November 5, 2020
Via Email
William J. Bielefeld
Dechert LLP
1900 K Street, NW
Washington, DC 20006
William.bielefeld@dechert.com
Re: SL Investment Corp.
Registration Statement on Form 10
File No. 000-56211
Dear Mr. Bielefeld:
On October 6, 2020, you filed a registration statement on Form 10 on
behalf of SL
Investment Corp. (the Company ). We have reviewed the registration
statement and have
provided our comments below. Where a comment is made in one location, it is
applicable to all
similar disclosure appearing elsewhere in the registration statement. All
capitalized terms not
otherwise defined herein have the meaning given to them in the registration
statement.
Please respond to this letter within ten (10) business days by either
amending the filing,
providing the requested information, or advising us when you will provide the
requested
information. We may have additional comments after reviewing your responses to
the following
comments, or any amendment to the filing.
We note that the Company is voluntarily registering shares of its
common stock under
Section 12(g) of the Securities Exchange Act of 1934 ( Exchange Act ).
Please note that a filing
on Form 10 goes effective automatically by lapse of time 60 days after the
original filing date,
pursuant to Exchange Act Section 12(g)(1). If our comments are not
satisfactorily addressed
within this 60-day time period, you should consider withdrawing the Company s
Form 10 prior
to its effectiveness, and re-filing a revised Form 10 that includes changes
responsive to our
comments. If the Company chooses not to withdraw its Form 10 registration
statement, it will be
subject to the reporting requirements of Exchange Act Section 13(a).
Additionally, we will
continue to review the filing until all of our comments have been
satisfactorily addressed.
Explanatory Note
1. Please add a section with bullet points and in bold font that
highlights the risks of
investing in the Company, such as the following:
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Investing in our shares may be considered speculative and involves a
high degree of risk,
including the following:
An investment in our shares is not suitable for you if you
might need access to the
money you invest in the foreseeable future.
You should not expect to be able to sell your shares
regardless of how we
perform.
If you are unable to sell your shares, you will be unable to
reduce your exposure
on any market downturn.
Shares of our common stock are not currently listed on an
exchange and given
that we have no current intention of pursuing any such listing,
it is unlikely that a
secondary trading market will develop for shares of our common
stock. In
addition, given that there is no guarantee on if or when the
Company will be able
to consummate the limited liquidity event described herein and
the fact that the
Company will not seek to wind down and/or liquidate and dissolve
until seven
years following the Initial Closing (as defined below), an
investment in shares of
our common stock is not suitable for you if you might need
access to the money
you invest in the foreseeable future.
Our distributions may be funded from unlimited amounts of
offering proceeds or
borrowings, which may constitute a return of capital and reduce
the amount of
capital available to us for investment. Any capital returned to
you through
distributions will be distributed after payment of fees and
expenses.
We will invest in securities that are rated below investment
grade by rating
agencies or that would be rated below investment grade if they
were rated. Below
investment grade securities, which are often referred to as
"junk" have
predominantly speculative characteristics with respect to the
issuer's capacity to
pay interest and repay principal. They will also be difficult to
value and are
illiquid.
Page 2 Item 1. Business
2. The third paragraph states that the Company intends to invest in senior
secured or
unsecured loans, subordinated loans and mezzanine loans. If the Company will
hold a
significant amount of covenant-lite loans, please revise your principal risk
disclosure to include
the heightened risks associated with covenant-lite loans.
3. In the second sentence of the fourth paragraph, disclosure states that
the Company
expects to generate income from, among other things, other fees. Please
specify what these
other fees are.
Page 3 Item 1. Business
4. In the fifth sentence of the fourth paragraph, disclosure refers to
add-on acquisitions.
Please define this term using plain English.
5. In the fifth paragraph, disclosure states,
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We expect to conduct private offerings of our Common Stock to investors
in
reliance on exemptions from the registration requirements of the
Securities Act of
1933, as amended (the Securities Act ). At the closing of any
private offering,
each investor will make a capital commitment (a Capital Commitment
) to
purchase shares of Common Stock pursuant to a subscription agreement
entered
into with us. Investors will be required to fund drawdowns to purchase
shares of
our Common Stock up to the amount of their respective Capital
Commitments
each time we deliver a notice to the investors.
a. Please add disclosure in this section that specifies the
exemptions on which the
Company expects to rely and the minimum amount of notice the Company
will provide
regarding drawdowns.
b. Please add disclosure that explains what happens to investors
who fail to honor
their obligations.
6. Please disclose in this section the expected maturity of the Company s
investments.
Page 4 Item 1. Business
7. In the fifth paragraph, in the section titled, Middle Market
Lending, disclosure states
that the Company will invest in middle market companies, typically with
annual EBITDA of $5
million to $100 million. Elsewhere, however, disclosure refers to a range of
$15 million to
$100 million. Please address the inconsistency.
Page 5 Investment Strategy
8. In the first sentence of the first paragraph, disclosure states, Our
primary investment
strategy is to make privately negotiated senior secured credit investments in
U.S. middle market
companies that have leading market positions, enjoy high barriers to entry,
generate strong and
stable free cash flow and are led by a proven management team with strong
financial sponsor
backing. Please define high barriers to entry, using plain English.
Page 10 Preliminary Screen
9. In the last sentence of the second paragraph, disclosure states,
Opportunities that gain
consensus advance to the Due Diligence & Structuring phase. Please clarify
what you mean by
gain consensus. For example, on the next page, in the section titled,
Investment Committee
Approval & Closing, disclosure is clear because it states that a majority of
the Investment
Committee must approve a transaction in order for the Company to pursue the
opportunity.
Page 11 Portfolio Monitoring and Risk Management
10. In the second sentence of the second paragraph, disclosure states,
Performing loans are
typically discussed every quarter, while any loan that has been downgraded
under our Internal
Risk Rating scale is typically discussed quarterly at a minimum and more
frequently as
appropriate. Please define performing loans using plain English.
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Page 47 Our interests in any subsidiary that enters into a Credit
Facility would be
subordinated, and we may not receive cash on our equity interests from any such
subsidiary.
11. Please tell us supplementally whether any subsidiary referred to in
this section includes
domestic and/or foreign entities.
Page 51 Uncertainty resulting from the U.S. political climate could
negatively impact our
business, financial condition and results of operations.
12. Please consider whether to add disclosure regarding the circumstances
surrounding the
2020 U.S. presidential election.
Page 70 Our Series A Preferred Stock is subject to a risk of early
redemption, and
holders may not be able to reinvest their funds.
13. Rule 23c-2 of the Investment Company Act of 1940 states that if less
than all the
outstanding securities of a class or series are to be redeemed, the redemption
shall be made in
non-discriminatory manner (such as on a pro rata basis). Please revise the
disclosure in this
section to clarify that involuntary redemptions will be conducted consistent
with rule 23c-2.
Page 75 Contractual Obligations and Off-Balance Sheet Arrangements
14. In the first sentence, disclosure states, We have entered into
certain contracts under
which we have material future commitments. Please explain to us whether the
Company will
make capital commitments that may be unfunded for some period of time. If so,
please explain
to us whether the Company will treat its unfunded commitments as senior
securities under
section 61 of the Investment Company Act of 1940. If the Company will have
unfunded
commitments that it will not treat as senior securities, please provide us with
a representation that
the Company reasonably believes that its assets will provide adequate cover to
allow it to satisfy
its future unfunded investment commitments, and include an explanation as to
why the Company
believes it will be able to cover its future unfunded investment commitments.
Exhibit 3.1a Delaware Certificate of Incorporation
15. The first sentence of Article IX, Section 9.4 provides:
Exclusive Forum. To the fullest extent permitted by law, unless the
Corporation
consents in writing to the selection of an alternative forum, the sole
and exclusive
forum for (i) any derivative action or proceeding brought on behalf of
the
Corporation, (ii) any action asserting a claim of breach of a fiduciary
duty owed
by any director, officer or other employee of the Corporation to the
Corporation
or the Corporation s stockholders, (iii) any action asserting a claim
arising
pursuant to any provision of the Delaware General Corporation Law, the
Bylaws
or this Certificate of Incorporation, or the securities, antifraud,
unfair trade
practices or similar laws of any international, national, state,
provincial, territorial,
local or other governmental or regulatory authority, including, in each
case, the
applicable rules and regulations promulgated thereunder, or (iv) any
action
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asserting a claim governed by the internal affairs doctrine shall be a
federal or
state court located in the state of Delaware.
Please supplementally provide a legal analysis that addresses the
propriety of designating
a federal or state court in the state of Delaware as an exclusive forum with
respect to claims
arising under the federal securities laws.
* * * * * *
We remind you that the Company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff. Should you have any questions regarding this letter,
please contact me at
(202) 551-5166.
Sincerely,
/s/ Lisa N. Larkin
Lisa N. Larkin
Senior Counsel
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