Unassociated Document
As filed
with the Securities and Exchange Commission on November 12, 2010
No.
812-13794
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT
NO. 1 TO APPLICATION FOR AN ORDER PURSUANT TO SECTION 6(c) OF THE INVESTMENT
COMPANY ACT OF 1940 GRANTING EXEMPTIONS FROM SECTIONS 18(a) AND 61(a) OF THE
ACT
GOLUB
CAPITAL BDC, INC.
GC
SBIC IV – GP, INC.
GC
SBIC IV – GP, LLC
GC
SBIC IV, L.P.
and
GC
ADVISORS LLC
150 South
Wacker Drive, Suite 800
Chicago,
Illinois 60606
(312)
205-5050
All
Communications, Notices and Orders to:
David B.
Golub
GC
Advisors LLC
150 South
Wacker Drive, Suite 800
Chicago,
Illinois 60606
(312)
205-5050
Copies
to:
David J.
Harris
Thomas J.
Friedmann
Dechert
LLP
1775 I
Street, N.W.
Washington,
D.C. 20006
November
12, 2010
UNITED
STATES OF AMERICA
Before
the
SECURITIES
AND EXCHANGE COMMISSION
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In
the Matter of:
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AMENDMENT
NO. 1 TO
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GOLUB
CAPITAL BDC, INC.
GC
SBIC IV – GP, INC.
GC
SBIC IV – GP, LLC
GC
SBIC IV, L.P.
and
GC
ADVISORS LLC
150
South Wacker Drive, Suite 800
Chicago,
Illinois 60606
(312)
205-5050
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APPLICATION
FOR AN ORDER PURSUANT TO SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF
1940 GRANTING EXEMPTIONS FROM SECTIONS 18(a) AND 61(a) OF THE
ACT
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File
No. 812-13794
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Investment
Company Act of 1940
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Golub
Capital BDC, Inc. (the “Company”), GC Advisors LLC (the “Investment Adviser”),
GC SBIC IV – GP, Inc. (the “GP Managing Member”), GC SBIC IV – GP, LLC (the
“General Partner”), GC SBIC IV, L.P. (“Golub SBIC,” collectively, the
“Applicants”), hereby apply for an order (the “Order”) of the U.S. Securities
and Exchange Commission (the “Commission”) pursuant to Section 6(c) of the
Investment Company Act of 1940, as amended (the “1940 Act” ),1 granting exemptions from
Sections 18(a) and 61(a).
In
particular, the relief requested in this application (the “Application”) would
permit the Company and any direct or indirect wholly owned subsidiary of the
Company (each, a “Subsidiary” and, collectively, the “Subsidiaries”) that is
licensed by the Small Business Administration (“SBA”) to operate under the Small
Business Investment Act of 1958 (“SBIA”) as a small business investment company
(“SBIC”) and relies on Section 3(c)(7) for an exemption from the definition of
“investment company” under the 1940 Act (each an “SBIC Subsidiary” and,
collectively, the “SBIC Subsidiaries”) to adhere to modified asset coverage
requirements under Section 61.
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Unless
otherwise indicated, all section references herein are to the 1940
Act.
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Any
existing entities that currently intend to rely on the Order have been named as
Applicants, and any other existing or future entities that may rely on the Order
in the future would comply with its terms and conditions.
I. GENERAL
DESCRIPTION OF APPLICANTS
A. The
Company
The
Company was organized under the General Corporation Law of the State of Delaware
on April 13, 2010 for the purpose of operating as an externally managed,
non-diversified, closed-end management investment company that has elected to be
regulated as a business development company (“BDC”)2 under the 1940 Act.3 In addition,
the Company intends to make an election to be treated for tax purposes as a
regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as
amended (the “Code”), and intends to continue to make such election in the
future. The Company’s principal place of business is 150 South Wacker
Drive, Suite 800, Chicago, Illinois 60606.
In
connection with its initial public offering of common stock (the “IPO”),
effective April 14, 2010 the Company filed a registration statement on Form N-2
(File No. 333-163279) (the “N-2”) and a notice under Form N-6F to be subject to
Sections 55 through 65 of the 1940 Act. Effective April 13, 2010, the
Company filed a registration statement on Form 8-A to register its common stock
under Section 12 of the Securities Exchange Act of 1934, as amended (the “1934
Act”). The registration statement was declared effective on April 14,
2010. Accordingly, the Company is subject to the periodic reporting
requirements under Section 13(a) of the 1934 Act. The Company’s
common stock is listed on the NASDAQ Global Select Market and trades under the
ticker symbol “GBDC”.
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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
Sections 55(a)(1) through 55(a)(3) of the 1940 Act and makes available
significant managerial assistance with respect to the issuers of such
securities.
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The
Company’s predecessor and wholly owned subsidiary, Golub Capital Master
Funding LLC, a Delaware limited liability company, was formed in July
2007.
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The
Company operates as a BDC under the 1940 Act. The Company seeks to
maximize the total return to its stockholders through both current income and
capital appreciation through debt and minority equity
investments. The Company intends to achieve its investment objective
by (1) accessing the established loan origination channels developed by Golub
Capital Incorporated and Golub Capital Management LLC (collectively “Golub
Capital”), (2) selecting investments within its core middle-market company
focus, (3) partnering with experienced private equity firms, or sponsors, (4)
implementing the disciplined underwriting standards of Golub Capital and (5)
drawing upon the aggregate experience and resources of Golub Capital, a leading
lender to middle-market companies with more than $4.0 billion of capital as of
June 30, 2010.
The board
of directors of the Company (the “Board”) has five members, of which three
members are not “interested persons” of the Company within the meaning of
Section 2(a)(19). As of November 1, 2010, the Company had no
employees and three officers. As discussed below, the
Investment Adviser serves as the investment adviser to the Company.
B. The
GP Managing Member and the General Partner
The GP
Managing Member was organized as a corporation under the laws of the state of
Delaware on July 6, 2010, and is a Subsidiary of the Company. The GP
Managing Member serves as the managing member of the General
Partner.
The
General Partner was organized as a limited liability company under the laws of
the state of Delaware on July 6, 2010, and is a Subsidiary of the
Company. The GP Managing Member and the Company are the sole members
of the General Partner. The General Partner is the general partner of
Golub SBIC.
C. Golub
SBIC
Golub
SBIC submitted an application to the SBA for a license to operate as an SBIC on
December 18, 2009 and the application was accepted for filing on January 20,
2010 (“SBIC Application”).4 The SBIC
Application was approved on August 24, 2010. The Company directly
owns 99% of Golub SBIC in the form of a limited partner
interest. Additionally, the General Partner owns 1% of Golub SBIC in
the form of a general partner interest. Golub SBIC was organized as a
limited partnership under the laws of the state of Delaware on July 6,
2010.
The
General Partner is the general partner of Golub SBIC, and the Company acts as
Golub SBIC’s manager and investment adviser. Golub SBIC is not
registered under the 1940 Act as it relies on the exemption from the definition
of investment company contained in Section 3(c)(7). Golub
SBIC has the same investment objective and strategies as the Company, as
summarized above.
As an
SBIC, Golub SBIC will be examined periodically by the SBA’s staff to determine
its compliance with SBIC regulations. In addition, Golub SBIC will be
audited on an annual basis by a third-party accounting firm. SBICs
are designed to stimulate the flow of capital to eligible small
businesses. Under present SBA regulations, eligible small businesses
include businesses that have a tangible net worth not exceeding $18 million and
have average net income after federal taxes not exceeding $6 million for the two
most recent fiscal years. In addition, an SBIC must devote generally
at least 25 percent of its investment activity to “smaller” concerns as defined
by the SBA. A smaller concern is one that has a tangible net worth
not exceeding $6 million and has average net income after federal taxes not
exceeding $2 million for the two most recent fiscal years. SBA
regulations also provide alternative size criteria to determine eligibility,
which depend on the industry in which the business is engaged and typically
include such factors as number of employees or gross sales. According
to SBA regulations, SBICs may make long-term loans to small businesses or invest
in the equity securities of such businesses. In addition to size
criteria, SBA regulations also contain other limitations, including limits
related to permitted industries, terms of investment, conflicts of interest and
co-investments.
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Although
the SBIC Application was filed prior to the formation of the Company, the
SBIC Application was modified on April 23, 2010 to reflect the Company as
the parent of Golub SBIC.
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D. The
Investment Adviser
Subject
to the overall supervision of the Board, the Investment Adviser, a Delaware
limited liability company that is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, will serve as the investment
adviser to the Company pursuant to an investment advisory agreement dated March
5, 2010 (as amended and re-approved from time to time by the Board, the
“Investment Advisory Agreement”). The Investment Adviser is
registered under the Investment Advisers Act of 1940, as amended. The
Investment Adviser is a member of the Golub Capital group of
companies. Affiliates of the Investment Adviser that are managed by
the same members of the Investment Adviser’s senior management team have
experience operating SBICs.
II. REQUESTED
RELIEF
A. Sections
6(c) and 18
1. Section
6(c)
Section
6(c) authorizes the Commission to exempt any person, security, or transaction or
any class or classes of persons, securities, or transactions from any provision
or provisions of the 1940 Act or any rule thereunder 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 1940 Act.
2. Section
18
Section
18(a) 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 it complies with the asset coverage requirements set forth in that
Section. “Asset coverage” is defined in Section 18(h) to mean, with
respect to a class of senior security representing an indebtedness of an issuer,
the ratio that the value of the total assets of an issuer, less all liabilities
and indebtedness not represented by senior securities, bears to the aggregate
amount of senior securities representing indebtedness of such
issuer. Under the provisions of Section 18(a)(1)(A) of the 1940 Act,
senior securities of closed-end investment companies representing indebtedness
must have an asset coverage of 300 percent immediately after their issuance or
sale. Section 61(a) of the 1940 Act applies Section 18 of the 1940
Act to a BDC to the same extent as if the BDC were a registered closed-end
investment company, subject to certain exceptions. One of the
exceptions provides that the asset coverage requirement of
Section 18(a)(1)(A) applicable to BDCs is 200 percent.
Section
18(k) makes the asset coverage and other requirements of subparagraphs (A) and
(B) of paragraph (1) of Section 18(a) inapplicable to investment companies
operating under the SBIA. However, companies operating under the
SBIA, such as SBIC Subsidiaries, are subject to the SBA’s substantial regulation
of permissible leverage in their capital structure. An SBIC with
outstanding SBA financial assistance may not incur any secured, third-party debt
or refinance any debt with secured, third-party debt without prior written
approval of the SBA. Golub SBIC and any other SBIC Subsidiary will be
regulated by the SBA and operate under the SBIA. There will be no
difference in the SBA’s regulation of Golub SBIC or other SBIC Subsidiaries due
to the fact that it and any other SBIC Subsidiaries will not be registered under
the 1940 Act or be BDCs.
3. Need for
Relief
The
Company is a closed-end investment company for purposes of Section 18 of the
1940 Act, which is made applicable to BDCs by Section 61(a)
thereof. Since Golub SBIC is, and other SBIC Subsidiaries would be,
Subsidiaries of the Company, a question exists as to whether the Company must
comply with the asset coverage requirements of Section 18(a) (as modified by
Section 61(a) for BDCs) solely on an individual basis or whether the Company
must also comply with these asset coverage requirements on a consolidated basis,
because the Company may be deemed to be an indirect issuer of any class of
senior security issued by Golub SBIC or another SBIC
Subsidiary. 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 held directly either by itself, by Golub SBIC, or by another SBIC
Subsidiary and also to treat as its own any liabilities of the Company, Golub
SBIC and the other SBIC Subsidiaries (with intercompany receivables and
liabilities eliminated).
4. Requested
Order
While the
Applicants do not concede that they must comply with the asset coverage
requirements of Section 18(a) (as modified by Section 61(a)) on a consolidated
basis, the Applicants wish to avoid any question regarding their compliance with
Section 18(a) (as modified by Section 61(a)). For the purposes of the
requested relief, and only for such purposes, the Applicants wish to treat Golub
SBIC and any other SBIC Subsidiaries as if each were a BDC subject to Sections
18 and 61 of the 1940 Act. Accordingly, the Applicants respectfully
request on behalf of themselves and any other SBIC Subsidiaries an Order of the
Commission, pursuant to Section 6(c) of the 1940 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 its
individual 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. The Applicants believe that the Order requested in this
Application would, if granted, be consistent with orders issued by the
Commission pursuant to Section 6(c) of the 1940 Act in the past.
D. Conditions
The
Applicants agree that any Order granting the requested relief will be subject to
the following conditions:
1. The
Company will at all times be the sole limited partner of any Subsidiary and the
sole owner of the Subsidiary’s general partner, or otherwise own and hold
beneficially all of the outstanding voting securities or other equity interests
in the Subsidiary.
2. No
person shall serve or act as investment adviser to Golub SBIC or another
Subsidiary unless the Board and the shareholders of the Company shall have taken
such action with respect thereto that is required to be taken by the functional
equivalent of the board of directors of Golub SBIC or of another Subsidiary and
the shareholders of Golub SBIC or another Subsidiary as if Golub SBIC or such
other Subsidiary were a BDC.
3. Each
of the managers of each Subsidiary shall be the Company, a Subsidiary of the
Company or a person elected or appointed by the Company.
4. The
Company shall not issue or sell any senior security, and the Company shall not
cause or permit Golub SBIC or any other SBIC Subsidiary to issue or sell any
senior security of which the Company, Golub 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 1940 Act; provided that, immediately after the issuance or
sale by any of the Company, Golub 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 1940 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 1940 Act (as
modified by Section 61(a)), any senior securities representing indebtedness of
Golub SBIC or another 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.
III. Procedural
Matters
A. Communications
Please
address all communications concerning this Application and the Notice and Order
to:
David B.
Golub
GC
Advisors LLC
150 South
Wacker Drive, Suite 800
Chicago,
Illinois 60606
(312)
205-5050
Please
address any questions and a copy of any communications concerning this
Application, the Notice and the Order to:
David J.
Harris
Thomas J.
Friedmann
Dechert
LLP
1775 I
Street, N.W.
Washington,
D.C. 20006
B. Authorizations
Pursuant
to Rule 02-(c) under the Act, Applicants hereby state that the Company, by
resolutions duly adopted by its Board on May 11, 2010 (attached hereto as
Exhibit A), has authorized its officers to cause to be prepared and to execute
and file with the Commission this Application and any amendment thereto under
Section 6(c) of the Act for an order granting exemptions from Sections 18(a) and
61(a) of the Act. The Board also authorized the filing of this
Application on behalf of its Subsidiaries: Golub SBIC, GP Managing Member and
the General Partner. Each person executing the Application on behalf
of the Company, the Subsidiaries and the Adviser says that he has duly executed
the Application for and on behalf of the Company, Subsidiaries or the Adviser;
that he is authorized to execute the Application pursuant to the terms of an
operating agreement, management agreement or otherwise; and that all actions by
members, directors or other bodies necessary to authorize each deponent to
execute and file the Application have been taken.
The
Applicants have caused this Application to be duly signed on their behalf on the
12th
day of November, 2010.
By: /s/ David B.
Golub
Name: David
B. Golub
Title:
Chief Executive Officer
GC
SBIC IV – GP, INC.
By: /s/ Gregory W.
Cashman
Name: Gregory
W. Cashman
Title:
Vice President & Treasurer
GC
SBIC IV – GP, LLC
By: /s/ Gregory W.
Cashman
Name: Gregory
W. Cashman
Title:
Manager
GC
SBIC IV, L.P.
By: GC
SBIC IV – GP, LLC, its general partner
By: /s/ Gregory W.
Cashman
Name: Gregory
W. Cashman
Title:
Manager
GC
ADVISORS LLC
By: /s/ David B.
Golub
Name: David
B. Golub
Title:
Vice Chairman
VERIFICATION
The
undersigned states that he has duly executed the foregoing Application, dated
November 12, 2010, for and on behalf of Golub Capital BDC, Inc.,
GC SBIC IV – GP, Inc., GC SBIC IV – GP, LLC, GC SBIC IV, L.P. and GC Advisors
LLC, as the case may be, that he holds the office with such entity as indicated
below and that all actions by the directors, stockholders, general partners,
trustees or members of each entity, as applicable, necessary to authorize the
undersigned to execute and file such instrument has been taken. The
undersigned further states that he is familiar with such instrument and the
contents thereof and that the facts set forth therein are true to the best of
his knowledge, information and belief.
By: /s/ David B.
Golub
Name: David
B. Golub
Title:
Chief Executive Officer
GC
SBIC IV – GP, INC.
By: /s/ Gregory W.
Cashman
Name: Gregory
W. Cashman
Title:
Vice President & Treasurer
GC
SBIC IV – GP, LLC
By: /s/ Gregory W.
Cashman
Name: Gregory
W. Cashman
Title:
Manager
GC
SBIC IV, L.P.
By: GC
SBIC IV – GP, LLC, its general partner
By: /s/ Gregory W.
Cashman
Name: Gregory
W. Cashman
Title:
Manager
GC
ADVISORS LLC
By: /s/ David B.
Golub
Name: David
B. Golub
Title:
Vice Chairman
EXHIBIT
A
Resolutions
of the Board of Directors
WHEREAS, taking into account
the Company’s capital structure, investment portfolio, sources of financing and
business objectives, the Board of Directors has determined that it is in the
best interests of the Company to diversify its assets and liabilities by forming
and developing a small business investment company (“SBIC”), licensed with
the United States Small Business Administration (the “SBA”);
WHEREAS, the Board of
Directors has observed the synergies between operating the Company and an SBIC
and recognizes that other industry peers have drawn the same conclusion and have
successfully formed and are operating SBICs; and
WHEREAS, the Company desires
to establish a wholly-owned subsidiary of the Company to act as the investment
vehicle for the SBA venture.
NOW,
THEREFORE, BE IT:
RESOLVED, that the Independent
Directors, voting separately, and the entire Board of Directors hereby accept
and approve to delegate to the Authorized Officers the process of forming an
SBIC as a wholly-owned subsidiary of the Company and obtaining an SBIC license
from the SBA and all prior actions of the Authorized Officers in such respect
are hereby accepted, approved and ratified;
FURTHER RESOLVED, that the
Authorized Officers be, and each of them hereby is, individually authorized,
empowered and directed in the name and on behalf of the Company, to execute and
caused to be filed with the SEC any applications for exemptive relief, and any
amendments deemed necessary or proper thereto, and any related documents,
including but not limited to requests for no-action relief or interpretative
positions under the 1940 Act, or any other applicable federal or state
securities law, as such Authorized Officers, in their sole discretion, deem
necessary or appropriate to effect such actions or pursue such activities or
transactions of the Company as are duly authorized; and
FURTHER RESOLVED, that the
Authorized Officers be, and each of them hereby is, individually authorized,
empowered and directed in the name of and on behalf of the Company, to do or
cause to be done each and every act necessary or convenient in connection with
the preparation and execution of the foregoing resolutions.