On October 17, 2019, the Staff of the Division of Investment Management released FAQs meant to assist business development companies ("BDCs") that have obtained the requisite approvals for lowering their asset coverage from 200% to 150% in satisfying the applicable repurchase offer obligation. As required by Section 61(a) of the Investment Company Act of 1940, any BDC that is not listed on a national securities exchange must extend to each shareholder the opportunity to sell such shareholder's securities to the BDC. The Staff confirmed that the requirement is triggered as of the date of the approval (even if the BDC is subsequently listed on an exchange) and that the BDC may extend either (i) a single offer to repurchase all the securities held by all BDC shareholders, with the repurchase of 25% of the securities of such shareholders who accept the offer to be effectuated quarterly or (ii) four separate, quarterly offers to repurchase 25% of the securities held by all BDC shareholders, with the repurchase of the securities of such shareholders who accept each offer to be effectuated in the same quarter as the offer. The price at which each repurchase is effectuated should be based on the current net asset value of the non-traded BDC at the time of that repurchase, rather than the net asset value at the time of the offer. The FAQs can be found here.
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