September 20, 2021
Via Email
Thomas Friedmann, Esq.
Thomas Cheeseman, Esq.
Dechert LLP
One International Place, 40th Floor
100 Oliver Street
Boston, MA 02110-2605
Re: Lafayette Square Mid-Atlantic BDC, LLC (File No. 000-56331)
Lafayette Square Gulf Coast BDC, LLC (File No. 000-56330)
Lafayette Square Southeast BDC, LLC (File No. 000-56329)
Dear Messrs. Friedmann and Cheeseman:
On August 20, 2021, you filed three registration statements on Form 10
on behalf of
Lafayette Square Mid-Atlantic BDC, LLC ( Mid-Atlantic BDC ), Lafayette
Square Gulf Coast
BDC, LLC ( Gulf Coast BDC ), and Lafayette Square Southeast BDC, LLC (
Southeast BDC )
(each a Company and together the Companies ) in connection with the
registration of each
Company s common stock under Section 12(g) of the Securities Exchange Act of
1934 (the
Exchange Act ). We have reviewed the registration statements, and have
provided our
comments below. For convenience, we generally organized our comments using
headings,
defined terms, and page numbers from the Mid-Atlantic BDC registration
statement. Where a
comment is made in one location, it is applicable to all similar disclosure
appearing elsewhere in
the Mid-Atlantic BDC registration statement, as well as to similar disclosure
appearing in the
registration statements of the Gulf Coast BDC and the Southeast BDC.
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 each Company is voluntarily registering shares of its
common stock under
Section 12(g) of the 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 Section 12(g)(1)
of the Exchange Act. If our comments are not satisfactorily addressed within
this 60-day time
period, you should consider withdrawing each Company s Form 10 prior to its
effectiveness, and
re-filing a revised Form 10 that includes changes responsive to our comments.
If a Company
chooses not to withdraw its Form 10 registration statement, it will be subject
to the reporting
Thomas Friedmann, Esq.
Thomas Cheeseman, Esq.
September 20, 2021
Page 2 of 6
requirements of Section 13(a) of the Exchange Act. Additionally, we will
continue to review the
filing until all of our comments have been satisfactorily addressed.
Legal Comments
Explanatory Note, p. 2
1. In the third paragraph of this section, please disclose that the Fund
will be subject to the
proxy rules in addition to the Exchange Act reporting obligations upon
effectiveness of
the registration statement.
2. Please revise the last bullet point as follows: "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.
3. Please add the following two bullet points:
a. 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.
b. The privately-held companies and below-investment grade securities
in which the
Fund will invest will be difficult to value and are illiquid.
Forward Looking Statements, pp. 2-4
4. In the last paragraph, please revise the last sentence as follows:
The forward-looking
statements are excluded from the safe harbor protection provided by
section 27A of
the Securities Act of 1933 and by Section 21E of the Exchange Act.
Summary of Risk Factors, pp. 5-6
5. Please add a risk factor stating that an investor will be required to
make capital
contributions to purchase shares of Common Stock each time the Company
delivers a
drawdown notice, including potential "Catch-Up Purchases."
Item 1. Business, pp. 7-8
6. In the third paragraph of the introductory section, please clarify
whether "Our debt
instruments" refers to the loans the Fund will make or in the debt
instruments in which
the Fund intends to invest generally.
Thomas Friedmann, Esq.
Thomas Cheeseman, Esq.
September 20, 2021
Page 3 of 6
7. In the first paragraph on page 8, you state that the Company's proposed
program of
supporting the employees of portfolio companies is consistent with the
mandate of
providing managerial assistance to eligible portfolio companies.
Please give examples
of the "curated services" to be offered to employees of portfolio
companies with regard to
"financial security and economic mobility issues" and explain how these
services meet
the definition of managerial assistance in section 2(a)(47) of the
1940 Act.
8. In the first paragraph on page 8, in the last sentence, please clarify
that the costs will
ultimately be borne by the Company s shareholders.
9. Since the registration statement will not go effective until the Company
has filed an
election to be treated as a BDC, please revise the disclosure in the last
paragraph to use
the past tense (e.g., we have filed with the SEC ).
Investment Strategy, p. 9
10. The general discussion of the Company's business suggests that the
Company may also
hold other debt instruments and investments in addition to loans. If
these other
instruments may be principal investments, please briefly describe them
here.
Promoting the Public Welfare, p. 10
11. Please combine this section with "Focus on Serving the Public Welfare" on
page 11. We
note that investments may be designed to serve the public welfare as well
as potentially
be eligible to receive CRA credit from from applicable banking
regulators; please move
this disclosure to the beginning of this discussion.
Potential CRA Credit for Insured Depositary Institutions, p. 11
12. The CRA addresses lending by federally insured banks and institutions so
it is unclear
how it applies to loans made by the Company, since the Company is not a
federally
insured bank or institution. Please expand the disclosure to explain the
proposed
arrangement between the borrower, the Company, and insured depository
institutions
(e.g., does the Company intend to market its shares to federally insured
banks and
institutions and can it pass through CRA credits to eligible
shareholders). Please
emphasize that an investment in the Company is not currently deemed a CRA
eligible
investment by the OCC, FDIC or FRB.
Thomas Friedmann, Esq.
Thomas Cheeseman, Esq.
September 20, 2021
Page 4 of 6
13. In first paragraph, please clarify the relevance of the revised CRA
regulations to the
Company s business (e.g., would the revised CRA regulations provide
additional
guidance on whether financial institutions may claim CRA credit for an
investment in the
Company's Shares; would the revised regulation no longer incentivize
insured depository
institutions to earn CRA credits; has the OCC indicated what the new
rulemaking would
cover and if so, how would that rulemaking impact the BDC s
investments).
14. Supplementally, please discuss the status of the Company's discussions
with the OCC on
whether a national bank's investment in the Company would qualify as a
CRA activity.
15. In the first paragraph on page 12, please bold the following two
sentences: There is no
guarantee the OCC will confirm as a CRA activity . Insured depository
institution
investors .
16. Please highlight the last sentence and move the text to the first
paragraph of this section
( However, we can offer no assurance ... ).
Private Offering, pp. 16-17
17. In the second paragraph, "Capital Commitments" is not a defined term.
Please revise the
disclosure accordingly.
Base Management Fee, p. 17
18. Please consider including a fee table in this section that conforms to
the requirements of
Item 3.1 of Form N-2; the staff believes that such disclosure would be
helpful to
investors.
Potential Advantages of a BDC Compared to Other Institutional Investment
Vehicles, p. 25
19. Please clarify that a public market may never develop for shares of the
Company's
Common Stock.
Item 1.A. Risk Factors
The current state of CRA regulations , pp. 37-38
20. For clarity, please move the first paragraph to the end of this risk
factor section.
21. If accurate, please clarify that certain of the Company s investments
may not be CRA-
qualified at all.
Thomas Friedmann, Esq.
Thomas Cheeseman, Esq.
September 20, 2021
Page 5 of 6
22. As noted above, please explain the relevance of the CRA to the Fund's
investment
strategy.
23. Please move the last two sentences of this section to the beginning of
this risk factor
section ( We can offer no assurance . Whether investments . ).
We will be subject to risks associated with any credit facility, p. 45
24. The disclosure states that a subsidiary of the Company may enter into
one or more
secured revolving credit facilities. Please describe this subsidiary in
greater detail in Item
1, and clarify whether this subsidiary is wholly owned or controlled by
the BDC,
including if the subsidiary is a controlled foreign corporation. We may
have additional
comments.
Risks relating to compliance with AIFMD, p. 49
25. Please explain why this risk is relevant to the Company (e.g., if
accurate, that it will be
triggered if the Company's Common Stock is sold in the EEA and not as a
result of the
Company's portfolio holdings).
Item 7. Certain Relationships and Related Transactions and Director
Independence, pp.
81-84
Co-investment by the Company, p. 82
26. Please combine with the previous section, "Co-Investment Transactions."
Item 11. Description of Registrant s Securities to Be Registered, pp. 87-92
Derivative Actions, p. 92
27. Please clarify that with respect to the undertaking related to
reimbursement, the
provision does not apply to claims arising under the federal securities
laws.
Accounting Comments
Item 1.A. Risk Factors: We do not currently have comprehensive documentation of
our
internal controls , p. 48
Thomas Friedmann, Esq.
Thomas Cheeseman, Esq.
September 20, 2021
Page 6 of 6
28. In the second paragraph of this risk factor, please explain how the
statement Our
independent registered public accounting firm will not be required to
attest to the
effectiveness of our internal control over financial reporting until the
year following our
first annual report required to be filed with the SEC is consistent
with the following
disclosure on page 29: pursuant to Rule 13a-15 under the Exchange
Act, our
management must prepare an annual report regarding its assessment of our
internal
control over financial reporting, which must be audited by our
independent registered
public accounting firm once the Company can no longer avail itself of
the exemption
under the JOBS Act.
* * * * *
We note that portions of the filing are incomplete. We may have
additional comments on
those portions when you complete them in a pre-effective amendment, on
disclosures made in
response to this letter, or on exhibits added in any pre-effective amendments.
A response to this letter should be in the form of a pre-effective
amendment filed
pursuant to rule 12b-15 under the Exchange Act. The pre-effective amendment
should be
accompanied by a supplemental letter that includes your responses to each of
the comments.
Where no change will be made in the filing in response to a comment, please
indicate this fact in
your supplemental letter and briefly state the basis for your position.
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.
You may contact me at (202) 551-6870 if you have any questions.
Sincerely,
/s/ Jaea F. Hahn
Jaea F. Hahn
Senior Counsel
cc: Andrea Ottomanelli Magovern, Assistant Director
Sumeera Younis, Branch Chief
Catalina Jaime, Branch Chief (Accounting)
Christina DiAngelo Fettig, Accounting Reviewer