June 1, 2022
Douglas P. Dick
Dechert LLP
1900 K Street, NW
Washington, DC 20006
Re: PIMCO Capital Solutions BDC Corp.
File No. 000-56438
Dear Mr. Dick:
On May 10, 2022, you filed a registration statement on Form 10 on behalf
of PIMCO
Capital Solutions BDC Corp. (the Company ), in connection with the
registration of the
Company s common stock under Section 12(g) of the Securities Exchange Act of
1934 (the
Exchange Act ). We have reviewed the registration statement, and have
provided our
comments below. For convenience, we generally organized our comments using
headings,
defined terms, and page numbers from the registration statement. Where a
comment is made in
one location, it is applicable to all similar disclosure appearing elsewhere 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 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 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 Section 13(a) of the Exchange Act. Additionally, we will
continue to review the
filing until all of our comments have been satisfactorily addressed.
Douglas P. Dick, Esq.
June 1, 2022
Page 2
REGISTRATION STATEMENT
Explanatory Note (page 1)
1. The first sentence of the fourth paragraph of this section states that
the Company will file
an election with the SEC to be treated as a BDC. 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 this sentence to use the past tense (e.g., the Company has
filed an election with the
SEC . . . ).
2. In the fourth paragraph of this section, please disclose the four
bullet points in bolded
font. Please also add the bulleted disclosure below in bold, or explain to us
why such disclosure
is not appropriate.
x The Company intends to invest primarily in privately held companies for
which little
public information exists and which are more vulnerable to economic
downturns and
substantial variations in operating results.
x The privately held companies and below investment grade securities (
junk bonds) in
which the Company invests are difficult to value and will generally be
illiquid.
x Investment in the Company is suitable only for sophisticated investors
and requires the
financial ability and willingness to accept high risks and lack of
liquidity inherent in an
investment in the Company.
x The Company has elected to be regulated as a BDC under the 1940 Act,
which imposes
numerous restrictions on the Company s activities, including
restrictions on leverage and
the nature of its investments.
Summary of Risk Factors (pages 4 5)
3. 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.
4. The fourteenth bullet point refers to sub-investment grade debt
obligations . Please
clarify what sub-investment grade debt obligations are. If sub-investment
grade means below
investment grade, please replace sub-investment grade with below
investment grade and add
a reference to junk bonds thereafter.
Item 1. Business (b) Description of Business About PIMCO (page 7)
5. The last sentence of the first paragraph of this section states that as
of December 31,
2021, PIMCO had approximately $1.71 trillion of third party assets under
management. Please
Douglas P. Dick, Esq.
June 1, 2022
Page 3
clarify what third party assets under management include and how the term
differs from assets
under management.
Item 1. Business (b) Description of Business Investment Objective and
Strategy
(page 8)
6. The second sentence of this section states that the Company seeks to
achieve its
investment objective by investing primarily in privately negotiated loans and
equity investments
to middle market companies. Please disclose the targeted allocation for
investment in loans and
investment in equity. Please also disclose (i) the types of loans (e.g.,
secured, unsecured, first
lien, second lien, unitranche, mezzanine) and equities in which the Company
will principally
invest; (ii) credit quality and maturity policy with respect to the loan
investments; (iii) market
capitalization policy with respect to equity; and (iv) corresponding risks in
the Risk Factors
section.
7. The second to last sentence of the first paragraph of this section
states that the Company
may make select investments in non-U.S. portfolio companies. If the Company
will invest in
emerging markets as a principal strategy, please disclose such investments here
and
corresponding risks in the Risk Factors section.
8. The first bullet point states that the Company seeks to provide
investors with access to a
diversified portfolio of credit investments . Inasmuch as the Company is
non-diversified, please
revise the reference to a diversified portfolio or explain to us why such
reference is appropriate.
Item 1. Business (b) Description of Business The Private Offering
(pages 9 10)
9. The last sentence of the fourth paragraph of this section states that
the Board may set the
price per share above the net asset value per share based on a variety of
factors. Please disclose
factors other than the total amount of the Company s accrued organizational
and offering
expenses that will cause the Board to set the price per share above the net
asset value per share.
We may have more comments after reviewing your response.
Item 1. Business (b) Description of Business Advisory Agreement;
Administration
Agreement (page 10)
10. 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.
11. Under Fee Waiver , the disclosure states that the Adviser has agreed
to waive all
Management Fees pursuant to the Advisory Agreement for so long as the only
Stockholders of
the Company are PIMCO-advised affiliates. Please disclose any ability of the
Adviser to recoup
waived Management Fees and briefly describe any limits on the Adviser s
ability to recoup.
Douglas P. Dick, Esq.
June 1, 2022
Page 4
Item 1. Business (b) Description of Business Administration Agreement
(pages 10
14)
12. The last sentence of the last full paragraph on page 12 describes an
Expense
Reimbursement Agreement pursuant to which the Advisor may elect to pay certain
Company
expenses on the Company s behalf. Please identify the certain Company
expenses the Adviser
may elect to pay.
13. The last sentence on page 12 state that the Company will engage or
otherwise transact
with one or more Service Providers in connection with its ongoing operations,
including in
respect of portfolio investments. Disclosure on page 12 also identifies Dual
Service Providers
and the Services Company as providers of services to the Company. The first
sentence of the
fourth paragraph on page 79 states that [s]ome portfolio services provided
by Service Providers
may be substantially similar to services provided by the Advisor. Please
identify each Service
Provider, Dual Service Provider and/or the Services Company who is an
investment adviser to
the Company as such and provide all required disclosure about such investment
advisers.
Alternatively, please explain to us why Service Providers, Dual Service
Providers and/or the
Services Company are not investment advisers to the Company as defined in
Section 2(a)(20) of
the Investment Company Act of 1940 ( 1940 Act ). We may have more comments
after
reviewing your response.
14. The first sentence under Services Company on page 13 states that
the Services
Company will serve as a Service Provider. Please disclose the specific services
to be provided
by the Services Company.
Item 1. Business (b) Description of Business Defaults (page 17)
15. The first sentence describes default penalties any Stockholder failing
to timely make a
Capital Contribution to the Company when due may be subject. Please disclose
the price at
which a forced sale or automatic transfer of 25% of shares would occur and to
whom a forced
sale would be made. Please also supplementally describe the Company s
policies and
procedures to conduct a forced sale or automatic transfer of 25% of the shares
of the Company,
including procedures regarding determination of the price at which such sale or
transfer is made
and to whom the sale or transfer is made. In addition, please clarify what
voting and approval
rights may be forfeited. If the voting rights are voting rights associated
with ownership of
Common Stock, please explain to us how a Stockholder s forfeiture of voting
rights is consistent
with Section 18(i) of the 1940 Act.
Item 1. Business (b) Description of Business Special Purpose Vehicles
(page 17)
16. The disclosure in this section indicates that the Adviser may invest
through SPVs. Please
respond to the following comments regarding any primarily controlled SPV that
engages in
investment activities in securities or other assets. A primarily controlled SPV
is an entity that the
Company controls as defined in Section 2(a)(9) of the 1940 Act and for which
the Company s
control of the entity is greater than that of any other person.
Douglas P. Dick, Esq.
June 1, 2022
Page 5
a. Disclose any of the SPV s principal investment strategies or principal
risks that constitute
principal investment strategies or principal risks of the Company.
b. Disclose that the Company complies with the provisions of the 1940 Act
governing
capital structure and leverage (Section 18, as modified by Section 61) on
an aggregate
basis with the SPV.
c. Disclose that each investment adviser to the SPV complies with the
provisions of the
1940 Act relating to investment advisory contracts (Section 15 as it
applies through
Section 59) as an investment adviser to the Company under Section
2(a)(20) of the 1940
Act. Also file the investment advisory agreement between the SPV and its
investment
adviser as an exhibit to the registration statement. See Item 25.2.k. of
Form N-2.
d. Disclose that each SPV complies with the provisions relating to
affiliated transactions
and custody (Section 17 as modified by Section 57). Identify the
custodian of the SPV.
e. Confirm to us that (a) if a SPV is not organized in the U.S., the SPV and
its board of
directors will agree to designate an agent for service of process in the
U.S.; and (b) a SPV
and its board of directors will agree to inspection by the staff of the
SPV s books and
records, which will be maintained in accordance with Section 31, as
modified by Section
64 of the 1940 Act.
17. Please confirm to us that the financial statements of each wholly-owned
and substantially
wholly-owned SPV will be consolidated with those of the Company.
18. Please confirm if any of the SPVs charge a management fee. If so,
please confirm to us
that an SPV s management fee (including any performance fee) will be included
in the
Management Fee line item of any fee table the Company discloses and a SPV
s expenses will
be included in the Other Expenses line item of any such fee table.
Item 1. Business (b) Description of Business Investments in Investment
Companies,
Business Development Companies and Private Funds (page 17)
19. Please disclose that the Company will not invest more than 15% of its
assets in private
funds that rely on Section 3(c)(1) and/or Section 3(c)(7) of the 1940 Act.
Item 1. Business (b) Description of Business Involuntary Repurchases
(page 18)
20. Please replace this paragraph with disclosure that the Company will
conduct involuntary
repurchases consistent with Rule 23c-2 under the 1940 Act.
Item 1. Business (b) Description of Business Discretionary Repurchase
of Shares
(pages 18 20)
21. The last sentence of the third to last paragraph on page 19 states that
the Company has
the right to repurchase all of a Stockholder s Common Stock at any time if
the aggregate value of
such Stockholder s Common Stock is less than the minimum initial investment
for the Company.
Douglas P. Dick, Esq.
June 1, 2022
Page 6
Please explain to us how this repurchase can be made in compliance with Rule
23c-2 under the
1940 Act.
22. Please replace the last paragraph of this section with disclosure that
the Company will
conduct involuntary repurchases consistent with Rule 23c-2 under the 1940 Act.
Item 1. Business (b) Description of Business Regulation as a Business
Development
Company (pages 20 25)
23. On page 22, in the third sentence under Senior Securities , please
delete or
emergency . See Section 18(g) of the 1940 Act.
24. On page 25, the last sentence under Emerging Growth Company states
that the
Company intends to take advantage of the extended transition period to comply
with new or
revised accounting standards. Please also disclose this information earlier in
the filing.
Item 1A. Risk Factors Risk Related to the Company s Investments
Illiquid Nature of
Investment Portfolio (page 34)
25. The first sentence of this risk factor states that the Company will
invest in private equity
investments . Please disclose what private equity investments are (e.g.,
equity of private
companies). We may have more comments after reviewing your response.
Item 1A. Risk Factors Risk Related to the Company s Investments
Syndication
and/or Transfer of Investments (page 39)
26. The first sentence states that the Company may originate and/or
purchase certain debt
assets, including ancillary equity assets . Please disclose what ancillary
equity assets are.
27. Many of the risk factors in this section describe risks of investments
that are not
identified in the description of the Company s business in Item 1 (e.g.,
Second Lien, or other
Subordinated Loans (page 41); Unsecured Loans (page 41); Covenant-Lite Loans
(page 42);
Hedging Transactions (page 47)). Please review the risk factors and disclose
the types of
investments referenced therein in the description of the Company s business.
28. On page 43, please revise the heading of Borrowing Risk as this
risk factor describes
the risks of activities other than borrowing, such as engaging in derivative
transactions.
Item 2. Financial Information Management s Discussion and Analysis of
Financial
Condition and Results of Operations Expense Reimbursement Agreement (page
67)
29. If accurate, please revise the third sentence of this section to replace
has agreed to
make with has agreed to elect to make .
Douglas P. Dick, Esq.
June 1, 2022
Page 7
30. The last paragraph of this section describes the possibility that the
Company may have to
pay the Adviser for previously waived expenses under certain circumstances.
Please briefly
describe the circumstances under which the Company would be required to repay
the Advisor for
previously waived expenses.
Item 11. Description of Registrant s Securities To Be Registered (pages 98
102)
31. If the Company s organizational documents and/or the Subscription
Agreement contain
provisions that require shareholders to waive jury trials, please disclose such
provision in this
section.
32. If the Company s organizational documents and/or the Subscription
Agreement contain
provisions that restrict shareholders ability to bring direct or derivative
claims or require
Stockholders to submit to mandatory arbitration, please disclose such
provisions in this section.
We may have more comments after reviewing your response.
33. Under Exclusive Forum on page 92, please disclose the associated
risks of the
exclusive forum provision (e.g., shareholders may have to bring suit in an
inconvenient and
unfavorable forum; that the enforceability of exclusive forum provisions is
questionable).
Item 13. Financial Statements and Supplementary Data (pages 93 94)
34. Please file an amended Form 10 with complete financial statements at
least 15 days prior
to the effective date of the Form 10.
35. Please provide an analysis under Article 6-11 of Regulation S-X and
discuss whether the
Company will acquire all or substantially all of the portfolio investments held
by private
funds. If so, please include financial statements and consents for the private
funds in the
registration statement and ensure that these financial statements have been
audited in accordance
with U.S. GAAP and Article 12 of Regulation S-X as required by Article 6-11 of
Regulation S-
X.
36. If the acquisition of the initial portfolio does not meet the
requirements in Article 6-11 of
Regulation S-X please include an unaudited special purpose schedule of
investments prepared in
accordance with Article 12-12 of Regulation S-X in the body of the registration
statement that
includes the initial portfolio of investments that the fund expects to
purchase.
37. Please ensure that the Company will comply with the Exchange Act
reporting
requirements in filing their first 10-Q or 10-K. After a registrant s first
registration statement is
effective, a Form 10-Q for the quarter following the most recent period
included in the
registration statement is due the later of 45 days after the effective date or
the date the Form 10-
Q would otherwise be due. If the effective date of an initial registration
statement was within 45
days (90 days for a Smaller Reporting Company) after the fiscal year-end, but
does not include
the audited statements of the just recently completed year, the annual Report
on Form 10-K is
due within 90 days after its fiscal year-end.
Douglas P. Dick, Esq.
June 1, 2022
Page 8
Signature Page
38. Please disclose the title of the signing officer under her name. See Form
10 signature
page.
GENERAL COMMENTS
39. We note that portions of the filing are incomplete. We may have
additional comments on
such portions when you complete them in a pre-effective amendment, on
disclosures made in
response to this letter, on information supplied supplementally, or on exhibits
added in any pre-
effective amendments.
40. Response to this letter should be in the form of a pre-effective
amendment filed under the
Exchange Act. The amendment filing should be accompanied by a supplemental
letter that
includes your responses to each of these 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.
41. Please advise us if you have submitted, or expect to submit, any
exemptive application
or no-action request in connection with the registration statement, other than
the application for
co-investment relief that is described on page 20 of the registration
statement.
42. We urge all persons who are responsible for the accuracy and adequacy
of the disclosure
in the filings reviewed by the staff to be certain that they have provided all
information investors
require for an informed decision. Since the Company and its management are in
possession of
all facts relating to Company disclosure, they are responsible for the accuracy
and adequacy of
the disclosures they have made.
*******
Should you have any questions regarding this letter, please feel free to
contact me at
(202) 551-6782.
Sincerely,
/s/ Anu
Dubey
Anu
Dubey
Senior
Counsel
cc: Michael Spratt
Ken Ellington