December 21, 2021
Via Email
Joshua Wechsler
Fried, Frank, Harris Shriver & Jacobsen LLP
One New York Plaza
New York, NY 10004
Joshua.Wechsler@friedfrank.com
Re: Goldman Sachs Middle Market Lending Corp. II
Registration Statement on Form 10
File No. 000-56369
Dear Mr. Wechsler:
On November 22, 2021, you filed a registration statement on Form 10 on
behalf of Goldman
Sachs Middle Market Lending Corp. II (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. Please add the following:
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a. The Company is an emerging growth company, as defined in the
Jumpstart Our Business
Startups Act of 2012. As a result, the Company is eligible to take
advantage of certain
reduced disclosure and other requirements that are otherwise applicable
to public companies
including, but not limited to, not being subject to the auditor
attestation requirements of
section 404(b) of the Sarbanes-Oxley Act of 2002. See Item 1.
Business Compliance
with the JOBS Act.
b. The Commission maintains an Internet Website (http://www.sec.gov) that
contains the
reports mentioned in this section.
2. In the second 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
unitholders will be subject to the reporting requirements of sections 13 and 16
of the Exchange Act.
3. Please add the following bullet points:
x The Company s common stock is not currently listed on an exchange,
and it is uncertain
whether a secondary market will develop.
x Repurchases of common stock by the Company, if any, are expected to be
very limited.
x An investment in the Company may not be suitable for investors who may
need the money
they invest in a specified time frame.
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 Company 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 Company
will invest will be difficult to value and are illiquid.
x The Company will elect to be regulated as a BDC under the 1940 Act,
which imposes
numerous restrictions on the activities of the Company, including
restrictions on leverage
and on the nature of its investments.
Page 2 General Development of Business
4. In the third line, disclosure states, MMLC II LLC will not raise
additional capital prior to
the Initial Drawdown Date, at which point it will raise capital from the
issuance of privately offered
shares of common stock in the offering. Please add disclosure to this
paragraph specifying the
exemption(s) upon which the Company expects to rely for these private
offerings.
Page 3 The Company Goldman Sachs Middle Market Lending Corp. II
5. In the first line of the first paragraph, disclosure states, We
expect to build a portfolio
weighted towards first lien loans or unitranche loans (including last out
portions of such loans),
while a minority of our portfolio may also include, but not be limited to,
assets such as second lien
loans, unsecured debt, mezzanine debt, and select investments in preferred and
common equities.
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It appears that the Company may hold a significant amount of covenant-lite
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.
Page 4 The Company Goldman Sachs Middle Market Lending Corp. II
6. In the first line of the first full paragraph, disclosure states that
the Company may invest in
convertible securities. If the Company expects to invest in contingent
convertible securities
( CoCos ), the Company should consider what, if any, disclosure is
appropriate. The type and
location of disclosure will depend on, among other things, the extent to which
the Company invests
in CoCos, and the characteristics of the CoCos (e.g., the credit quality, the
conversion triggers). If
CoCos are or will be a principal type of investment, the Company should provide
a description of
them and should provide appropriate risk disclosure. In addition, please
supplementally inform us
whether the Company intends to invest in CoCos and the amount the Company will
invest in
CoCos.
7. In the last line of the first full paragraph, disclosure states, In
many cases, we may also
obtain registration rights in connection with these equity investments, which
may include demand
and piggyback registration rights. Please define demand and
piggyback registration rights
using plain English.
Page 5 The Company Goldman Sachs Middle Market Lending Corp. II
8. The third 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.
9. In the tenth line of the third paragraph, disclosure states,
Leverage may be incurred by the
Company or by subsidiaries of the Company. If the Company may make
investments through a
subsidiary, please supplementally tell us how much of the subsidiary the
Company owns. Also,
please disclose:
a. That the Company complies with the provisions of the Investment Company
Act of 1940
governing investment policies (section 8) and capital structure and
leverage (section 61) on
an aggregate basis with the subsidiaries.
b. That each investment adviser to the subsidiaries complies with
provisions of the Investment
Company Act relating to investment advisory contracts (section 15) as an
investment adviser
to the Company under section 2(a)(20) of the Investment Company Act. The
investment
advisory agreement between the subsidiary and its investment adviser is
a material contract
that should be included as an exhibit to the registration statement. If
the same person is the
adviser to both the Company and the subsidiary, then, for purposes of
complying with
section 15(c), the reviews of the Company s and the subsidiary s
investment advisory
agreements may be combined.
c. That each subsidiary complies with provisions relating to affiliated
transactions and custody
(section 57). Also, please identify the custodian of the subsidiary.
d. Any of the subsidiary s principal investment strategies or principal
risks that constitute
principal investment strategies or risks of the Company. The principal
investment strategies
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and principal risk disclosures of a fund that invests in a subsidiary
should reflect aggregate
operations of the fund and the subsidiary.
Please explain in correspondence whether the financial statements of the
Subsidiary will be
consolidated with those of the Company. If not, please explain why not.
Please also confirm that: (1) the subsidiary s management fee (including
any performance fee)
will be included in Management Fees and the subsidiary s expenses will
be included in Other
Expenses in the Company s fee table; (2) the subsidiary, if organized and
operating outside the
United States, and its board of directors will agree to designate an agent for
service of process in the
United States; (3) the subsidiary and its board of directors will agree to
inspection by the staff of the
subsidiary s books and records, which will be maintained in accordance with
section 31 of the
Investment Company Act and the rules thereunder; and (4) the Subsidiary and its
board of directors
will agree to designate an agent for service of process in the United States.
If you believe that such disclosure and/or confirmations are not required,
please provide us with
a detailed legal analysis.
Page 10 Monitoring
10. This section refers to a four-tier rating system for the Company s
investments. Please
consider identifying, by grade, the target amount of net assets for which the
Company will seek to
invest. A range might be helpful.
Page 11 Allocation of Investment Opportunities
11. In the fifth line of the top paragraph, disclosure refers to an
application for a new exemptive
relief order regarding co-investments with certain accounts managed by the
Company s adviser and
its affiliates. 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 13 Market Opportunity
12. In the first bullet point, disclosure states, According to the
National Center for the Middle
Market and the CIA World Factbook, the U.S. middle market is comprised of
approximately
200,000 companies that represent approximately 33% of the private sector gross
domestic product,
employing approximately 48 million people. Footnote 2 states that the
information is an estimate
for 2020. Has the information been updated or further refined?
13. In the third bullet point, disclosure refers to North America buyout
funds. Please define
the term using plain English.
Page 15 Management Services
14. Disclosure in this section states, Subject to compliance with
applicable law and published
SEC guidance, nothing contained in the Investment Management Agreement in any
way precludes,
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restricts or limits the activities of the Investment Adviser or any of its
respective subsidiaries or
affiliated parties. Please explain the relevance of this statement.
Page 21 Investment Management Agreement
15. Disclosure in this section includes investment management fee
calculations and graphical
representations. Please consider disclosing a fee table that conforms to the
requirements of Item 3.1
of Form N-2 adjacent to this section. Please also consider disclosing an
expense example that
conforms to the requirements of Instruction 11 to Item 3.1 of Form N-2. We
believe that such
disclosure would be helpful to investors.
Page 21 Administration Agreement
16. Please disclose the fee payable to the Administrator, as you have
similarly disclosed with
respect to the Investment Management Agreement and the Transfer Agent
Agreement.
Page 22 Revolving Credit Facility
17. In the second paragraph, disclosure refers to unfunded 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 18(g) 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.
Page 25 Investment Period
18. In the first paragraph, disclosure states that the Board of Directors
may terminate the
Investment Period at any time in its discretion. Please tell us how and when
you will inform
stockholders if the Board decides to terminate.
Pages 29-30 Default
19. Disclosure in this section explains what happens to an investor that
fails to honor its
obligations. Reference is made to subsequent purchases following a delinquency,
a prohibition on
purchasing any additional shares of common stock or participating in any future
capital calls, and
the automatic cancellation or forfeiture of 25% of the shares of common stock
held by the
defaulting stockholder. Please supplementally explain the legal basis for
addressing defaults,
paying particular attention to section 23 of the Investment Company Act.
Page 34 Indebtedness and Senior Securities
20. In the eighth line, disclosure states, We may also borrow amounts up
to 5% of the value of
our total assets for temporary or emergency purposes without regard to asset
coverage. The
additional 5% is available only for temporary purposes, regardless of whether
there are also
emergency purposes. Please revise this section to indicate that the additional
5% borrowings
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described in this section are limited to borrowing for temporary purposes as
that term is defined in
section 18(g) of the 1940 Act.
Page 53-54 Summary Risk Factors
21. The second and sixth bullet points are very similar. Please consider
consolidating.
22. Please ensure the bullet points are aligned with their corresponding
discussions later in the
registration statement. For example, it appears that a mismatch begins on page
57 and continues
through page 73.
23. The last bullet point states, The AIFM Directive may have a negative
impact on our
Investment Adviser and its affiliates. Please define AIFM Directive using
plain English.
Page 77 Our Portfolio Companies may prepay loans, which may reduce stated
yields in the
future if the capital returned cannot be invested in transactions with equal or
greater
expected yields.
24. In the first line, disclosure states, Certain of the loans we make
will be prepayable at any
time, with some prepayable at no premium to par. Please revise this sentence
using plain English.
Page 82 Our Investments in non-U.S. companies may involve significant risks
in addition to
the risks inherent in U.S. Investments.
25. Please explain supplementally why investments in non-U.S. companies is
a principal risk. If
it is a principal risk, please add disclosure to the principal investment
strategies section to address
this risk.
Page 91 Investments
26. Disclosure states that the Initial Drawdown Date is expected to occur in
the fourth quarter of
2021. Please confirm that this date is correct or revise, if necessary.
Page 110 Valuation of our Investments
27. This section discusses potential differences in valuation of the
Company s holdings,
depending on the entity responsible for determining such valuation. Please
consider clarifying that
the valuation procedures are still subject to rule 2(a)(41) of the Investment
Company Act,
notwithstanding such differences.
Page 133 Action by Stockholders
28. This section discloses that certain written consent provisions in the
certificate of
incorporation 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.
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ACCOUNTING COMMENTS
Page 110 Valuation of our Investments
1. Please confirm that when different methodologies are utilized to value
assets in different
accounts that each are valued in accordance with U.S. GAAP. Also, when
different third-party
vendors are used please explain if the information provided to each is the
same, or are their
instances when they receive different information?
* * * * * *
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 or Jason Fox at (202) 551-6757.
Sincerely,
/s/ Lisa N. Larkin
Lisa N. Larkin
Senior Counsel
cc: Jason P. Fox, Staff Accountant
John Lee, Branch Chief
Christian Sandoe, Assistant Director
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