Question
Company A, apension fund, intends to acquire 30% of the voting securities (the"Acquisition") of Company B, for consideration in excess of $63.1million. We believe the Acquisition is exempt pursuant to 16 C.F.R. 802.4.Company B is an externally managed, non-diversified, closed-end managementinvestment company which is regulated as a business development company underthe Investment Company Act of 1940. Company B holds the following assets:
ASSETS
Fair Market Value> 63.1MM
Exempt?
First Lien Debt
Yes
Yes
Second Lien Debt
Yes
Yes
Unsecured and Subordinated Debt
Yes
Yes
Common Equity
Yes
Yes/No (see below)
Preferred Equity (third-party non-controlled issuers)
No
Yes
Warrants
No
Yes
Cash and cash equivalents
Yes
Yes
Cash Collateral held at brokers
Yes
Yes
Receivable for investment securities sold
No
Yes
Interest receivable (cash/cash equivalent)
No
Yes
Unrealized appreciation on swaps
No
Yes
Deferred debt issuance costs
No
Yes
Deferred offering costs
No
Yes
Other assets
No
Yes/No (depending on nature)
We understand allof the above assets to be exempt assets for purposes of 802.4, other than controllingvoting interests which Company B holds in several of its portfolio companies(the "Controlled Companies") and "other assets" (which maybe exempt depending on their nature). The Board of Directors of Company hasdelegated to the Board of Directors of Company B the task of determining thefair market value of the Controlled Companies and the "other assets",and has been told such value is, in the aggregate, less than $63.1 million.
As indicated above,Company B is externally managed by a third party management company (the"Manager") pursuant to a management contract; the Manager is not apart of this Acquisition. To our knowledge, Company B has no "off balancesheet" assets such as intellectual property or intangibles, and it has noemployees, know-how or goodwill associated with its assets.
Please confirm thatyou agree with our methodology and that the Acquisition is exempt under 802.4.Thank you.