security representing indebtedness that is
issued by Triangle SBIC would not harm the public interest because the
SBA regulates the capital structure of Triangle SBIC.
7. Sections 57(a)(1) and (2) of the Act generally prohibit, with
certain exceptions, sales or purchases of any security or other
property between BDCs and certain of their affiliates as described in
section 57(b) of the Act. Section 57(b) includes a person, directly or
indirectly, either controlling, controlled by or under common control
with the BDC. Applicants state that Triangle directly owns all of the
limited partnership interests in Triangle SBIC and indirectly owns all
of the general partnership interests in Triangle SBIC through its 100%
ownership of the General Partner. Accordingly, Triangle and Triangle
SBIC are related to each other in the manner set forth in section
57(b).
8. Applicants state that there may be circumstances when it is in
the interests of Triangle and its stockholders that Triangle SBIC
invest in securities of an issuer that may be deemed to be a controlled
affiliate of Triangle or that Triangle invest in securities of an
issuer that may be deemed to be a controlled affiliate of Triangle
SBIC. Applicants therefore request an exemption from sections 57(a)(1)
and 57(a)(2) of the Act to permit any transaction solely between
Triangle and Triangle SBIC with respect to the purchase or sale of
securities or other property. Applicants also seek an exemption from
these provisions to allow any transaction involving Triangle and/or
Triangle SBIC and portfolio affiliates of either or both of Triangle
and/or Triangle SBIC. Applicants state that the requested relief is
intended only to permit Triangle and Triangle SBIC to do that which
they otherwise would be permitted to do if they were one company.
9. Section 57(c) provides that the Commission will exempt a
proposed transaction from the provisions of section 57(a)(1), (2), and
(3) of the Act if the terms of the proposed transaction, including the
consideration to be paid or received, are reasonable and fair and do
not involve overreaching of any person concerned, and the proposed
transaction is consistent with the policy of the BDC concerned and the
general purposes of the Act.
10. Applicants submit that the requested relief from section
57(a)(1) and (2) meets this standard. Applicants represent that the
proposed operation of Triangle and Triangle SBIC as one company will
enhance the efficient operations of both companies and allow them to
deal with portfolio companies as if Triangle and Triangle SBIC were one
company. Applicants contend that the terms of the proposed transactions
are reasonable and fair and do not involve overreaching of Triangle or
its stockholders by any person, and that the requested order would
permit applicants to carry out more effectively their purposes and
objectives of investing primarily in small business concerns.
Applicants also state that since Triangle SBIC will be a wholly-owned
subsidiary of Triangle and no officers or directors of Triangle or
Triangle SBIC (or any controlling persons or other ``upstream
affiliates'' of Triangle) will have any prohibited financial interest
in the transactions described, there can be no overreaching on the part
of any persons in transactions solely between Triangle and Triangle
SBIC. Finally, applicants note that the proposed transactions are
consistent with the policy of Triangle and Triangle SBIC as specified
in filings with the Commission and reports to stockholders, as well as
consistent with the policies and provisions of the Act.
11. Section 57(a)(3) of the Act makes it unlawful for certain
affiliated persons of a BDC, and certain affiliated persons of those
persons, to borrow money or other property from such BDC or from any
company controlled by the BDC, except as permitted by section 21(b) or
section 62. Section 21(b) of the Act (made applicable to BDCs by
section 62) provides that it shall be unlawful for a BDC to lend any
money or property, directly or indirectly, to any person that controls
or is under common control with the BDC, except for loans to any
company that owns all of the outstanding securities of the BDC (other
than directors' qualifying shares).
12. Triangle is an affiliated person of Triangle SBIC by reason of
its direct ownership of all of the limited partnership interests in
Triangle SBIC and its indirect ownership of all of the general
partnership interests in Triangle SBIC through its 100% ownership of
the General Partner. Triangle does not directly own all of the
outstanding securities of Triangle SBIC because the General Partner
holds a 0.1 percent general partnership interest in Triangle SBIC and
Triangle SBIC has issued SBA-guaranteed debentures and, in the future,
may have other outstanding securities in the form of indebtedness not
owned by Triangle. Triangle SBIC is an affiliated person of Triangle
because it is deemed to be under the control of Triangle.
13. Applicants state that there may be instances when it would be
in the best interests of Triangle and its stockholders for Triangle to
make loans to Triangle SBIC or for Triangle SBIC to make loans to
Triangle. Applicants note that, in the case of loans from Triangle SBIC
to Triangle, the loans would be prohibited by section 21(b) and section
57(a)(3) because the borrower controls the lender and the lender may
have outstanding securities not owned by the borrower. Accordingly,
applicants request an order under section 6(c) to exempt the lending of
money or other property by Triangle SBIC to Triangle and by Triangle to
Triangle SBIC from the provisions of section 21(b). Applicants argue
that because these transactions are solely between Triangle and
Triangle SBIC, its wholly-owned subsidiary, they will have no
substantive economic effect and there will be no basis for overreaching
or harm to the public interest. Applicants also request an order under
section 57(c) to exempt the borrowing of money or property by Triangle
from Triangle SBIC from the provisions of section 57(a)(3). Applicants
submit that the requested relief meets the standards of section 57(c).
14. Section 17(d) of the Act and rule 17d-1 under the Act (made
applicable to BDCs by section 57(i)) prohibit affiliated persons of a
registered investment company, or an affiliated person of such person,
acting as principal, from participating in any joint transaction or
arrangement in which the registered company or a company it controls is
a participant, unless the Commission has issued an order authorizing
the arrangement. Section 57(a)(4) of the Act imposes substantially the
same prohibitions on joint transactions involving any BDC and an
[[Page 55567]]
affiliated person of such BDC, or an affiliated person of such
affiliated person, as specified in section 57(b) of the Act. Section
57(i) of the Act provides that rules and regulations under section
17(d) of the Act will apply to transactions subject to section 57(a)(4)
in the absence of rules under that section. The Commission has not
adopted rules under section 57(a)(4) with respect to joint transactions
and, accordingly, the standards set forth in rule 17d-1 govern
applicants' request for relief.
15. Applicants request relief under section 57(i) and rule 17d-1 to
permit any transaction solely between Triangle and Triangle SBIC with
respect to any transfer of assets to Triangle SBIC or operations
thereafter, and any transaction involving investments by Triangle or
Triangle SBIC in portfolio companies in which either is or is proposed
to become an investor, but only to the extent that the transaction
would not be prohibited if Triangle SBIC were deemed to be part of
Triangle.
16. In determining whether to grant an order under section 57(i)
and rule 17d-1, the Commission considers whether the participation of
the BDC 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. Applicants note that the proposed
transactions are consistent with the policy and provisions of the Act
and will enhance the interests of Triangle's stockholders while
retaining for them the important protections afforded by the Act. In
addition, because the joint participants will conduct their operations
as though they comprise one company, the participation of one will not
be on a basis different from or less advantageous than the others.
Accordingly, applicants believe that the standard for relief under
section 57(i) and rule 17d-1 is satisfied.
17. Section 54 of the Act provides that a closed-end company may
elect BDC treatment under the Act if the company has either a class of
equity securities registered under section 12 of the Exchange Act or
has filed a registration statement pursuant to section 12 of the
Exchange Act for a class of its equity securities. Section 12(g) of the
Exchange Act requires issuers with specified assets and a specified
number of security holders to register under the Exchange Act. As a
BDC, Triangle has registered its common stock under section 12(b) of
the Exchange Act. In order to elect BDC treatment, Triangle SBIC has
voluntarily registered its securities under the Exchange Act, even
though it is not required to do so by section 12(g) of the Exchange
Act.
18. By filing a registration statement under section 12 of the
Exchange Act, absent an exemption, Triangle SBIC would be required by
section 13(a) of the Exchange Act to file periodically with the
Commission, even though Triangle SBIC will have only one equity holder.
Accordingly, applicants request an order under section 12(h) of the
Exchange Act exempting Triangle SBIC from the reporting requirements of
section 13(a) of the Exchange Act to permit it to file consolidated
reports with Triangle.
19. Section 12(h) of the Exchange Act provides that the Commission
may exempt an issuer from section 13 of the Exchange Act if the
Commission finds that by reason of the number of public investors,
amount of trading interest in the securities, the nature and extent of
the activities of the issuer, income or assets of the issuer, or
otherwise, that such action is not inconsistent with the public
interest or the protection of investors. Triangle SBIC will have only
one investor, which is itself a reporting company, and no public
investors. There will be no trading in Triangle SBIC securities, so no
public interest or investor protective purpose will be served by
separate Triangle SBIC reporting. Further, applicants state that the
nature and extent of Triangle SBIC's activities are such that its
activities will be fully reported through consolidated reporting in
accordance with normal accounting rules. Accordingly, applicants
believe that the requested exemption meets the standards of section
12(h) of the Exchange Act.
Applicants' Conditions
Applicants agree that the requested order will be subject to the
following conditions:
A. Capital Structure Conditions
1. Triangle will at all times own and hold, beneficially and of
record, all of the outstanding limited partnership interests in
Triangle SBIC and all of the outstanding membership interests in the
General Partner, or otherwise own and hold beneficially all of the
outstanding voting securities and other equity interests in Triangle
SBIC.
2. Triangle SBIC will have investment policies not inconsistent
with those of Triangle, as set forth in Triangle's registration
statement.
3. No person shall serve as a member of the Board of Triangle SBIC
unless such person shall also be a member of the Board of Triangle. The
Board of Triangle SBIC will be appointed by the equity owners of
Triangle SBIC.
4. Triangle will not itself issue or sell any senior security, and
Triangle will not cause or permit Triangle SBIC to issue or sell any
senior security of which Triangle or Triangle SBIC is the issuer except
to the extent permitted by section 18 (as modified for BDCs by section
61) of the Act; provided that immediately after the issuance or sale of
any such notes or evidence of indebtedness by either Triangle or
Triangle SBIC, Triangle and Triangle SBIC on a consolidated basis, and
Triangle individually, shall have the asset coverage required by
section 18(a) (as modified by section 61(a)), except that, in
determining whether Triangle and Triangle SBIC on a consolidated basis
have the asset coverage required by section 61(a), any borrowings by
Triangle SBIC shall not be considered senior securities and, for
purposes of the definition of ``asset coverage'' in section 18(h),
shall be treated as indebtedness not represented by senior securities.
5. Triangle will acquire securities of Triangle SBIC representing
indebtedness only if, in each case, the prior approval of the SBA has
been obtained. In addition, Triangle and Triangle SBIC will purchase
and sell portfolio securities between themselves only if, in each case,
the prior approval of the SBA has been obtained.
B. Consolidated Reporting
1. Triangle will: (a) File with the Commission, on behalf of itself
and Triangle SBIC, all information and reports required to be filed
with the Commission under the Exchange Act and other applicable federal
securities laws, including information and financial statements
prepared solely on a consolidated basis as to Triangle and Triangle
SBIC, such information and reports to be in satisfaction of the
separate reporting obligations of Triangle SBIC; and (b) provide to its
stockholders such information and reports required to be disseminated
to Triangle's stockholders, including information and financial
statements prepared solely on a consolidated basis as to Triangle and
Triangle SBIC, such reports to be in satisfaction of the separate
reporting obligations of Triangle SBIC. Notwithstanding anything in
this condition, Triangle will not be relieved of any of its reporting
obligations including, but not limited to, any consolidating statements
setting forth the individual statements of Triangle SBIC required by
rule 6-03(c) of Regulation S-X.
2. Triangle and Triangle SBIC may file on a consolidated basis
pursuant to the
[[Page 55568]]
above condition only so long as the amount of Triangle's total
consolidated assets invested in assets other than (a) securities issued
by Triangle SBIC or (b) securities similar to those in which Triangle
SBIC invests, does not exceed 10%.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E8-22508 Filed 9-24-08; 8:45 am]
BILLING CODE 8010-01-P
