June 9, 2021
Via Email
Harry Pangas
Dechert LLP
1900 K Street, NW
Washington, DC 20006
harry.pangas@dechert.com
Re: Barings Private Credit LLC
Registration Statement on Form 10
File No. 000-56280
Dear Mr. Pangas:
On May 10, 2021, you filed a registration statement on Form 10 on behalf
of Barings Private
Credit LLC (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.
LEGAL COMMENTS
Page 1 Explanatory Note
1. In the first paragraph, disclosure states that the Company intends to
convert to a Maryland
corporation. Please tell us whether the conversion is subject to a shareholder
vote and, if so, when
such vote will occur.
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2. In the fourth paragraph, disclosure describes certain provisions of the
Exchange Act to
which the Company will be subject. Please clarify that the Company will be
subject to the proxy
rules in section 14 of the Exchange Act and that the Company, directors,
officers, and principal
shareholders will be subject to the reporting requirements of sections 13 and
16 of the Exchange
Act.
3. At the end of the first sentence in the fourth bullet point, please add,
Therefore, the
Company s shares constitute illiquid investments.
4. Please add bullet points explaining that:
x Investment in the Company is suitable only for sophisticated investors
and requires the
financial ability and willingness to accept the high risks and lack of
liquidity inherent in an
investment in the Company.
x The Fund intends to invest primarily in privately-held companies for
which very little public
information exists. Such companies are also generally more vulnerable
to economic
downturns and may experience substantial variations in operating
results.
x The privately-held companies and below-investment-grade securities in
which the Fund will
invest will be difficult to value and are illiquid.
x The Fund will elect to be regulated as a BDC under the 1940 Act, which
imposes numerous
restrictions on the activities of the Fund, including restrictions on
leverage and on the nature
of its investments.
Page 3 Formation Transactions/Initial Portfolio
5. In the first paragraph, disclosure states that the Company intends to
acquire a select portfolio
of investments (the Initial Portfolio ) and will use the proceeds from an
initial closing, in which
the Company expects to receive $450 million, along with borrowing under one or
more credit
facilities, to finance the acquisition prior to the Company s election to be
regulated as a business
development company.
a. On page F-8 of the registration statement, disclosure indicates
that the initial closing
already occurred. Please update disclosure throughout the
registration statement,
including as applicable the Private Offering up to $1 billion, to
reflect the transaction,
e.g., Item 2 Financial Information, Item 4. Security
Ownership of Certain Beneficial
Owners and Management, Item 10. Recent Sales of Unregistered
Securities, and
Item 11. Description of Registrant s Securities to be
Registered. See Item 1 of Form
10 (cross-referencing Item 101 of Regulation S-K, which requires
information that is
material to an understanding of the registrant s business).
b. Please discuss whether, as a BDC, the Company intends to acquire
investments from
MassMutual and CM Life or other affiliates of the Company. Please
provide a legal
analysis that explains how doing so is consistent with the
requirements of the Investment
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Company Act of 1940, including, but not limited to, section 57
(transactions with
affiliates).
6. In the second sentence of the second paragraph, disclosure refers to
unfunded obligation
associated with each investment in the Initial Portfolio. 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. 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.
7. In the fifth line of the third paragraph, disclosure states, Barings
will conduct a valuation
bring-down to confirm whether there have been any material changes to the fair
value of the
investments and obligations in the Initial Portfolio and will adjust the
purchase price accordingly.
Please define valuation bring-down using plain English.
Page 4 The Private Offering
8. In the first paragraph, disclosure states that shares are being sold
under the exemption
provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the
Securities Act ), only
to investors that are accredited investors in accordance with Rule 506 of
Regulation D
promulgated under the Securities Act, and other exemptions of similar import in
the laws of the
states and jurisdictions where the offering will be made. Please explain
supplementally what you
mean by other exemptions of similar import in the laws of the states and
jurisdictions.
9. In the second paragraph, disclosure states that the Company intends
to apply for exemptive
relief from SEC that, if granted, will permit us to issue multiple classes of
shares of our common
stock and to impose various fees and charges on the different classes, the
details for which will be
finalized at a later date at our discretion (the Multi-Class Exemptive
Relief ). Please advise us of
the status of the exemptive application. If the application is pending, revise
the disclosure
throughout the registration statement to clarify that such relief has not yet
been granted and may not
be granted.
Page 4 Description of Business
10. The second sentence in the second paragraph repeats the language in
the first sentence of the
first paragraph. Please revise.
11. In the last line of the third paragraph, disclosure states, These
opportunistic investments in
non-qualifying assets may include but may not be limited to assets from the
following asset classes:
European direct lending, structured credit, private asset-backed securities,
high-yield investments,
special situations, real estate debt and/or mortgage securities.
a. Please clarify whether these investments will be rated below
investment grade or, if not
rated, would be considered to be below investment grade if they had
been rated.
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b. In the section titled, Risk Factors, please add risk disclosure
that addresses each of
these asset classes.
c. Please be more specific about what kinds of structured credit
the Company will invest
in and add tailored risk disclosure, if applicable.
Pages 15-16 Investment Advisory Agreement
12. Please provide a graphic and examples demonstrating the operation of the
incentive fee.
13. Please add to this section a fee table that conforms to requirements of
Item 3 of Form N-2.
Such disclosure will be helpful to investors.
14. Please add an example that conforms to the requirements of Instruction
11 to Item 3.1 of
Form N-2. We further request that you include, in the explanatory paragraph
following the
example, a second example where the five percent return results entirely from
net realized capital
gains and which uses language substantially the same as the following: You
would pay the
following expenses on a $1,000 investment, assuming a 5.0% annual return
resulting entirely from
net realized capital gains (all of which is subject to our incentive fee on
capital gains): $ ___ $ ___ $
___ $ ___. Such disclosure will be helpful to investors.
15. Please describe the terms of the sub-advisory agreement, including
compensation. See
Item 1 of Form 10 (cross-referencing to Item 101 of Regulation S-K, which
requires information
that is material to an understanding of the registrant s business).
Page 44 We may not be able to pay distributions to our stockholders, our
distributions may
not grow over time and a portion of distributions paid to our stockholders may
be a return of
capital.
16. In the third line of the third paragraph, disclosure refers to a
return of capital. Please
define the term using plain English.
Page 48 We are subject to risks associated with the current interest rate
environment and, to
the extent we use debt to finance our investments, changes in interest rates
will affect our cost
of capital and net investment income.
17. The first paragraph refers to the possibility that the Company will
issue preferred stock.
Please confirm that the Company will not issue preferred shares within one
year. Otherwise, please
add appropriate strategy, risk, and fee table (e.g., dividend expenses)
disclosure.
Page 72 Nomination and Corporate Governance Committee
18. Please add disclosure regarding promoters and certain control persons
under Item 401(g) of
Regulation S-K. See Item 5 of Form 10.
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Page 82 Action by Stockholders
19. The last sentence states, These provisions, combined with the
requirements of our Bylaws
regarding the calling of a stockholder-requested special meeting of
stockholders discussed below,
may have the effect of delaying consideration of a stockholder proposal until
the next annual
meeting. Please revise the last sentence to state that the written consent
provisions may have the
effect of delaying consideration of a shareholder proposal indefinitely,
instead of merely to the next
annual meeting.
ACCOUNTING COMMENTS
20. Please explain supplementally if the Incentive Fee Cap on page 16 is
subject to recoupment.
If so, please confirm the recoupment period is limited to a 3 year period.
21. On page 3, under the heading Formation Transactions/Initial
Portfolio, disclosure
indicates the Company expects to acquire a select portfolio of debt investments
( Initial Portfolio ).
Please include a schedule of the investments subject to this commitment,
prepared in accordance
with Regulation S-X. Additionally, confirm that the Company evaluated the
disclosure
requirements for the Initial Portfolio in accordance with FASB ASC 450,
Contingencies.
* * * * * *
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
cc: John Lee, Branch Chief
Christian Sandoe, Assistant Director
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