
[Federal Register Volume 80, Number 118 (Friday, June 19, 2015)]
[Notices]
[Pages 35416-35417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15046]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31670; 812-14275]


TCP Capital Corp., et al.; Notice of Application

June 15, 2015.
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: TCP Capital Corp. (the ``Holding Company''), Special Value 
Continuation Partners, LP (the ``Operating Company'' and, together with 
the Holding Company, the ``Company''), Tennenbaum Capital Partners, LLC 
(``TCPC Advisor''), TCPC SBIC, LP (``TCPC SBIC'') and TCPC SBIC GP, 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 February 7, 2014, and amended 
on July 7, 2014, December 4, 2014, March 4, 2015, May 7, 2015, and June 
5, 2015.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on July 10, 2015, and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090. Applicants: Howard M. Levkowitz, 
Chief Executive Officer, TCP Capital Corp., 2951 28th Street, Suite 
1000, Santa Monica, California 90405.

FOR FURTHER INFORMATION CONTACT: Kieran G. Brown, Senior Counsel, at 
(202) 551-6773, 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 Holding Company is a Delaware corporation. The Operating 
Company is a Delaware limited partnership. Each is an externally 
managed, non-diversified, closed-end management investment company that 
has elected to be treated as a business development company (``BDC'') 
under the Act.\1\ The Holding Company is a holding company with no 
direct operations, and currently its only business and sole asset is 
its ownership of all of the common limited partner interests in the 
Operating Company, which represents approximately 100% of the common 
equity and 86.1% of the combined common and preferred equity interests 
of the Operating Company as of December 31, 2014.\2\ The Holding 
Company's ownership percentage of the Operating Company will not 
decrease from its current level.\3\ The investment objective of the 
Company is to achieve high total returns through current income and 
capital appreciation, with an emphasis on principal protection.
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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.
    \2\ In addition to common limited partnership interests, at 
December 31, 2014, the Operating Company had 6,700 Series A 
preferred limited partner interests (``Preferred Interests'') issued 
and outstanding with a liquidation preference of $20,000 per 
Preferred Interest. Per a conversation between the Holding Company's 
counsel and the staff of the Division of Investment Management on or 
about April 27, 2011, the Applicants are relying on New Mountain 
Finance Corporation, SEC No-Action Letter (April 27, 2011) for the 
Holding Company and the Operating Company to operate as BDCs under 
the two-tier structure described above.
    \3\ There are no significant ways compliance with the Act 
differs under this structure wherein the Holding Company owns 86.1% 
of the Operating Company, than a structure wherein the Operating 
Company were a wholly-owned subsidiary of the Holding Company. The 
Preferred Interests will be subject to mandatory redemption on July 
31, 2016. Once the Preferred Interests are redeemed, the Operating 
Company will be a wholly-owned subsidiary of the Holding Company.
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    2. TCPC SBIC, a Delaware limited partnership, is a small business 
investment company (``SBIC'') licensed by the Small Business 
Administration (``SBA'') to operate under the Small Business Investment 
Act of 1958 (``SBIA''). TCPC SBIC is excluded from the definition of 
investment company by section 3(c)(7) of the Act. The Operating Company 
is the sole limited partner of TCPC SBIC and owns more than 95% of the 
outstanding voting securities of TCPC SBIC consistent with the 
definition of ``wholly-owned subsidiary'' contained in section 2(a)(43) 
of the Act. The General Partner, a Delaware limited liability company, 
is the sole general partner of TCPC SBIC. The Operating Company is the 
sole member of the General Partner.
    3. TCPC Advisor, a Delaware limited liability company, is the 
investment adviser to the Company. TCPC Advisor is registered under the 
Investment Advisers Act of 1940. Subject to the overall supervision of 
the General Partner, TCPC Advisor will also serve as the investment 
manager to TCPC SBIC and to any other SBIC Subsidiaries (as defined 
below).

[[Page 35417]]

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 
Operating Company or the Holding Company that is licensed by the SBA to 
operate under the SBIA as an SBIC and relies on section 3(c)(7) for an 
exemption from the definition of ``investment company'' under the Act 
(each, an ``SBIC Subsidiary'').\4\ Applicants state that companies 
operating under the SBIA, such as an SBIC Subsidiary, are subject to 
the SBA's substantial regulation of permissible leverage in their 
capital structure.
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    \4\ 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 TCPC 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 TCPC 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 will not itself issue or sell any senior security and 
the Company will not cause or permit TCPC SBIC or any other SBIC 
Subsidiary to issue or sell any senior security of which the Company, 
TCPC SBIC or any other SBIC Subsidiary is the issuer except to the 
extent permitted by section 18 (as modified for BDCs by section 61); 
provided that, immediately after the issuance or sale of any such 
senior security by any of the Company, TCPC SBIC or any other SBIC 
Subsidiary, the Company, individually and on a consolidated basis, 
shall have the asset coverage required by section 18(a) (as modified by 
section 61(a)). In determining whether the Company, TCPC SBIC and any 
other SBIC Subsidiary on a consolidated basis have the asset coverage 
required by section 18(a) (as modified by section 61(a)), any senior 
securities representing indebtedness of an SBIC Subsidiary 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 but only if that SBIC Subsidiary 
has issued indebtedness that is held or guaranteed by the SBA.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-15046 Filed 6-18-15; 8:45 am]
 BILLING CODE 8011-01-P


