December 15, 2022
VIA E-MAIL
Richard Horowitz
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036-6797
Richard.Horowitz@dechert.com
Re: Tate Capital Company, File No. 000-56494
Dear Mr. Horowitz:
On November 17, 2022, you filed a registration statement on Form 10 on
behalf of Tate
Capital Company (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 common shares of
beneficial interest
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.
Page 1 Explanatory Note
1. In the fourth paragraph, please disclose that the Company will be subject to
the proxy rules,
in addition to the Exchange Act reporting obligations, upon effectiveness of
the registration
statement.
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2. In the fifth paragraph, in the second bullet point, disclosure states,
You should not expect to
be able to sell your Common Shares regardless of how we perform. In the
third bullet point,
disclosure suggests that an investor might be able to sell Common Shares.
Please reconcile
the disclosure in the two bullet points.
3. In the fifth paragraph, in the fifth bullet point, disclosure refers to a
return of capital.
Please define this term using clear, straightforward language.
4. In the fifth paragraph, please add the following bullet points:
x Repurchases of common stock by the Company, if any, are expected to be
very
limited.
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 4 The Investment Team and Kennedy Lewis
5. In the last sentence of the first paragraph, disclosure states that the
Investment Team shares a
disciplined approach to sourcing, executing upon, and monetizing
idiosyncratic special
situations investments. Please revise this sentence using clear,
straightforward language.
6. In the second paragraph, disclosure states that the Company is expected to
benefit from
Kennedy Lewis s Collateralized Loan Obligation business. Please explain
the basis for this
statement and how the firm s CLO business is relevant to the Company s
investment
objectives and strategies. Currently, the registration statement does not
refer to CLOs in any
discussion of the Company s investment strategies and risks.
Page 7 The Private Offering
7. This section refers to the Company s capital raising efforts through
private placements made
with a subscription agreement. Please disclose what happens to investors who
fail to honor
their obligations in connection with the terms of such a subscription
agreement.
Page 7 Our Business Strategy/Investment Objective
8. The first paragraph states that the Company will generally invest in
directly originated
senior secured loans sourced through its vast network of relationships.
Please disclose the
following:
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x Any limits on loan origination by the Company (e.g., the amount of
loans originated
as a percentage of net assets);
x A description of the overall loan selection process; and
x Whether the Company will be involved in servicing or administering
the loans and, if
so, (i) a description of its servicing obligations and (ii) whether
it will be paid a fee or
reimbursed for expenses for such services. Note that the staff may
have additional
comments depending upon the response.
9. Please disclose in this section the expected credit quality and maturity of
the Company s
investments. Please include the term junk bonds in describing debt
instruments that will be
rated below investment grade or which, if unrated, would be rated below
investment grade if
they were rated.
Page 8 Industry Verticals
10. In the first paragraph, the term Verticals is capitalized. The term
is used several times
earlier in the previous paragraph on the previous page. Please reconcile.
11. Disclosure refers to industry verticals that the Company has established in
Life Sciences,
Power, Technology, Media and Telecom ( TMT ), Homebuilder Finance,
Tactical
Opportunities, and Opportunistic Cyclicals. Please explain what you mean
by Tactical
Opportunities and Opportunistic Cyclicals.
Page 8 Investment Allocation
12. In the second paragraph, disclosure states that the Advisor has applied for
an exemptive order
that will permit the Company, among other things, to co-invest with certain
other persons.
Please advise us of the status of the exemptive application.
Page 8 Payment of the Company s Expenses
13. In the seventh bullet point, disclosure refers to Base Management Fees
and Incentive Fees.
These terms are not yet defined. Please address.
Page 9 Distributions; Dividend Reinvestment Program
14. In the second paragraph, disclosure refers to PIK Common Shares.
Please define PIK
using clear, straightforward language.
Page 10 Management Fee
15. 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
further request
that you include a second example where the five percent return results
entirely from net
realized capital gains, with an introductory sentence of explanation of the
second example.
We believe that such disclosure would be helpful to investors.
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16. Please include in the section titled, Incentive Fee a graphical
illustration of how the
incentive fee will operate.
17. Please tell us supplementally whether the Income-Based Incentive Fee
is also charged at
12.5% after the hurdle is reached and whether are there any catch-up
provisions. Based on
the last paragraph of the Incentive Fee section, it appears both the
income and capital gains
fee is 12.5%. The income fee, however, is not explicitly disclosed. Please
explain.
Page 11 Administration Agreement
18. Please state the fee payable under the Administration Agreement.
Page 11 License Agreement
19. If applicable, please add disclosure regarding a transfer agent agreement
and/or a credit
facility. Please also include such agreements, as well as the License
Agreement, as exhibits
in Item 15.
Page 11 Expense Support and Conditional Reimbursement Agreement
20. Please add the following conditions to the ability of the Advisor to recoup
expenses under the
Expense Support and Conditional Reimbursement Agreement:
x An expense ratio (excluding management or incentive fees) that, after
giving effect to
the recoupment, is lower than the expense ratio (excluding
management or incentive
fees) at the time of the fee waiver or expense reimbursement; and
x A distribution level (exclusive of return of capital, if any) equal
to, or greater than, the
rate at the time of the waiver or reimbursement.
Page 15 Senior Securities
21. Please delete or emergency, from the second to last sentence of this
section, which states,
The Company may also borrow amounts up to 5% of the value of its total
assets for
temporary or emergency purposes . See section 18(g) of the 1940 Act.
Page 19 Proxy Voting Policies and Procedures
22. If applicable, please discuss how the Company will approach relevant ESG
proxy issues for
any portfolio investments such as common stock.
Page 25 Item 1A. Risk Factors
23. Please add risk disclosure regarding the cost of Exchange Act reporting.
24. Please consider including a series of concise bullet points summarizing the
principal risk
factors.
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Page 28 The senior investment professionals and other Investment Team
members of the
Advisor may, from time to time, possess material non-public information,
limiting the
Company s investment discretion.
25. The last sentence states, Additional information on the Advisor s
policies regarding material
non-public information can be found in Kennedy Lewis Insider Trading
Policy. Please
explain how an investor can obtain such policy.
Page 30 PIK Interest
26. The heading states, The Company have difficulty paying its required
distributions if it
recognizes income before, or without, receiving cash representing such
income. There
appears to be a word missing after The Company. Please address.
27. Please disclose that:
x The interest payments deferred on a PIK loan are subject to the risk
that the borrower
may default when the deferred payments are due in cash at the
maturity of the loan;
x The interest rates on PIK loans are higher to reflect the time-value
of money on
deferred interest payments and the higher credit risk of borrowers
who may need to
defer interest payments; and
x PIK instruments may have unreliable valuations because the accruals
require
judgments about ultimate collectability of the deferred payments and
the value of the
associated collateral.
Page 31 Regulations governing the Company s operation as a BDC affect its
ability to,
and the way in which it, raises additional capital. As a BDC, the necessity of
raising
additional capital may expose the Company to risks, including the typical risks
associated
with leverage.
28. The first paragraph refers to the possibility that the Company will issue
preferred stock.
Please confirm that the Company will not issue preferred stock within one
year. Otherwise,
please add appropriate strategy, risk, and fee table (e.g., dividend
expenses) disclosure.
Page 40 The Company will be subject to credit, liquidity and interest rate
risks.
29. Disclosure in this section refers to the Company s investments in certain
types of debt, such
as secured or unsecured debt that may not be protected by financial
covenants. If the
Company will hold a significant amount of covenant-lite loans, please
revise your principal
risks disclosure to include the heightened risks associated with
covenant-lite loans.
Page 68 - Item 13. Financial Statements and Supplementary Data
30. The financial statements are not included in this registration statement.
Please file an
amended Form 10 with complete financial statements at least fifteen days
prior to the
Form 10 s effectiveness. We may have further comments.
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Page 69 Item 15. Financial Statements and Exhibits
31. Please add a hyperlink to each document in the exhibit index.
32. The registration statement does not appear to have a signature page. Please
confirm that the
Company will file a pre-effective amendment that includes the signature
page required by
Form 10. See Page 3 and Instr. D of Form 10 ( At least one complete copy
of the
registration statement filed with the Commission . . . shall be manually
signed. Copies not
manually signed shall bear typed or printed signatures. ).
* * * * * *
We remind you that the Fund 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 Chad
Eskildsen at (202) 551-6951.
Sincerely,
/s/ Lisa N. Larkin
Lisa N. Larkin
Senior Counsel
cc: Chad Eskildsen, Staff Accountant
John Lee, Branch Chief
Christian Sandoe, Assistant Director
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