
[Federal Register Volume 79, Number 174 (Tuesday, September 9, 2014)]
[Notices]
[Pages 53466-53467]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21381]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31240; 812-14320]


Garrison Capital, Inc., et al.; Notice of Application

September 3, 2014.
AGENCY:  Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 6(c) of the 
Investment Company Act of 1940 (the ``Act'') for an exemption from 
sections 18(a) and 61(a) of the Act.

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Applicants:  Garrison Capital Inc. (``Company''), Garrison Capital SBIC 
LP (``Garrison SBIC''), Garrison Capital Advisers LLC (``Garrison 
Adviser''), Garrison Capital SBIC Holdco Inc. (``Holdco'') and Garrison 
Capital SBIC General Partner LLC (``General Partner'').

Summary of the Application: The Company requests an order to permit it 
to adhere to a modified asset coverage requirement.

Filing Dates: The application was filed June 6, 2014.

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 September 29, 2014 and should be accompanied by proof of 
service on the 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.

[[Page 53467]]


ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090. Applicants: Julian Weldon, 
Garrison Capital, Inc., 1290 Avenue of the Americas, Suite 914, New 
York, NY 10104.

FOR FURTHER INFORMATION CONTACT: Emerson Davis, Senior Counsel, at 
(202) 551-6868, or Daniele Marchesani, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.
    Applicants' Representations:
    1. The Company, a Delaware corporation, is an externally managed, 
non-diversified, closed-end management investment company that has 
elected to be regulated as a business development company (``BDC'') 
under the Act.\1\ The Company's investment objective is to provide its 
stockholders with both current income and capital appreciation 
primarily through debt investments and, to a lesser extent, equity 
investments. Garrison Adviser, a Delaware limited liability company, is 
the investment adviser to the Company. The Investment Adviser is 
registered under the Investment Advisers Act of 1940, as amended.
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    \1\ Section 2(a)(48) defines a BDC to be any closed-end 
investment company that operates for the purpose of making 
investments in securities described in section 55(a)(1) through 
55(a)(3) of the Act and makes available significant managerial 
assistance with respect to the issuers of such securities.
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    2. Garrison SBIC, a Delaware limited partnership, has received a 
``green light letter'' from the Small Business Administration (``SBA'') 
and intends to submit an application to the SBA for a small business 
investment company (``SBIC'') license to operate under the Small 
Business Investment Act of 1958 (``SBIA''). Garrison SBIC expects to 
rely on the exclusion from the definition of investment company 
contained in section 3(c)(7) of the Act. The Company currently owns a 
99% limited partnership interest in Garrison SBIC. The General Partner, 
a Delaware limited liability company, is the general partner of 
Garrison SBIC. The General Partner owns 1% of Garrison SBIC in the form 
of a general partner interest. The Company currently holds 100 percent 
of the shares of Holdco, which holds a one percent membership interest 
in the General Partner.
    Applicants' Legal Analysis:
    1. The Company requests an exemption pursuant to section 6(c) of 
the Act from the provisions of sections 18(a) and 61(a) of the Act to 
permit it to adhere to a modified asset coverage requirement with 
respect to any direct or indirect wholly-owned subsidiary of the 
Company that is licensed by the SBA to operate under the SBIA as a SBIC 
and relies on Section 3(c)(7) for an exemption from the definition of 
``investment company'' under the 1940 Act (each, a ``SBIC 
Subsidiary'').\2\ Applicants state that companies operating under the 
SBIA, such as the SBIC Subsidiary, will be subject to the SBA's 
substantial regulation of permissible leverage in their capital 
structure.
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    \2\ All existing entities that currently intend to rely on the 
order are named as applicants. Any other existing or future entity 
that may rely on the order in the future will comply with the terms 
and condition of the order.
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    2. Section 18(a) of the Act prohibits a registered closed-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 for senior securities 
representing indebtedness that are contained in section 18(a)(1)(A) and 
(B).
    3. Applicants state that the Company may be required to comply with 
the asset coverage requirements of section 18(a) (as modified by 
section 61(a)) on a consolidated basis because the Company may be 
deemed to be an indirect issuer of any class of senior security issued 
by Garrison SBIC or another SBIC Subsidiary. Applicants state that 
applying section 18(a) (as modified by section 61(a)) on a consolidated 
basis generally would require that the Company treat as its own all 
assets and any liabilities held directly either by itself, by Garrison 
SBIC, or by another SBIC Subsidiary. Accordingly, the Company requests 
an order under section 6(c) of the Act exempting the Company from the 
provisions of section 18(a) (as modified by section 61(a)), such that 
senior securities issued by each SBIC Subsidiary that would be excluded 
from the SBIC Subsidiary's asset coverage ratio by section 18(k) if it 
were itself a BDC would also be excluded from the Company's 
consolidated asset coverage ratio.
    4. 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 the requested relief 
satisfies the section 6(c) standard. Applicants contend that, because 
the SBIC Subsidiary would be entitled to rely on section 18(k) if it 
were a BDC itself, there is no policy reason to deny the benefit of 
that exemption to the Company.
    Applicants' Condition:
    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    The Company shall not issue or sell any senior security, and the 
Company shall not cause or permit Garrison SBIC or any other SBIC 
Subsidiary to issue or sell any senior security of which the Company, 
Garrison SBIC or any other SBIC Subsidiary 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 by any 
of the Company, Garrison SBIC or any other SBIC Subsidiary of any such 
senior security, the Company, individually and on a consolidated basis, 
shall have the asset coverage required by section 18(a) of the Act (as 
modified by section 61(a)). In determining whether the Company has the 
asset coverage on a consolidated basis required by section 18(a) of the 
Act (as modified by section 61(a)), any senior securities representing 
indebtedness of a SBIC Subsidiary if that SBIC Subsidiary has issued 
indebtedness that is held or guaranteed by the SBA 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.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21381 Filed 9-8-14; 8:45 am]
BILLING CODE 8011-01-P


