[Federal Register Volume 83, Number 133 (Wednesday, July 11, 2018)]
[Notices]
[Pages 32174-32179]
[FR Doc No: 2018-14844]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33149; 812-14835]

Blackstone/GSO Floating Rate Enhanced Income Fund, et al.

July 6, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for an order under sections 17(d) and 57(i)
of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1
under the Act to permit certain joint transactions otherwise prohibited
by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.

SUMMARY OF APPLICATION:  Applicants request an order to permit business
development companies (``BDCs'') and closed-end management investment
companies to co-invest in portfolio companies with each other and with
certain affiliated investment funds and accounts.

APPLICANTS:  Blackstone/GSO Floating Rate Enhanced Income Fund
(``BGFREI''); Blackstone/GSO Long-Short Credit Income Fund (``BGX'');
Blackstone/GSO Senior Floating Rate Term Fund (``BSL''); Blackstone/GSO
Strategic Credit Fund (``BGB''); Blackstone/GSO Secured Lending Fund
(``BGSL,'' and together with BGFREI, BGX, BSL, BGB, the ``GSO Regulated
Funds''); GSO/Blackstone Debt Funds Management LLC (``GDFM''), the
investment adviser to BGFREI, BGX, BSL and BGB; GSO Asset Management
LLC (``GAM''), the proposed investment adviser to BGSL; the investment
advisers set forth in Schedule A to the application (together with GDFM
and GAM, the ``GSO Advisers''); the Existing Affiliated Funds set forth
on Schedule A to the application \1\; and Blackstone Alternative
Solutions L.L.C. (``BAS'').
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    \1\ The Existing Affiliated Funds, together with their direct
and indirect wholly-owned subsidiaries, are entities (i) (A) whose
primary investment adviser is a GSO Adviser or (B) whose primary
investment adviser is a registered investment adviser that controls,
is controlled by or is under common control with an Adviser (as
defined below), but is itself not an Adviser (each, an ``Existing
Primary Adviser''), and whose sub-adviser is an Adviser (each, an
``Existing Sub-Advised Affiliated Fund'') and (ii) that either (A)
would be an investment company but for section 3(c)(1) or 3(c)(7) of
the Act or (B) rely on the rule 3a-7 exemption thereunder from
investment company status. The sole Existing Primary Adviser is BAS.
Each of the Existing Sub-Advised Affiliated Funds are sub-advised by
GSO Capital Partners LP, a GSO Adviser.

FILING DATES:  The application was filed on October 13, 2017, and
amended on June 25, 2018. Applicants have agreed to file an amendment
during the notice period, the substance of which is reflected in this
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notice.

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 30, 2018, 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
St. NE, Washington, DC 20549-1090. Applicants: 345 Park Avenue, New
York, New York 10154.

FOR FURTHER INFORMATION CONTACT:  Asen Parachkevov, Senior Counsel, or
David J. Marcinkus, Branch Chief, at<PHONE_NUMBER> (Chief Counsel's
Office, Division of Investment Management).

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 for an
applicant using the Company name box, at http://

www.sec.gov/search/search.htm or by calling<PHONE_NUMBER>.

Applicants' Representations

    1. BGFREI, BGX, BSL and BGB, each a Delaware statutory trust, are
externally managed, diversified, closed-end management investment
companies. Each of BGFREI's and BGX's investment objective is to
provide current income, with a secondary objective of capital
appreciation. Each of BSL's and BGB's investment objective is to seek
high current income, with a secondary objective to seek preservation of
capital, consistent with its primary goal of high current income. Each
of BGFREI, BGX, BSL and BGB have a five-member Board, of which four
members are Non-Interested Trustees.\2\
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    \2\ ``Board'' means the board of trustees (or equivalent) of the
GSO Regulated Funds and any other Regulated Fund (as defined below).
    ``Non-Interested Trustees'' means the Non-Interested Trustees of
the GSO Regulated Funds and any other Regulated Fund who are not
``interested persons'' within the meaning of section 2(a)(19) of the
Act.
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    2. BGSL is a Delaware statutory trust that intends to file an
election to be regulated as a business development company (``BDC'')
under the Act.\3\ BGSL's investment objective is to seek high current
income, with a secondary objective to seek preservation of capital,
consistent with its primary goal of high current income. BGSL will have
a seven-member Board, of which four members will be Non-Interested
Trustees.
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    \3\ 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 Act and makes available significant managerial
assistance with respect to the issuers of such securities.
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    3. Each Adviser \4\ is a subsidiary of The Blackstone Group, L.P.
(``Blackstone''). Blackstone is a leading global alternative asset
manager, whose alternative asset management businesses include
investment vehicles focused on private equity, real estate, hedge fund
solutions, non-investment grade credit, secondary private equity funds
of funds and multi-asset class strategies. Blackstone's four business
segments are (1) private equity, (2) real estate, (3) hedge fund
solutions and (4) credit.
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    \4\ The term ``Adviser'' means (i) the GSO Advisers and (ii) any
future investment adviser that controls, is controlled by or is
under common control with a GSO Adviser and is registered as an
investment adviser under the Advisers Act that intends to
participate in the Co-Investment Program (as defined below). The
term Adviser does not include any Primary Adviser. The term
``Primary Adviser'' means the Existing Primary Adviser or any future
investment adviser that (i) controls, is controlled by or is under
common control with an Adviser, (ii) is registered as an investment
adviser under the Advisers Act, and (iii) is not an Adviser.
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    4. The GSO Advisers operate as a self-contained advisory business
within Blackstone's credit group. Each GSO Adviser is under common
control with GDFM and GAM, the Adviser to each of the GSO Regulated
Funds, and collectively they conduct a single advisory business for
purposes of the requested Order. The GSO Advisers are each either
separately registered as investment advisers with the Commission, or
are relying advisers that rely on the registration of another GSO
Adviser. No GSO Adviser is a relying adviser of any Blackstone-
affiliated investment adviser from outside of the self-contained group.
BAS is the sole Existing Primary Adviser and serves as investment
adviser of the Existing Sub-Advised Affiliated Funds.
    5. Applicants seek an order to permit one or more Regulated Funds
\5\ to be able to participate with one or more other Regulated Funds
and/or one or more Affiliated Investors \6\ in the same investment
opportunities through a proposed co-investment program where such
participation would otherwise be prohibited under sections 17(d) and
57(a)(4) of the Act and rule 17d-1 thereunder (the ``Co-Investment
Program'').
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    \5\ ``Regulated Fund'' means any of the GSO Regulated Funds and
any future closed-end management investment company (i) that has
elected to be regulated as a BDC or is registered under the Act,
(ii) whose investment adviser is an Adviser and (iii) who intends to
participate in the Co-Investment Program.
    \6\ ``Affiliated Investor'' means (i) the Existing Affiliated
Funds, (ii) any Affiliated Proprietary Account and (iii) any Future
Affiliated Fund.
    ``Future Affiliated Fund'' means an entity (i)(A) whose
investment adviser is an Adviser or (B) whose investment adviser is
a Primary Adviser and whose sub-adviser is an Adviser, (ii) that
either (A) would be an investment company but for an exemption in
section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act or (B) relies on
the rule 3a-7 exemption thereunder from investment company status,
and (iii) that intends to participate in the Co-Investment Program.
    ``Affiliated Proprietary Account'' means any account of an
Adviser or its affiliates or any company that is an indirect,
wholly- or majority-owned subsidiary of an Adviser or its
affiliates, which, from time to time, may hold various financial
assets in a principal capacity. For the avoidance of doubt, neither
the Regulated Funds nor the Affiliated Investors shall be deemed to
be Affiliated Proprietary Accounts for purposes of the requested
Order.
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    6. For purposes of the requested Order, ``Co-Investment
Transaction'' means any transaction in which one or more Regulated
Funds (or one or more Wholly-Owned Investment Subsidiaries, as defined
below) participates together with one or more other Regulated Funds (or
one or more Wholly-Owned Investment Subsidiaries, as defined below)
and/or one or more Affiliated Investors in reliance on the requested
Order. ``Potential Co-Investment Transaction'' means any investment
opportunity in which a Regulated Fund (or its Wholly-Owned Investment
Subsidiary, as defined below) could not participate together with one
or more Affiliated Investors and/or one or more other Regulated Funds
without obtaining and relying on the requested Order.\7\ Funds that are
advised or sub-advised by affiliates of Blackstone other than an
Adviser or Primary Adviser will not participate in the Co-Investment
Program. No Primary Adviser will be the source of any Potential Co-
Investment Transactions under the requested Order. Potential Co-
Investment Transactions will not be shared outside of the Co-Investment
Program.
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    \7\ All existing entities that currently intend to rely upon the
requested Order have been named as applicants. Any other existing or
future entity that subsequently relies on the Order will comply with
the terms and conditions of the application.
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    7. Applicants state that a Regulated Fund may, from time to time,
form a special purpose subsidiary (a ``Wholly-Owned Investment
Subsidiary'').\8\ A Wholly-Owned Investment Subsidiary would be
prohibited from investing in a Co-Investment Transaction with another
Regulated Fund or any Affiliated Investor because it would be a company
controlled by its parent Regulated Fund for purposes of sections 17(d)
and 57(a)(4) of the Act and rule 17d-1 thereunder. Applicants request
that a Wholly-Owned Investment Subsidiary be permitted to participate
in Co-Investment Transactions in lieu of the applicable Regulated Fund
and that the Wholly-Owned Investment Subsidiary's participation in any
such transaction be treated, for purposes of the requested

Order, as though the parent Regulated Fund were participating directly.
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    \8\ ``Wholly-Owned Investment Subsidiary'' means an (i) whose
sole business purpose is to hold one or more investments on behalf
of a Regulated Fund (and, in the case of an SBIC Subsidiary (as
defined below), maintain a license under the SBA Act (as defined
below) and issue debentures guaranteed by the SBA (as defined
below)); (ii) that is wholly-owned by a Regulated Fund (with such
Regulated Fund at all times holding, beneficially and of record,
100% of the voting and economic interests); (iii) with respect to
which the Board of the Regulated Fund has the sole authority to make
all determinations with respect to the Wholly-Owned Investment
Subsidiary's participation under the conditions of the requested
Order; and (iv) that is an entity that would be an investment
company but for an exemption in section 3(c)(1) or 3(c)(7) of the
Act.
    The term ``SBIC Subsidiary'' means a Wholly-Owned Investment
Subsidiary that is licensed by the Small Business Administration
(the ``SBA'') to operate under the Small Business Investment Act of
1958, as amended, (the ``SBA Act'') as a small business investment
company (a ``SBIC'').
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    8. When considering Potential Co-Investment Transactions for any
Regulated Fund, an Adviser will consider only the Objectives and
Strategies,\9\ Board-Established Criteria,\10\ investment policies,
investment positions, capital available for investment, and other
pertinent factors applicable to that Regulated Fund. The participation
of a Regulated Fund in a Potential Co-Investment Transaction may only
be approved by a Required Majority, as defined in section 57(o) of the
Act (a ``Required Majority''), of the trustees of the Board eligible to
vote on that Co-Investment Transaction under section 57(o) of the Act
(the ``Eligible Trustees'').\11\ When selecting investments for the
Affiliated Investors, an Adviser will select investments separately for
each Affiliated Investor, considering, in each case, only the
investment objective, investment policies, investment position, capital
available for investment, and other pertinent factors applicable to
that particular Affiliated Investor.
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    \9\ The term ``Objectives and Strategies'' means a Regulated
Fund's investment objectives and strategies, as described in the
filings made with the Commission by the Regulated Fund under the
Securities Exchange Act of 1934, as amended, the Securities Act of
1933, as amended (the ``1933 Act'') and the Act, and the Regulated
Fund's reports to shareholders.
    \10\ The term ``Board-Established Criteria'' means criteria that
the Board of the applicable Regulated Fund may establish from time
to time to describe the characteristics of Potential Co-Investment
Transactions regarding which an Adviser to the Regulated Fund should
be notified under condition 1 of the requested Order. The Board-
Established Criteria will be consistent with the Regulated Fund's
then-current Objectives and Strategies. If no Board-Established
Criteria are in effect, then the Regulated Fund's Adviser will be
notified of all Potential Co-Investment Transactions that fall
within the Regulated Fund's then current Objectives and Strategies.
Board-Established Criteria will be objective and testable, meaning
that they will be based on observable information, such as industry/
sector of the issuer, minimum earnings before interest, taxes,
depreciation, and amortization of the issuer, asset class of the
investment opportunity or required commitment size, and not on
characteristics that involve discretionary assessment. The Adviser
to the Regulated Fund may from time to time recommend criteria for
the applicable Board's consideration, but Board-Established Criteria
will only become effective if approved by a majority of the Non-
Interested Trustees. The Non-Interested Trustees of a Regulated Fund
may at any time rescind, suspend or qualify its approval of any
Board-Established Criteria, though Applicants anticipate that, under
normal circumstances, the Board would not modify these criteria more
often than quarterly.
    \11\ The defined terms Eligible Trustees and Required Majority
apply as if each Regulated Fund were a BDC subject to section 57(o)
of the Act.
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    9. With respect to participation in a Potential Co-Investment
Transaction by a Regulated Fund, the application Adviser will present
each Potential Co-Investment Transaction and the proposed allocation of
each investment opportunity to the Eligible Trustees. The Required
Majority of a Regulated Fund will approve each Co-Investment
Transaction prior to any investment by the Regulated Fund.
    10. Applicants state that the majority of the GSO Advisers'
employees work on matters for Close Affiliates \12\ and information
about potential investment opportunities is routinely disseminated
among such Adviser's employees. Other than to satisfy compliance
obligations, information regarding Potential Co-Investment Transactions
will not be shared with Remote Affiliates,\13\ which would include
other investment advisers that operate in other Blackstone business
groups, except in unusual circumstances, as the Blackstone business
groups each generally target different investment strategies or asset
classes and there are information barrier policies in place between the
Blackstone business groups. Applicants further note within the GSO
Advisers, the personnel overlap and coordination among portfolio
management teams ensures that all relevant investment opportunities
will be brought to the attention of each Regulated Fund (as defined
below) managed by the respective Adviser. Applicants submit that the
GSO Advisers will receive all information regarding all investment
opportunities that fall within the then-current Objectives and
Strategies and Board-Established Criteria of each Regulated Fund
managed by the respective Adviser.
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    \12\ The term ``Close Affiliate'' means the Advisers, the
Regulated Funds, the Affiliated Investors and any other person
described in section 57(b) of the Act (after giving effect to rule
57b-1 thereunder) in respect of any Regulated Fund (treating any
registered investment company or series thereof as a BDC for this
purpose) except for limited partners included solely by reason of
the reference in section 57(b) to section 2(a)(3)(D) of the Act.
    \13\ The term ``Remote Affiliate'' means any person described in
section 57(e) of the Act in respect of any Regulated Fund (treating
any registered investment company or series thereof as a BDC for
this purpose) and any limited partner holding 5% or more of the
relevant limited partner interests that would be a Close Affiliate
but for the exclusion in that definition.
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    11. Applicants submit that, in the event that a Potential Co-
Investment Transaction would be within the investment objectives and
strategies of the Existing Sub-Advised Affiliated Fund, the respective
Adviser shall have the primary responsibility for the investment,
including making the initial investment recommendation, and day-to-day
monitoring of the investment. Applicants further note that the Adviser
will be responsible for complying with the conditions of the requested
Order. Applicants state that if the Adviser and Primary Adviser agree
that the Existing Sub-Advised Affiliated Fund should invest in the
Potential Co-Investment Transaction and at what size of investment,
then the Adviser would, consistent with the conditions of the requested
Order, determine an allocation for the Regulated Funds and Affiliated
Investors, including such Existing Sub-Advised Affiliated Fund.
    12. Applicants acknowledge that some of the Affiliated Investors
may not be funds advised by an Adviser because they are Affiliated
Proprietary Accounts. Applicants do not believe the participation of
these Affiliated Proprietary Accounts in Co-Investment Transactions
should raise issues under the conditions of the requested Order because
allocation policies and procedures of the account owners provide that
investment opportunities are offered to client accounts before they are
offered to Affiliated Proprietary Accounts.
    13. Under condition 14, if an Adviser or its principals, or any
person controlling, controlled by, or under common control with the
Adviser or its principals, and any Affiliated Investor (collectively,
the ``Holders'') own in the aggregate more than 25 percent of the
outstanding voting shares of a Regulated Fund (``Shares''), then the
Holders will vote such Shares as directed by an independent third party
when voting on (1) the election of directors; (2) the removal of one or
more directors; or (3) all other matters under either the Act or
applicable state law affecting the Board's composition, size or manner
of election.
    14. No Non-Interested Trustee of a Regulated Fund will have a
financial interest in any Co-Investment Transaction, other than
indirectly through share ownership in one of the Regulated Funds.

Applicants' Legal Analysis

    1. Section 57(a)(4) of the Act prohibits certain affiliated persons
of a BDC from participating in joint transactions with the BDC or a
company controlled by a BDC in contravention of rules as prescribed by
the Commission. Under section 57(b)(2) of the Act, any person who is
directly or indirectly controlling, controlled by, or under common
control with a BDC is subject to section 57(a)(4) of the Act. Section
57(i) of the Act provides that, until the Commission prescribes rules
under section 57(a)(4) of the Act, the Commission's rules under section
17(d) of the Act applicable to registered closed-end investment
companies will be deemed to apply to transactions subject to

section 57(a)(4) of the Act. Because the Commission has not adopted any
rules under section 57(a)(4) of the Act, rule 17d-1 thereunder applies.
    2. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
affiliated persons of a registered investment company from
participating in joint transactions with the company unless the
Commission has granted an order permitting such transactions. In
passing upon applications under rule 17d-1, the Commission considers
whether the company's participation 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.
    3. Applicants state that certain transactions effected as part of
the Co-Investment Program may be prohibited by sections 17(d) and
57(a)(4) of the Act and rule 17d-1 thereunder without a prior exemptive
order of the Commission to the extent that the Affiliated Investors
fall within the category of persons described by section 17(d) or
section 57(b) of the Act, as modified by rule 57b-1 thereunder with
respect to a Regulated Fund. Applicants believe that the proposed terms
and conditions will ensure would ensure that the conflicts of interest
that section 17(d) and section 57(a)(4) of the Act were designed to
prevent would be addressed and the standards for an order under rule
17d-1 under the Act are met.

Applicants' Conditions

    Applicants agree that any Order granting the requested relief shall
be subject to the following conditions:
    1. (a) Each Adviser will establish, maintain and implement policies
and procedures reasonably designed to ensure that each Adviser is
promptly notified, for each Regulated Fund the Adviser manages, of all
Potential Co-Investment Transactions \14\ that (i) an Adviser considers
for any other Regulated Fund or Affiliated Investor and (ii) fall
within the Regulated Fund's then-current Objectives and Strategies and
Board-Established Criteria.
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    \14\ No Primary Adviser will be the source of any Potential Co-
Investment Transactions under the requested Order.
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    (b) When an Adviser to a Regulated Fund is notified of a Potential
Co-Investment Transaction under condition 1(a), such Adviser will make
an independent determination of the appropriateness of the investment
for the Regulated Fund in light of the Regulated Fund's then-current
circumstances.
    2. (a) If the Adviser deems a Regulated Fund's participation in any
Potential Co-Investment Transaction to be appropriate for the Regulated
Fund, it will then determine an appropriate level of investment for the
Regulated Fund.
    (b) If the aggregate amount recommended by the applicable Adviser
to be invested by the applicable Regulated Fund in the Potential Co-
Investment Transaction, together with the amount proposed to be
invested by the other participating Regulated Funds and Affiliated
Investors, collectively, in the same transaction, exceeds the amount of
the investment opportunity, then the investment opportunity will be
allocated among them pro rata based on each participant's Available
Capital up \15\ to the amount proposed to be invested by each. The
applicable Adviser will provide the Eligible Trustees of each
participating Regulated Fund with information concerning each
participating party's Available Capital to assist the Eligible Trustees
with their review of the Regulated Fund's investments for compliance
with these allocation procedures.
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    \15\ ``Available Capital'' means (a) for each Regulated Entity,
the amount of capital available for investment determined based on
the amount of cash on hand, liquidity considerations, existing
commitments and reserves, if any, the targeted leverage level,
targeted asset mix, risk return and target-return profile, tax
implications, regulatory or contractual restrictions or consequences
and other investment policies and restrictions set from time to time
by the Board of the applicable Regulated Entity or imposed by
applicable laws, rules, regulations or interpretations, and (b) for
each Affiliated Investor, the amount of capital available for
investment determined based on the amount of cash on hand, liquidity
considerations, existing commitments and reserves, if any, the
targeted leverage level, targeted asset mix, risk return and target-
return profile, tax implications, regulatory or contractual
restrictions or consequences and other investment policies and
restrictions set from time to time by the Affiliated Investors'
directors, general partners, or adviser or imposed by applicable
laws, rules, regulations or interpretations.
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    (c) After making the determinations required in conditions 1 and
2(a), the applicable Adviser will distribute written information
concerning the Potential Co-Investment Transaction (including the
amount proposed to be invested by each participating Regulated Fund and
Affiliated Investor) to the Eligible Trustees of each participating
Regulated Fund for their consideration. A Regulated Fund will co-invest
with one or more other Regulated Funds and/or one or more Affiliated
Investors only if, prior to the Regulated Fund's participation in the
Potential Co-Investment Transaction, a Required Majority concludes
that:
    (i) The terms of the Potential Co-Investment Transaction, including
the consideration to be paid, are reasonable and fair to the Regulated
Fund and its shareholders and do not involve overreaching in respect of
the Regulated Fund or its shareholders on the part of any person
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (A) the interests of the shareholders of the Regulated Fund; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Funds or Affiliated
Investors would not disadvantage the Regulated Fund, and participation
by the Regulated Fund would not be on a basis different from or less
advantageous than that of other Regulated Funds or Affiliated
Investors; provided that, if any other Regulated Fund or Affiliated
Investor, but not the Regulated Fund itself, gains the right to
nominate a director for election to a portfolio company's board of
directors or the right to have a board observer or any similar right to
participate in the governance or management of the portfolio company,
such event shall not be interpreted to prohibit the Required Majority
from reaching the conclusions required by this condition (2)(c)(iii),
if:
    (A) The Eligible Trustees will have the right to ratify the
selection of such director or board observer, if any;
    (B) the applicable Adviser agrees to, and does, provide periodic
reports to the Regulated Fund's Board with respect to the actions of
such director or the information received by such board observer or
obtained through the exercise of any similar right to participate in
the governance or management of the portfolio company; and
    (C) any fees or other compensation that any Affiliated Investor or
any Regulated Fund or any affiliated person of any Affiliated Investor
or any Regulated Fund receives in connection with the right of an
Affiliated Investor or a Regulated Fund to nominate a director or
appoint a board observer or otherwise to participate in the governance
or management of the portfolio company will be shared proportionately
among the participating Affiliated Investors (who each may, in turn,
share its portion with its affiliated persons), and the participating
Regulated Funds in accordance with the amount of each party's
investment; and
    (iv) the proposed investment by the Regulated Fund will not benefit
the Advisers, the Affiliated Investors, the other Regulated Funds or
any Primary Adviser or any affiliated person of any

of them (other than the parties to the Co-Investment Transaction),
except
    (A) to the extent permitted by condition 13;
    (B) to the extent permitted by section 17(e) or 57(k) of the Act,
as applicable;
    (C) indirectly, as a result of an interest in the securities issued
by one of the parties to the Co-Investment Transaction; or
    (D) in the case of fees or other compensation described in
condition 2(c)(iii)(C).
    3. Each Regulated Fund has the right to decline to participate in
any Potential Co-Investment Transaction or to invest less than the
amount proposed.
    4. The applicable Adviser will present to the Board of each
Regulated Fund, on a quarterly basis, a record of all investments in
Potential Co-Investment Transactions made by any of the other Regulated
Funds or Affiliated Investors during the preceding quarter that fell
within the Regulated Fund's then-current Objectives and Strategies and
Board Established Criteria that were not made available to the
Regulated Fund, and an explanation of why the investment opportunities
were not offered to the Regulated Fund. All information presented to
the Board pursuant to this condition will be kept for the life of the
Regulated Fund and at least two years thereafter, and will be subject
to examination by the Commission and its staff.
    5. Except for Follow-On Investments made in accordance with
Condition 8,\16\ a Regulated Fund will not invest in reliance on the
Order in any issuer in which a Related Party \17\ has an investment.
The Adviser will maintain books and records that demonstrate compliance
with this condition for each Regulated Fund.
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    \16\ This exception applies only to Follow-On Investments by a
Regulated Fund in issuers in which that Regulated Fund already holds
investments.
    \17\ The term ``Related Party'' means (i) any Close Affiliate
and (ii) in respect of matters as to which any Adviser has
knowledge, any Remote Affiliate.
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    6. A Regulated Fund will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of
securities to be purchased, settlement date, and registration rights
will be the same for each participating Regulated Fund and Affiliated
Investor. The grant to an Affiliated Investor or another Regulated
Fund, but not the Regulated Fund, of the right to nominate a director
for election to a portfolio company's board of directors, the right to
have an observer on the board of directors or similar rights to
participate in the governance or management of the portfolio company
will not be interpreted so as to violate this condition 6, if
conditions 2(c)(iii)(A), (B) and (C) are met.
    7. (a) If any Affiliated Investor or any Regulated Fund elects to
sell, exchange or otherwise dispose of an interest in a security that
was acquired in a Co-Investment Transaction, the applicable Adviser
will: \18\
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    \18\ Any Affiliated Proprietary Account that is not advised by
an Adviser is itself deemed to be an Adviser for purposes of
Conditions 7(a)(i) and 8(a)(i).
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    (i) notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed disposition at the earliest
practical time; and
    (ii) formulate a recommendation as to participation by each
Regulated Fund in the disposition.
    (b) Each Regulated Fund will have the right to participate in such
disposition on a proportionate basis, at the same price and on the same
terms and conditions as those applicable to the participating
Affiliated Investors and Regulated Funds.
    (c) A Regulated Fund may participate in such disposition without
obtaining prior approval of the Required Majority if: (i) The proposed
participation of each Regulated Fund and each Affiliated Investor in
such disposition is proportionate to its outstanding investments in the
issuer immediately preceding the disposition; (ii) the Board of the
Regulated Fund has approved as being in the best interests of the
Regulated Fund the ability to participate in such dispositions on a pro
rata basis (as described in greater detail in the application); and
(iii) the Board of the Regulated Fund is provided on a quarterly basis
with a list of all dispositions made in accordance with this condition.
In all other cases, the Adviser will provide its written recommendation
as to the Regulated Fund's participation to the Eligible Trustees, and
the Regulated Fund will participate in such disposition solely to the
extent that a Required Majority determines that it is in the Regulated
Fund's best interests.
    (d) Each Affiliated Investor and each Regulated Fund will bear its
own expenses in connection with any such disposition.
    8. (a) If any Affiliated Investor or any Regulated Fund desires to
make a Follow-On Investment in a portfolio company whose securities
were acquired in a Co-Investment Transaction, the applicable Advisers
will:
    (i) Notify each Regulated Fund that participated in the Co-
Investment Transaction of the proposed transaction at the earliest
practicable time; and
    (ii) formulate a recommendation as to the proposed participation,
including the amount of the proposed Follow-On Investment, by each
Regulated Fund.
    (b) A Regulated Fund may participate in such Follow-On Investment
without obtaining prior approval of the Required Majority if: (i) the
proposed participation of each Regulated Fund and each Affiliated
Investor in such investment is proportionate to its outstanding
investments in the issuer immediately preceding the Follow-On
Investment; and (ii) the Board of the Regulated Fund has approved as
being in the best interests of the Regulated Fund the ability to
participate in Follow-On Investments on a pro rata basis (as described
in greater detail in the application). In all other cases, the Adviser
will provide its written recommendation as to the Regulated Fund's
participation to the Eligible Trustees, and the Regulated Fund will
participate in such Follow-On Investment solely to the extent that a
Required Majority determines that it is in the Regulated Fund's best
interests.
    (c) If, with respect to any Follow-On Investment:
    (i) The amount of the opportunity is not based on the Regulated
Funds' and the Affiliated Investors' outstanding investments
immediately preceding the Follow-On Investment; and
    (ii) the aggregate amount recommended by the applicable Adviser to
be invested by the applicable Regulated Fund in the Follow-On
Investment, together with the amount proposed to be invested by the
other participating Regulated Funds and Affiliated Investors,
collectively, in the same transaction, exceeds the amount of the
investment opportunity; then the amount invested by each such party
will be allocated among them pro rata based on each party's Available
Capital, up to the amount proposed to be invested by each.
    (d) The acquisition of Follow-On Investments as permitted by this
condition will be considered a Co-Investment Transaction for all
purposes and subject to the other conditions set forth in the
application.
    9. The Non-Interested Trustees of each Regulated Fund will be
provided quarterly for review all information concerning Potential Co-
Investment Transactions that fell within the Regulated Fund's then-
current Objectives and Strategies and Board-Established Criteria,
including investments in Potential Co-Investment Transactions made by
other Regulated Funds or Affiliated Investors that the

Regulated Fund considered but declined to participate in, and
concerning Co-Investment Transactions in which the Regulated Fund
participated, so that the Non-Interested Trustees may determine whether
all Potential Co-Investment Transactions and Co-Investment Transactions
during the preceding quarter, including those Potential Co-Investment
Transactions which the Regulated Fund considered but declined to
participate in, comply with the conditions of the Order. In addition,
the Non-Interested Trustees will consider at least annually: (a) The
continued appropriateness for the Regulated Fund of participating in
new and existing Co-Investment Transactions, and (b) the continued
appropriateness of any Board-Established Criteria.
    10. Each Regulated Fund will maintain the records required by
section 57(f)(3) of the Act as if each of the Regulated Funds were a
BDC and each of the investments permitted under these conditions were
approved by the Required Majority under section 57(f) of the Act.
    11. No Non-Interested Trustee of a Regulated Fund will also be a
director, general partner, managing member or principal, or otherwise
an ``affiliated person'' (as defined in the Act) of any of the
Affiliated Investors.
    12. The expenses, if any, associated with acquiring, holding or
disposing of any securities acquired in a Co-Investment Transaction
(including, without limitation, the expenses of the distribution of any
such securities registered for sale under the 1933 Act) will, to the
extent not payable by the Advisers under their respective investment
advisory agreements with Affiliated Investors and the Regulated Funds,
be shared by the Regulated Funds and the Affiliated Investors in
proportion to the relative amounts of the securities held or to be
acquired or disposed of, as the case may be.
    13. Any transaction fee \19\ (including break-up, structuring,
monitoring or commitment fees but excluding broker's fees contemplated
by section 17(e) or 57(k) of the Act, as applicable), received in
connection with a Co-Investment Transaction will be distributed to the
participating Regulated Funds and Affiliated Investors on a pro rata
basis based on the amounts they invested or committed, as the case may
be, in such Co-Investment Transaction. If any transaction fee is to be
held by an Adviser pending consummation of the transaction, the fee
will be deposited into an account maintained by the Adviser at a bank
or banks having the qualifications prescribed in section 26(a)(1) of
the Act, and the account will earn a competitive rate of interest that
will also be divided pro rata among the participating Regulated Funds
and Affiliated Investors based on the amount they invest in such Co-
Investment Transaction. None of the Advisers, the Primary Advisers, the
Affiliated Investors, the other Regulated Funds nor any affiliated
person of the Regulated Funds or Affiliated Investors will receive
additional compensation or remuneration of any kind as a result of or
in connection with a Co-Investment Transaction (other than (a) in the
case of the Regulated Funds and the Affiliated Investors, the pro rata
transaction fees described above and fees or other compensation
described in condition 2(c)(iii)(C), and (b) in the case of an Adviser
or Primary Adviser, investment advisory fees paid in accordance with
their respective agreements between the Advisers and the Regulated Fund
or Affiliated Investor).
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    \19\ Applicants are not requesting and the staff is not
providing any relief for transaction fees received in connection
with any Co-Investment Transaction.
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    14. If the Holders own in the aggregate more than 25% of the
Shares, then the Holders will vote such Shares as directed by an
independent third party when voting on (1) the election of trustees;
(2) the removal of one or more trustees; or (3) all other matters under
either the Act or applicable state law affecting the Board's
composition, size or manner of election.
    15. Each Regulated Fund's chief compliance officer, as defined in
rule 38a-1(a)(4) under the Act, will prepare an annual report for its
Board each year that evaluates (and documents the basis of that
evaluation) the Regulated Fund's compliance with the terms and
conditions of the application and the procedures established to achieve
such compliance.
    16. The Affiliated Proprietary Accounts will not be permitted to
invest in a Potential Co-Investment Transaction except to the extent
the aggregate demand from the Regulated Funds and the other Affiliated
Investors is less than the total investment opportunity.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-14844 Filed 7-10-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register: September 26, 2007 (Volume 72, Number 186)]
[Notices]
[Page 54651]
[DOCID:fr26se07-60]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RP04-42-000]

Southern Natural Gas Company; Notice of Technical Conference

September 20, 2007.
    The Federal Energy Regulatory Commission's (Commission or FERC)
September 27, 2006 Order in the above-captioned proceeding,\1\ directed
Southern Natural Gas Company (Southern) to file revised tariff sheets
addressing the requirements of the Commission's Policy Statement issued
in Docket No. PL04-3-000 concerning liquefiable hydrocarbon gas quality
specifications, and directed that a technical conference be held to
address issued raised by that filing. Southern filed pro forma tariff
sheets on August 15, 2007.
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    \1\ Southern Natural Gas Company, 116 FERC ] 61,295 (2006).
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    Take notice that a technical conference will be held on Monday,
October 15, 2007, at 10 a.m. (EST), in a room to be designated at the
offices of the Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426.
    FERC conferences are accessible under section 508 of the
Rehabilitation Act of 1973. For accessibility accommodations please
send an e-mail to<EMAIL_ADDRESS>or call toll free (866) 208-
3372 (voice) or<PHONE_NUMBER> (TTY), or send a fax to<PHONE_NUMBER> with
the required accommodations.
    All interested parties and staff are permitted to attend. For
further information please contact Jacob Silverman at<PHONE_NUMBER> or
e-mail Jacob<EMAIL_ADDRESS>
Kimberly D. Bose,
Secretary.
 [FR Doc. E7-18984 Filed 9-25-07; 8:45 am]

BILLING CODE 6717-01-P