TCW Direct Lending LLC, et al.;, 22560-22563 [2018-10246]
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Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices
Paper Comments
ACTION:
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSEAMER–2018–20. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSEAMER–2018–20 and
should be submitted on or before June
5, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–10263 Filed 5–14–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
daltland on DSKBBV9HB2PROD with NOTICES
[Investment Company Act Release No.
33094; File No. 812–14765]
TCW Direct Lending LLC, et al.;
May 9, 2018.
Securities and Exchange
Commission (‘‘Commission’’).
AGENCY:
14 17
CFR 200.30–3(a)(12).
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Notice.
Notice of an application for an order
under sections 12(d)(1)(J), 57(c), 57(i)
and 60 of Investment Company Act of
1940 (the ‘‘Act’’) and rule 17d–1 under
the Act to permit certain joint
transactions otherwise prohibited by
sections 12(d)(1)(A), 12(d)(1)(C),
57(a)(1), 57(a)(2) and 57(a)(4) of the Act
and rule 17d–1 under the Act.
APPLICANTS: TCW Direct Lending LLC
(the ‘‘Fund’’), TCW Middle Market
Lending Opportunities BDC, Inc. (the
‘‘Extension Fund’’), and TCW Asset
Management Company (the ‘‘Adviser’’).
SUMMARY OF APPLICATION: Applicants
seek an order to permit the Fund (i) to
conduct an exchange offer pursuant to
which investors in the Fund
(‘‘Unitholders’’), including certain
directors and officers of the Fund and
employees of the Adviser (collectively,
the ‘‘TCW Directors, Officers and
Employees’’), may elect to exchange all
or a portion of their units in the Fund
(‘‘Units’’) for an equivalent number of
shares (‘‘Shares’’) in the Extension Fund
(each such Unitholder, an ‘‘Electing
Unitholder’’), and (ii) to transfer to the
Extension Fund a pro rata portion of the
Fund’s assets and liabilities, including a
pro rata portion of each of the Fund’s
portfolio investments, in proportion to
the percentage of Units tendered and
accepted for exchange.
FILING DATES: The application was filed
on April 20, 2017, and amended on
October 16, 2017, May 3, 2018, and May
9, 2018.
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 May 30, 2018 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 section 0–5
under the Act, hearing requests should
state the nature of the writer’s interest,
any facts bearing upon the desirability
of a hearing on the matter, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090. The
Applicants: c/o Adrian Rae Leipsic,
Esq., and Adam E. Fleisher, Esq., Cleary
Gottlieb Steen & Hamilton LLP, One
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Liberty Plaza, New York, New York
10006.
FOR FURTHER INFORMATION CONTACT:
Asen Parachkevov, Senior Counsel, or
David J. Marcinkus, Branch Chief, at
(202) 551–6821 (Division of Investment
Management, Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
website by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. The Fund, a Delaware limited
liability company, is a closed-end
management investment company that
has elected to be regulated as a business
development company (‘‘BDC’’) under
the Act. On April 18, 2014, the Fund
filed a registration statement on Form 10
to register Units pursuant to section
12(g) of the Exchange Act of 1934 (the
‘‘Exchange Act’’). The Fund commenced
operations on September 19, 2014. The
Fund operates as a direct lending
company that seeks to generate riskadjusted returns primarily through
direct investments in senior secured
loans made to middle-market companies
or other companies that are engaged in
various businesses.
2. The Fund conducted a private
offering of its Units to investors in
reliance on the exemption from
registration provided by section 506 of
Regulation D under the Securities Act of
1933 (the ‘‘Securities Act’’). The Fund
entered into subscription agreements
with its Unitholders, pursuant to which
the Unitholders made capital
commitments to the Fund. The Units are
not traded on an exchange and are not
freely transferable.
3. The Extension Fund, a Delaware
corporation and a wholly-owned
subsidiary of the Fund, intends to elect
to be regulated as a BDC. Applicants
state that the Extension Fund will have
investment objectives and investment
policies that are substantially similar to
the Fund’s. Applicants state that the
Extension Fund intends to conduct an
initial public offering or listing of its
Shares immediately following the
completion of the Proposed
Transactions.
4. The Adviser, a Delaware limited
liability company, is registered as an
investment adviser under the
Investment Advisers Act of 1940 (the
‘‘Advisers Act’’). The Adviser serves as
investment adviser to the Fund
pursuant to an investment advisory
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agreement, and intends to serve as
investment adviser to the Extension
Fund.
5. Applicants state that the Fund’s
legal interest in each of its existing
portfolio investments is capable of being
proportionally assigned or similarly
transferred on a pro rata basis.
Applicants further state that each of the
credit agreements and loan documents
governing the terms of the Fund’s assets,
which primarily consist of loans and
other private investments in middle
market companies, permits an
assignment, participation or similar
transfer by the Fund without the need
for the written consent of any
administrative or collateral agent,
borrower or other party.
6. Applicants state that the Fund’s
limited liability company operating
agreement (the ‘‘LLC Agreement’’)
provides that the Fund will be dissolved
upon the expiration of its six-year term
on September 19, 2020 (subject to any
extensions of the term in accordance
with the procedures set forth in the LLC
Agreement), whereupon the Fund’s
assets will be liquidated in an orderly
manner, capital will be returned to the
Unitholders, and the Fund will wind
up. Applicants state that the Fund’s
organizational documents do not permit
the Fund to conduct an initial public
offering of its Units, and the Fund has
agreed that no Unitholder will be
required to participate in a publicly
traded vehicle without such
Unitholder’s consent.
7. Applicants state that the Fund’s
LLC Agreement provides for the ability
of the Fund to engage in a ‘‘split-off’’
transaction, which, as described below
and in greater detail in the application,
would be implemented through the
Exchange Offer, the Refinancing, the
Contribution Transaction and the Share
Issuance (each defined below, and,
collectively, the ‘‘Proposed
Transactions’’). The costs and expenses
of the Proposed Transactions will be
borne by the Adviser.1
8. If the requested order is granted,
the Applicants propose to conduct an
exchange offer, pursuant to which each
Unitholder may elect to exchange a
number of Units for an equivalent
number of Shares (the ‘‘Exchange
Offer’’). The Exchange Offer will be
conducted as a private placement
pursuant to Regulation D and made in
compliance with rule 13e–4 under the
Exchange Act and section 23(c)(2) of the
Act.
1 All costs and expenses relating to the
organization and operation of the Extension Fund
will be borne by the Extension Fund as fully
disclosed to investors prior to their decision to
participate in the Exchange Offer.
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9. Applicants state that the Exchange
Offer will not commence unless and
until (1) the boards of the Fund and the
Extension Fund (the ‘‘Fund Board’’ and
the ‘‘Extension Fund Board’’, and
collectively, the ‘‘Boards’’), including a
‘‘required majority’’ (as defined in
section 57(o) of the Act (‘‘Required
Majority’’)) of the directors of each
Board, authorize and approve the
Proposed Transactions, and make all
necessary determinations, including
among other things, that: (i) The
Proposed Transactions are in the best
interests of the Fund or the Extension
Fund, as applicable, (ii) the interests of
Unitholders who elect to remain
invested in the Fund and the interests
of the Electing Unitholders will not be
diluted as a result of effecting the
Proposed Transactions, and (iii)
following the Proposed Transactions, all
Unitholders, including the Electing
Unitholders, will hold the same pro rata
interest in the same underlying portfolio
investments as immediately prior to the
Exchange; (2) the Fund Board, including
a Required Majority, approves the
participation in the Exchange by any
‘‘remote’’ affiliate of the Fund, as
described in Section 57(d) of the Act
and as required under section 57(f) of
the Act; and (3) the Extension Fund
Board, including a Required Majority,
and the Fund, in its capacity as initial
shareholder of the Extension Fund, each
approve the investment advisory
agreement between the Extension Fund
and the Adviser.
10. Applicants state that
simultaneously with the Share Issuance
(as defined below), the Fund will
transfer to the Extension Fund a pro rata
portion of each of the Fund’s assets and
liabilities, including each of the Fund’s
portfolio investments, in proportion to
the percentage of Units tendered by
Electing Unitholders and accepted for
exchange (the ‘‘Contribution
Transaction’’). Applicants state that
such computation will be objective and
formulaic and determined solely on the
basis of the percentage of Electing
Unitholders, and will not be impacted
by the valuation of the Fund’s assets or
any other factor that would impart an
element of discretion. Applicants
further state that material liabilities
(other than those arising under the
Fund’s credit facility) will also be
proportionally transferred or transferred
on a pro rata basis by the Fund to the
Extension Fund.
11. Applicants state that
simultaneously with the Contribution
Transaction, the Extension Fund will
issue the applicable number of Shares to
each Electing Unitholder in exchange
for the corresponding number of Units
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accepted by the Fund from such
Electing Unitholder in the Exchange
Offer (the ‘‘Share Issuance’’).
12. Immediately prior to (and
effectively contemporaneously with) the
closing of the Exchange, the
Contribution Transaction and the Share
Issuance, (a) the Extension Fund will
enter into a new credit facility and draw
down an amount equal to the pro rata
portion of the Fund’s existing
indebtedness immediately prior to the
closing of the Exchange Offer
attributable to the Units that have been
validly tendered by Electing
Unitholders and accepted for exchange,
which amount will be distributed to the
Fund and will be used to pay down the
Fund’s current outstanding senior
secured revolving credit facility, and (b)
the Fund will enter into a new credit
facility to drawn down an amount to
pay down the remainder of its existing
credit facility (together, the
‘‘Refinancing’’).
13. Applicants believe that the
Proposed Transactions will result in a
number of benefits to Unitholders.
Applicants state that the Proposed
Transactions will provide Unitholders
with the optionality that was negotiated
for and was disclosed at the time of
their investment in the Fund and will
enable Unitholders to participate in the
Extension Fund in a manner that
promotes capital formation. Applicants
state that the Proposed Transactions
will position the Extension Fund to
continue operations as a BDC with the
goals of achieving greater economies of
scale and completing an initial public
offering or listing of its Shares.
Applicants further state that by allowing
the Unitholders to elect to participate in
the Extension Fund, the Proposed
Transactions will enable potential
future retail investors to benefit from
alignment with sophisticated
institutional investors who elect to
participate in the Extension Fund.
Legal Analysis
Section 57(a)(1) and 57(a)(2) of the Act
1. The Applicants are requesting an
exemption pursuant to section 57(c)
from the provisions of sections 57(a)(1)
and 57(a)(2), in order to permit the
Applicants to effect the Contribution
Transaction and the Share Issuance.
2. Sections 57(a)(1) provides that it
shall be unlawful for any person who is
related to a BDC in a manner described
in section 57(b) 2, acting as principal, to
sell to such BDC, or to a company
controlled by such BDC, any securities
2 Section 57(b) specifies the persons to whom the
prohibitions of sections 57(a)(1), (a)(2) and (a)(4)
apply.
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or other property unless such sale
involves solely (emphasis added) (i)
securities of which the buyer is the
issuer or (ii) securities of which the
seller is the issuer and which are part
of a general offering to the holders of a
class of its securities.
3. Section 57(a)(2) provides that it
shall be unlawful for any person who is
related to a BDC in a manner described
in section 57(b), acting as principal, to
purchase from such BDC, or from a
company controlled by such BDC, any
securities or other property except for
securities of which the seller is the
issuer.
4. Rule 57b–1 does not exempt the
Fund and the Extension Fund from
being subject to the prohibitions of
section 57(a).3 In addition, the TCW
Directors, Officers and Employees may
be prohibited by section 57(a)(1) and (2)
from participating in the Share Issuance
as a result of tendering their Units in the
Exchange.
5. Section 57(c) authorizes the
Commission to issue an exemptive order
if (i) the terms of the proposed
transaction, including the consideration
to be paid or received, are reasonable
and fair and do not involve
overreaching of the BDC or its
shareholders or partners on the part of
any person concerned, (ii) the proposed
transaction is consistent with the policy
of the BDC, as recited in the filings
made by such company with the
Commission under the Securities Act,
its registration statement and reports
filed under the Exchange Act, and its
reports to shareholders or partners; and,
and (iii) the proposed transaction is
consistent with the general purposes of
the Act.
6. The Applicants submit that the
request for an exemption from the
provisions of section 57(a)(1) and (a)(2)
meets the standards for an order set
forth in section 57(c). First, Applicants
state that the terms of the Contribution
Transaction, including the
consideration to be paid or received, are
fair and reasonable and involve no
element of overreaching, since the
transfer by the Fund of a pro rata
portion of each of its assets and
liabilities to the Extension Fund will be
determined solely on the basis of the
3 Rule 57b–1 exempts certain persons otherwise
related to a BDC in a manner described in section
57(b)(2) from being subject to the prohibitions of
section 57(a). Specifically, this rule states that the
provisions of section 57(a) shall not apply to any
person: (a) Solely because that person is directly or
indirectly controlled by a BDC; or (b) solely because
that person is directly or indirectly controlling,
controlled by, or under common control with, a
person described in (a) of the rule or is an officer,
director, partner, copartner, or employee of a person
described in (a) of the rule (emphasis added).
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percentage of Electing Unitholders,
which is purely an objective and
formulaic exercise. Second, the
Applicants state that the Contribution
Transaction and the Share Issuance are
consistent with the stated investment
policies of the Fund as fully disclosed
to Unitholders. Finally, the Applicants
submit that the Boards, including a
Required Majority of each, will have
approved and authorized, as well as
made all required determinations with
respect to, the Proposed Transactions.
Section 57(a)(4) and Rule 17d–1, as
Made Applicable to BDCs by Section
57(i) of the Act
7. The Applicants are also requesting
an Order pursuant to section 57(i) and
rule 17d–1, to permit certain joint
transactions that may be otherwise
prohibited by Section 57(a)(4) and rule
17d–1.
8. Section 57(a)(4) makes it unlawful
for any person who is related to a BDC
in a manner described in section 57(b),
acting as principal, knowingly to effect
any transaction in which the BDC or a
company controlled by such BDC is a
joint or a joint and several participant.
Section 57(i) provides that the rules
under section 17(d) applicable to
registered closed-end investment
companies are deemed to apply to
transactions subject to section 57(a). In
relevant part, rule 17d–1 prohibits any
person who is related to a BDC in a
manner described in section 57(b),
acting as principal, from participating
in, or effecting any transaction in
connection with, any joint enterprise or
other joint arrangement in which the
BDC or a company controlled by such
BDC is a participant, unless an
application has been filed with the
Commission and an order has been
granted.
9. The Fund and the Extension Fund
may be viewed as affiliated persons of
each other in a manner described in
section 57(b). Considered together, the
Proposed Transactions will require a
considerable degree of coordination
among the Fund, the Extension Fund
and the Adviser that may indicate the
existence of a ‘‘joint arrangement’’ as
described in rule 17d–1. Further, certain
TCW Directors, Officers and Employees
who have invested in the Fund are
affiliated persons of the Fund pursuant
to section 57(b).
10. Rule 17d–1(b) provides that in
determining whether to grant such an
order, the Commission will consider
whether the participation of the
investment company in the joint
transaction ‘‘is consistent with the
provisions, policies and purposes of the
Act and the extent to which such
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participation is on a basis different from
or less advantageous than that of other
participants.’’
11. The Applicants submit that the
request for an order under section
57(a)(4) and rule 17d–1 meets the
standards set forth to rule 17d–1 for the
same reasons as discussed above with
respect to the request for exemption
from sections 57(a)(1) and (a)(2). The
Applicants state that TCW Directors,
Officers and Employees will participate
in the Exchange pursuant to the same
terms and documentation as all other
Unitholders, and the Proposed
Transactions will not place any of the
Fund, the Extension Fund or existing
Unitholders of the Fund in a position
less advantageous than that of any other
of such persons. The Applicants further
submit that the terms of the investment
advisory agreement between the
Extension Fund and the Adviser will be
comprehensively disclosed to all
Unitholders in the Offer to Exchange,
the Fund and the Extension Fund will
pay comparable management fees in
respect of overlapping investments
transferred by the Fund to the Extension
Fund, and each Unitholder who wishes
to remain invested in the Fund will be
subject to the Fund’s existing fee
structure without any modification.
Sections 12(d)(1)(A) and 12(d)(1)(C), as
Made Applicable to BDCs by Section 60
of the Act
12. The Applicants are requesting an
exemption pursuant to section
12(d)(1)(J) from the provisions of section
12(d)(1)(A) and section 12(d)(1)(C), to
permit the Applicants to effect the
Proposed Transactions.
13. Sections 12(d)(1)(A) and
12(d)(1)(C) are made applicable to BDCs
by section 60 to the same extent as if
they were registered closed-end
investment companies. The Proposed
Transactions may be viewed as violating
sections 12(d)(1)(A) 4 and 12(d)(1)(C) 5
because prior to the Exchange, the Fund
will own 100% of the newly issued
Shares of the Extension Fund, even
4 Section 12(d)(1)(A) provides that no registered
investment company (‘‘acquiring company’’) may
acquire securities of any other investment company
(‘‘acquired company’’) if such securities represent
more than 3% of the acquired company’s
outstanding voting stock or more than 5% of the
acquiring company’s total assets, or if such
securities, together with the securities of other
investment companies, represent more than 10% of
the acquiring company’s total assets.
5 Section 12(d)(1)(C) provides that no investment
company (‘‘acquiring company’’) may acquire any
securities issued by a registered closed-end
investment company, if the acquiring company
owns more than 10% of the total outstanding voting
stock of such closed-end company.
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though such ownership will exist for
only a momentary period of time.
14. The Applicants submit that the
requested exemption from sections
12(d)(1)(A) and 12(d)(1)(C) meets the
standards set forth in section 12(d)(1)(J).
Section 12(d)(1)(J) provides that ‘‘the
Commission, by rule or regulation, upon
its own motion or by order upon
application, may conditionally or
unconditionally exempt any person,
security, or transaction, or any class or
classes of persons, securities, or
transactions from any provision of this
subsection, if and to the extent that such
exemption is consistent with the public
interest and the protection of investors.’’
15. The Applicants state that the
Proposed Transactions are consistent
with the public interest in that they are
intended to result in a benefit to nonelecting Unitholders, Electing
Unitholders and potential future
investors in the Extension Fund. The
Applicants also state that the Proposed
Transactions are consistent with
investor protection because the
momentary holding by the Fund of
Shares of the Existing Fund does not
raise any of the concerns that Sections
12(d)(1)(A) and (C) were intended to
address.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
BILLING CODE 8011–01–P
[Release No. 34–83192; File No. SR–BX–
2018–017]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Reorganize and
Amend Chapter XV, Section 3, entitled
BX Options Market—Ports and Other
Services
daltland on DSKBBV9HB2PROD with NOTICES
May 9, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 27,
2018, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Sep<11>2014
20:27 May 14, 2018
The Exchange proposes to reorganize
and amend Chapter XV, Section 3,
entitled ‘‘BX Options Market—Ports and
Other Services.’’
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaqbx.cchwallstreet.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
2 17
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2018–10246 Filed 5–14–18; 8:45 am]
1 15
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
Jkt 244001
The Exchange proposes to reorganize
and amend Chapter XV, Section 3,
entitled ‘‘BX Options Market—Ports and
Other Services.’’ The Exchange offers
various services across its 6 affiliated
options markets, BX, The Nasdaq
Options Market LLC, Nasdaq Phlx LLC,
Nasdaq ISE, LLC, Nasdaq GEMX, LLC
and Nasdaq MRX, LLC (‘‘Nasdaq
Affiliated Markets’’).3 The Exchange
desires to rename services to conform
the naming of the offerings across all
Nasdaq Affiliated Markets. The
Exchange proposes to reorganize
Section 3 to list order and quote
protocols first, order and execution
offerings next, followed by data ports
and other ports as the last section. The
Exchange proposes to list data offerings
which are offered at no cost. The
Exchange believes that aligning its
offerings, where relevant, across the
Nasdaq Affiliated Markets will provide
3 The Exchange will file a similar rule change on
each Nasdaq Affiliated Market to conform the
offerings by amending naming to make them similar
and delineating each offering on the fee schedule
where no fee is assessed.
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more transparency as to the offerings for
market participants.
Ports
The Exchange proposes to define a
port within Section 3 to provide
additional clarity to the fee schedule as
‘‘a logical connection or session that
enables a market participant to send
inbound messages and/or receive
outbound messages from the Exchange
using various communication
protocols.’’ The Exchange believes this
definition will assist Participants in
distinguishing ports from other
offerings.
Order and Quote Protocols
The Exchange proposes to add a new
section (i) and include the following
introductory sentence, ‘‘The following
order and quote protocols are available
on BX.’’ Today, BX offers market
participants an Order Entry order
protocol and an SQF quote protocol.
These fees currently exist on the fee
schedule. The Exchange is not
amending any pricing related to these
protocols. The Exchange proposes to
rename ‘‘Order Entry Port Fee’’ as ‘‘FIX
Port Fee.’’ This description is more
accurate as ‘‘FIX’’ is the name of the
order entry protocol. A Participant may
request an SQF Port or an SQF Purge
Port, the price is $500 for either port.
SQF is an interface that allows market
makers to connect and send quotes,
sweeps and auction responses into the
Exchange. The SQF Purge port only
receives and notifies of purge requests
from the market maker. The proposal is
to include a line item for each offering
because a market participant may either
select an SQF port or an SQF Purge Port
and both are assessed the same $500 fee.
The price does not vary. The Exchange
separately lists these offerings on
Nasdaq ISE, LLC. A separate line item
will make clear that there are two
options for this offering. The price of the
SQF Purge Port is not being amended.
The Exchange believes that grouping
the available order and quote protocols
together into their own subsection will
provide greater transparency within its
fee schedule as to the available
protocols.
Order and Execution Information
The Exchange proposes to add a new
section (ii) and add the following
introductory sentence, ‘‘The following
order and execution information is
available to Participants.’’ The Exchange
proposes to group the available order
and execution information that is
particular to a Participant’s executions
on BX into its own subsection. Today,
BX offers CTI, Order Entry DROP and
E:\FR\FM\15MYN1.SGM
15MYN1
]]>Agencies
[Federal Register Volume 83, Number 94 (Tuesday, May 15, 2018)]
[Notices]
[Pages 22560-22563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10246]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33094; File No. 812-14765]
TCW Direct Lending LLC, et al.;
May 9, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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Notice of an application for an order under sections 12(d)(1)(J),
57(c), 57(i) and 60 of Investment Company Act of 1940 (the ``Act'') and
rule 17d-1 under the Act to permit certain joint transactions otherwise
prohibited by sections 12(d)(1)(A), 12(d)(1)(C), 57(a)(1), 57(a)(2) and
57(a)(4) of the Act and rule 17d-1 under the Act.
Applicants: TCW Direct Lending LLC (the ``Fund''), TCW Middle Market
Lending Opportunities BDC, Inc. (the ``Extension Fund''), and TCW Asset
Management Company (the ``Adviser'').
Summary of Application: Applicants seek an order to permit the Fund (i)
to conduct an exchange offer pursuant to which investors in the Fund
(``Unitholders''), including certain directors and officers of the Fund
and employees of the Adviser (collectively, the ``TCW Directors,
Officers and Employees''), may elect to exchange all or a portion of
their units in the Fund (``Units'') for an equivalent number of shares
(``Shares'') in the Extension Fund (each such Unitholder, an ``Electing
Unitholder''), and (ii) to transfer to the Extension Fund a pro rata
portion of the Fund's assets and liabilities, including a pro rata
portion of each of the Fund's portfolio investments, in proportion to
the percentage of Units tendered and accepted for exchange.
Filing Dates: The application was filed on April 20, 2017, and amended
on October 16, 2017, May 3, 2018, and May 9, 2018.
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 May 30, 2018 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 section 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE, Washington, DC 20549-1090. The Applicants: c/o Adrian Rae
Leipsic, Esq., and Adam E. Fleisher, Esq., Cleary Gottlieb Steen &
Hamilton LLP, One Liberty Plaza, New York, New York 10006.
FOR FURTHER INFORMATION CONTACT: Asen Parachkevov, Senior Counsel, or
David J. Marcinkus, Branch Chief, at (202) 551-6821 (Division of
Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. The Fund, a Delaware limited liability company, is a closed-end
management investment company that has elected to be regulated as a
business development company (``BDC'') under the Act. On April 18,
2014, the Fund filed a registration statement on Form 10 to register
Units pursuant to section 12(g) of the Exchange Act of 1934 (the
``Exchange Act''). The Fund commenced operations on September 19, 2014.
The Fund operates as a direct lending company that seeks to generate
risk-adjusted returns primarily through direct investments in senior
secured loans made to middle-market companies or other companies that
are engaged in various businesses.
2. The Fund conducted a private offering of its Units to investors
in reliance on the exemption from registration provided by section 506
of Regulation D under the Securities Act of 1933 (the ``Securities
Act''). The Fund entered into subscription agreements with its
Unitholders, pursuant to which the Unitholders made capital commitments
to the Fund. The Units are not traded on an exchange and are not freely
transferable.
3. The Extension Fund, a Delaware corporation and a wholly-owned
subsidiary of the Fund, intends to elect to be regulated as a BDC.
Applicants state that the Extension Fund will have investment
objectives and investment policies that are substantially similar to
the Fund's. Applicants state that the Extension Fund intends to conduct
an initial public offering or listing of its Shares immediately
following the completion of the Proposed Transactions.
4. The Adviser, a Delaware limited liability company, is registered
as an investment adviser under the Investment Advisers Act of 1940 (the
``Advisers Act''). The Adviser serves as investment adviser to the Fund
pursuant to an investment advisory
[[Page 22561]]
agreement, and intends to serve as investment adviser to the Extension
Fund.
5. Applicants state that the Fund's legal interest in each of its
existing portfolio investments is capable of being proportionally
assigned or similarly transferred on a pro rata basis. Applicants
further state that each of the credit agreements and loan documents
governing the terms of the Fund's assets, which primarily consist of
loans and other private investments in middle market companies, permits
an assignment, participation or similar transfer by the Fund without
the need for the written consent of any administrative or collateral
agent, borrower or other party.
6. Applicants state that the Fund's limited liability company
operating agreement (the ``LLC Agreement'') provides that the Fund will
be dissolved upon the expiration of its six-year term on September 19,
2020 (subject to any extensions of the term in accordance with the
procedures set forth in the LLC Agreement), whereupon the Fund's assets
will be liquidated in an orderly manner, capital will be returned to
the Unitholders, and the Fund will wind up. Applicants state that the
Fund's organizational documents do not permit the Fund to conduct an
initial public offering of its Units, and the Fund has agreed that no
Unitholder will be required to participate in a publicly traded vehicle
without such Unitholder's consent.
7. Applicants state that the Fund's LLC Agreement provides for the
ability of the Fund to engage in a ``split-off'' transaction, which, as
described below and in greater detail in the application, would be
implemented through the Exchange Offer, the Refinancing, the
Contribution Transaction and the Share Issuance (each defined below,
and, collectively, the ``Proposed Transactions''). The costs and
expenses of the Proposed Transactions will be borne by the Adviser.\1\
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\1\ All costs and expenses relating to the organization and
operation of the Extension Fund will be borne by the Extension Fund
as fully disclosed to investors prior to their decision to
participate in the Exchange Offer.
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8. If the requested order is granted, the Applicants propose to
conduct an exchange offer, pursuant to which each Unitholder may elect
to exchange a number of Units for an equivalent number of Shares (the
``Exchange Offer''). The Exchange Offer will be conducted as a private
placement pursuant to Regulation D and made in compliance with rule
13e-4 under the Exchange Act and section 23(c)(2) of the Act.
9. Applicants state that the Exchange Offer will not commence
unless and until (1) the boards of the Fund and the Extension Fund (the
``Fund Board'' and the ``Extension Fund Board'', and collectively, the
``Boards''), including a ``required majority'' (as defined in section
57(o) of the Act (``Required Majority'')) of the directors of each
Board, authorize and approve the Proposed Transactions, and make all
necessary determinations, including among other things, that: (i) The
Proposed Transactions are in the best interests of the Fund or the
Extension Fund, as applicable, (ii) the interests of Unitholders who
elect to remain invested in the Fund and the interests of the Electing
Unitholders will not be diluted as a result of effecting the Proposed
Transactions, and (iii) following the Proposed Transactions, all
Unitholders, including the Electing Unitholders, will hold the same pro
rata interest in the same underlying portfolio investments as
immediately prior to the Exchange; (2) the Fund Board, including a
Required Majority, approves the participation in the Exchange by any
``remote'' affiliate of the Fund, as described in Section 57(d) of the
Act and as required under section 57(f) of the Act; and (3) the
Extension Fund Board, including a Required Majority, and the Fund, in
its capacity as initial shareholder of the Extension Fund, each approve
the investment advisory agreement between the Extension Fund and the
Adviser.
10. Applicants state that simultaneously with the Share Issuance
(as defined below), the Fund will transfer to the Extension Fund a pro
rata portion of each of the Fund's assets and liabilities, including
each of the Fund's portfolio investments, in proportion to the
percentage of Units tendered by Electing Unitholders and accepted for
exchange (the ``Contribution Transaction''). Applicants state that such
computation will be objective and formulaic and determined solely on
the basis of the percentage of Electing Unitholders, and will not be
impacted by the valuation of the Fund's assets or any other factor that
would impart an element of discretion. Applicants further state that
material liabilities (other than those arising under the Fund's credit
facility) will also be proportionally transferred or transferred on a
pro rata basis by the Fund to the Extension Fund.
11. Applicants state that simultaneously with the Contribution
Transaction, the Extension Fund will issue the applicable number of
Shares to each Electing Unitholder in exchange for the corresponding
number of Units accepted by the Fund from such Electing Unitholder in
the Exchange Offer (the ``Share Issuance'').
12. Immediately prior to (and effectively contemporaneously with)
the closing of the Exchange, the Contribution Transaction and the Share
Issuance, (a) the Extension Fund will enter into a new credit facility
and draw down an amount equal to the pro rata portion of the Fund's
existing indebtedness immediately prior to the closing of the Exchange
Offer attributable to the Units that have been validly tendered by
Electing Unitholders and accepted for exchange, which amount will be
distributed to the Fund and will be used to pay down the Fund's current
outstanding senior secured revolving credit facility, and (b) the Fund
will enter into a new credit facility to drawn down an amount to pay
down the remainder of its existing credit facility (together, the
``Refinancing'').
13. Applicants believe that the Proposed Transactions will result
in a number of benefits to Unitholders. Applicants state that the
Proposed Transactions will provide Unitholders with the optionality
that was negotiated for and was disclosed at the time of their
investment in the Fund and will enable Unitholders to participate in
the Extension Fund in a manner that promotes capital formation.
Applicants state that the Proposed Transactions will position the
Extension Fund to continue operations as a BDC with the goals of
achieving greater economies of scale and completing an initial public
offering or listing of its Shares. Applicants further state that by
allowing the Unitholders to elect to participate in the Extension Fund,
the Proposed Transactions will enable potential future retail investors
to benefit from alignment with sophisticated institutional investors
who elect to participate in the Extension Fund.
Legal Analysis
Section 57(a)(1) and 57(a)(2) of the Act
1. The Applicants are requesting an exemption pursuant to section
57(c) from the provisions of sections 57(a)(1) and 57(a)(2), in order
to permit the Applicants to effect the Contribution Transaction and the
Share Issuance.
2. Sections 57(a)(1) provides that it shall be unlawful for any
person who is related to a BDC in a manner described in section 57(b)
\2\, acting as principal, to sell to such BDC, or to a company
controlled by such BDC, any securities
[[Page 22562]]
or other property unless such sale involves solely (emphasis added) (i)
securities of which the buyer is the issuer or (ii) securities of which
the seller is the issuer and which are part of a general offering to
the holders of a class of its securities.
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\2\ Section 57(b) specifies the persons to whom the prohibitions
of sections 57(a)(1), (a)(2) and (a)(4) apply.
---------------------------------------------------------------------------
3. Section 57(a)(2) provides that it shall be unlawful for any
person who is related to a BDC in a manner described in section 57(b),
acting as principal, to purchase from such BDC, or from a company
controlled by such BDC, any securities or other property except for
securities of which the seller is the issuer.
4. Rule 57b-1 does not exempt the Fund and the Extension Fund from
being subject to the prohibitions of section 57(a).\3\ In addition, the
TCW Directors, Officers and Employees may be prohibited by section
57(a)(1) and (2) from participating in the Share Issuance as a result
of tendering their Units in the Exchange.
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\3\ Rule 57b-1 exempts certain persons otherwise related to a
BDC in a manner described in section 57(b)(2) from being subject to
the prohibitions of section 57(a). Specifically, this rule states
that the provisions of section 57(a) shall not apply to any person:
(a) Solely because that person is directly or indirectly controlled
by a BDC; or (b) solely because that person is directly or
indirectly controlling, controlled by, or under common control with,
a person described in (a) of the rule or is an officer, director,
partner, copartner, or employee of a person described in (a) of the
rule (emphasis added).
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5. Section 57(c) authorizes the Commission to issue an exemptive
order if (i) the terms of the proposed transaction, including the
consideration to be paid or received, are reasonable and fair and do
not involve overreaching of the BDC or its shareholders or partners on
the part of any person concerned, (ii) the proposed transaction is
consistent with the policy of the BDC, as recited in the filings made
by such company with the Commission under the Securities Act, its
registration statement and reports filed under the Exchange Act, and
its reports to shareholders or partners; and, and (iii) the proposed
transaction is consistent with the general purposes of the Act.
6. The Applicants submit that the request for an exemption from the
provisions of section 57(a)(1) and (a)(2) meets the standards for an
order set forth in section 57(c). First, Applicants state that the
terms of the Contribution Transaction, including the consideration to
be paid or received, are fair and reasonable and involve no element of
overreaching, since the transfer by the Fund of a pro rata portion of
each of its assets and liabilities to the Extension Fund will be
determined solely on the basis of the percentage of Electing
Unitholders, which is purely an objective and formulaic exercise.
Second, the Applicants state that the Contribution Transaction and the
Share Issuance are consistent with the stated investment policies of
the Fund as fully disclosed to Unitholders. Finally, the Applicants
submit that the Boards, including a Required Majority of each, will
have approved and authorized, as well as made all required
determinations with respect to, the Proposed Transactions.
Section 57(a)(4) and Rule 17d-1, as Made Applicable to BDCs by Section
57(i) of the Act
7. The Applicants are also requesting an Order pursuant to section
57(i) and rule 17d-1, to permit certain joint transactions that may be
otherwise prohibited by Section 57(a)(4) and rule 17d-1.
8. Section 57(a)(4) makes it unlawful for any person who is related
to a BDC in a manner described in section 57(b), acting as principal,
knowingly to effect any transaction in which the BDC or a company
controlled by such BDC is a joint or a joint and several participant.
Section 57(i) provides that the rules under section 17(d) applicable to
registered closed-end investment companies are deemed to apply to
transactions subject to section 57(a). In relevant part, rule 17d-1
prohibits any person who is related to a BDC in a manner described in
section 57(b), acting as principal, from participating in, or effecting
any transaction in connection with, any joint enterprise or other joint
arrangement in which the BDC or a company controlled by such BDC is a
participant, unless an application has been filed with the Commission
and an order has been granted.
9. The Fund and the Extension Fund may be viewed as affiliated
persons of each other in a manner described in section 57(b).
Considered together, the Proposed Transactions will require a
considerable degree of coordination among the Fund, the Extension Fund
and the Adviser that may indicate the existence of a ``joint
arrangement'' as described in rule 17d-1. Further, certain TCW
Directors, Officers and Employees who have invested in the Fund are
affiliated persons of the Fund pursuant to section 57(b).
10. Rule 17d-1(b) provides that in determining whether to grant
such an order, the Commission will consider whether the participation
of the investment company 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.''
11. The Applicants submit that the request for an order under
section 57(a)(4) and rule 17d-1 meets the standards set forth to rule
17d-1 for the same reasons as discussed above with respect to the
request for exemption from sections 57(a)(1) and (a)(2). The Applicants
state that TCW Directors, Officers and Employees will participate in
the Exchange pursuant to the same terms and documentation as all other
Unitholders, and the Proposed Transactions will not place any of the
Fund, the Extension Fund or existing Unitholders of the Fund in a
position less advantageous than that of any other of such persons. The
Applicants further submit that the terms of the investment advisory
agreement between the Extension Fund and the Adviser will be
comprehensively disclosed to all Unitholders in the Offer to Exchange,
the Fund and the Extension Fund will pay comparable management fees in
respect of overlapping investments transferred by the Fund to the
Extension Fund, and each Unitholder who wishes to remain invested in
the Fund will be subject to the Fund's existing fee structure without
any modification.
Sections 12(d)(1)(A) and 12(d)(1)(C), as Made Applicable to BDCs by
Section 60 of the Act
12. The Applicants are requesting an exemption pursuant to section
12(d)(1)(J) from the provisions of section 12(d)(1)(A) and section
12(d)(1)(C), to permit the Applicants to effect the Proposed
Transactions.
13. Sections 12(d)(1)(A) and 12(d)(1)(C) are made applicable to
BDCs by section 60 to the same extent as if they were registered
closed-end investment companies. The Proposed Transactions may be
viewed as violating sections 12(d)(1)(A) \4\ and 12(d)(1)(C) \5\
because prior to the Exchange, the Fund will own 100% of the newly
issued Shares of the Extension Fund, even
[[Page 22563]]
though such ownership will exist for only a momentary period of time.
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\4\ Section 12(d)(1)(A) provides that no registered investment
company (``acquiring company'') may acquire securities of any other
investment company (``acquired company'') if such securities
represent more than 3% of the acquired company's outstanding voting
stock or more than 5% of the acquiring company's total assets, or if
such securities, together with the securities of other investment
companies, represent more than 10% of the acquiring company's total
assets.
\5\ Section 12(d)(1)(C) provides that no investment company
(``acquiring company'') may acquire any securities issued by a
registered closed-end investment company, if the acquiring company
owns more than 10% of the total outstanding voting stock of such
closed-end company.
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14. The Applicants submit that the requested exemption from
sections 12(d)(1)(A) and 12(d)(1)(C) meets the standards set forth in
section 12(d)(1)(J). Section 12(d)(1)(J) provides that ``the
Commission, by rule or regulation, upon its own motion or by order upon
application, may conditionally or unconditionally exempt any person,
security, or transaction, or any class or classes of persons,
securities, or transactions from any provision of this subsection, if
and to the extent that such exemption is consistent with the public
interest and the protection of investors.''
15. The Applicants state that the Proposed Transactions are
consistent with the public interest in that they are intended to result
in a benefit to non-electing Unitholders, Electing Unitholders and
potential future investors in the Extension Fund. The Applicants also
state that the Proposed Transactions are consistent with investor
protection because the momentary holding by the Fund of Shares of the
Existing Fund does not raise any of the concerns that Sections
12(d)(1)(A) and (C) were intended to address.
For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10246 Filed 5-14-18; 8:45 am]
BILLING CODE 8011-01-P
