Correspondence 0001193125-23-238531 from GLADSTONE INVESTMENT CORPORATION\DE (GAIN, GAINL, GAINN, GAINZ) (CIK 0001321741) (GAIN)
GLADSTONE INVESTMENT CORPORATION\DE (GAIN, GAINL, GAINN, GAINZ) (CIK 0001321741)
Date: Sept. 20, 2023 · CIK: 0001321741 · Accession: 0001193125-23-238531
AI Filing Summary & Sentiment
File numbers found in text: 814-00704
Letter
United States United States Securities and Exchange Commission Division of Investment Management Washington, D.C. 20549 Attn: Kimberly Browning Re: Gladstone Investment Corporation Preliminary Proxy Statement on Schedule 14A
Dear Ladies and Gentlemen:
On behalf of Gladstone Investment Corporation, a Delaware corporation (the “Company”), we hereby respond to the comments raised by the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) regarding the Company’s Preliminary Proxy Statement on Schedule 14A, filed on August 31, 2023 (File No. 814-00704 and Accession No. 0001193125-23-226377), in a telephone call on September 11, 2023 between Kimberly Browning of the Staff and William J. Tuttle and Erin M. Lett of Kirkland & Ellis LLP, outside counsel to the Company. For your convenience, a transcription of the Staff’s comments is included in this letter, with each comment followed by the Company’s response. Except as provided in this letter, terms used in this letter have the meanings given to them in the Preliminary Proxy Statement.
1. 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. In addition, where a comment is made with respect to disclosure in one location, it may be applicable to other places in the proxy statement.
Response: The Company acknowledges the Staff’s comment.
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2. The Staff notes that a preliminary proxy statement relating to a similar proposal was filed by Gladstone Capital Corporation (“GLAD”) on August 31, 2023. Please confirm supplementally that the Company’s proxy statement and that of GLAD are materially the same, except for (1) matters relating to the respective states of incorporation, (2) the applicable loan servicing arrangements of the Company and GLAD and (3) the incentive fees payable under the applicable investment advisory agreement of the Company and GLAD.
Response: The Company confirms that the Company’s proxy statement and that of GLAD are materially the same other than (1) the names of the registrants, (2) matters related to the respective dates and states of incorporation, (3) matters related to the dates of the respective annual stockholder meetings, (4) directors and officers, (5) fee waivers granted by the Adviser to GLAD, (6) the terms and rates of the fees payable under the applicable investment advisory agreements, (7) the applicable loan servicing arrangements of the Company and GLAD and (8) beneficial ownership of shares.
3. The preliminary Proxy Statement notes that the Special Meeting of Stockholders (the “Meeting”) will be held in a virtual format.
(a) Please confirm that the Company has reviewed the Staff’s guidance titled “Staff Guidance for Conducting Shareholder Meetings in Light of COVID-19 Concerns” and that the Meeting will be held in accordance with the requirements of such guidance.
Response: The Company confirms that it has reviewed, and that the Meeting will be held in accordance with, the requirements of the above-referenced guidance.
(b) Please confirm that the Meeting will be held in compliance with applicable state law and the Company’s governing documents.
Response: The Company confirms that a virtual stockholder meeting is consistent with Delaware corporate law and the Company’s governing documents. In particular, Section 211 of the Delaware General Corporation Law provides that if a “board of directors is authorized to determine the place of a meeting of stockholders, the board of directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication.” The Company’s Second Amended and Restated Bylaws expressly provide that the Board “may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as provided under the Delaware General Corporation Law….”
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(c) Please confirm whether the Company contemplates any material changes to a stockholder’s experience at the proposed virtual stockholder meeting when compared to a stockholder’s experience at an in-person stockholder meeting.
Response: The Company notes that it has been conducting its stockholder meetings virtually since 2017 and, in its experience, virtual meetings have not materially impacted a stockholder’s meeting experience. The Company further confirms that it does not contemplate any material changes to a stockholder’s virtual meeting experience at the Meeting when compared to a stockholder’s in-person meeting experience. For example, stockholders will still have an opportunity to ask questions and make statements to the extent such questions or statements relate to the business of the Meeting.
(d) Please consider providing a technical assistance phone number for stockholders to call in the event of a day of meeting problem.
Response: The Company acknowledges the Staff’s request and will consider making such a number available.
4. Please confirm that Item 22(c)(6) of Schedule 14A is not applicable or revise the disclosure accordingly.
Response: The Company respectfully submits that the preliminary Proxy Statement complies with the requirements of Item 22(c)(6) of Schedule 14A by disclosing that David Gladstone, a director of the Company, is the sole indirect owner of the Adviser (as detailed in the response to Comment #19 below) and providing the aggregate dollar amount paid to the Adviser pursuant to the Original Advisory Agreement for the last fiscal year. In the interests of providing robust disclosure to investors, the Company also will add disclosure to the Proxy Statement regarding amounts paid to the Administrator pursuant to the Administration Agreement consistent with the proxy statements for the Company’s annual stockholder meetings.
5. We understand that the Adviser will bear the cost of solicitation of proxies. Please confirm that (1) the Adviser will pay both Alliance’s fees for distribution and collection of proxies and the pass-through charges and (2) any fees or expenses paid by the Adviser in connection with solicitation of proxies will be paid out of the Adviser’s own legitimate profits and will not be subject to recoupment.
Response: The Company confirms that (1) the Adviser will pay both Alliance’s fees for distribution and collection of proxies and the pass-through charges and (2) any fees or expenses paid by the Adviser in connection with solicitation of proxies will be paid out of the Adviser’s
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own legitimate profits and will not be subject to recoupment. The Company will revise its disclosure to clarify both items.
6. Please clarify how David Gladstone “indirectly” owns and controls the Adviser.
Response: The Adviser is a wholly owned subsidiary of The Gladstone Companies, Inc., which is in turn a wholly owned subsidiary of The Gladstone Companies, Ltd., which is in turn wholly owned by Mr. Gladstone. The Company will add disclosure describing this ownership structure in response to Comment #19.
7. Pursuant to Rule 14a-6(e) under the Securities Exchange Act of 1934, as amended, all copies of preliminary proxy statements and forms of proxy filed pursuant to Rule 14a-6(a) are required to be clearly marked as “Preliminary Copies.” Please confirm that you will mark such proxy statements and forms of proxy as “Preliminary Copies” in future filings made pursuant to Rule 14a-6(a).
Response: The Company acknowledges the Staff’s comment and will mark future preliminary proxy materials accordingly.
8. Please consider adding the disclosure regarding the Board’s determination that the New Advisory Agreement was in the best interests of the Company and its stockholders to the stockholder letter and the “Questions and Answers About This Proxy Material and Voting” section of the Proxy Statement.
Response: As requested, the Company will add disclosure regarding the Board’s determination that the New Advisory Agreement was in the best interests of the Company and its stockholders to the stockholder letter and the “Questions and Answers About This Proxy Material and Voting” section of the Proxy Statement.
9. Please confirm that Item 22(a)(3)(iv) of Schedule 14A is not applicable or revise the disclosure accordingly.
Response: The Company confirms that Item 22(a)(3)(iv) of Schedule 14A is not applicable.
10. We note the disclosure that “There are no changes to the terms of the Original Advisory Agreement in the New Advisory Agreement, including the fee structure and services to be provided.”
(a) Please revise the disclosure to clarify that the dates will change between the agreements.
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Response: As requested, the Company will revise the disclosure in the Proxy Statement to clarify that the date and term of the agreement will change between the Original Advisory Agreement and the New Advisory Agreement.
(b) Please confirm that there are no other material changes to the terms of the advisory agreement.
Response: The Company confirms that there are no other material changes to the terms of the advisory agreement between the Original Advisory Agreement and the New Advisory Agreement.
(c) Please add similar disclosure to the stockholder letter and the “Questions and Answers About This Proxy Material and Voting” section of the Proxy Statement.
Response: As requested, the Company will add disclosure regarding there being no material changes between the Original Advisory Agreement and the New Advisory Agreement other than the date and term of the agreement to the stockholder letter and the “Questions and Answers About This Proxy Material and Voting” section of the Proxy Statement.
(d) Please expand upon the disclosure regarding there being no changes to the fee structure by disclosing whether any other fees or expenses paid by the Company are expected to change as a result of entry into the New Advisory Agreement.
Response: As requested, the Company will add disclosure to note that, in addition to there being no changes to the fee structure, no other fees or expenses paid by the Company are expected to change as a result of entry into the New Advisory Agreement.
(e) Please disclose whether any changes will occur to the Company’s principal investment objective, investment strategies, fundamental policies or risk profile as a result of the entry into the Voting Trust Agreement or the New Advisory Agreement.
Response: As requested, the Company will add disclosure that there will be no changes to the Company’s principal investment objective, investment strategies, fundamental policies or risk profile as a result of the entry into the Voting Trust Agreement or the New Advisory Agreement.
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(f) Please confirm that the disclosure regarding the New Advisory Agreement complies with Item 22(c)(8) of Schedule 14A or revise the disclosure accordingly.
Response: The Company confirms that the disclosure regarding the New Advisory Agreement complies with the requirements of Item 22(c)(8) of Schedule 14A.
11. The Staff notes the use of anticipatory language throughout the Proxy Statement in connection with the change of control of the Adviser and the entry into the New Advisory Agreement. Please advise whether there is any scenario under which the change of control would not transpire or under which the Company and the Adviser would not enter into the New Advisory Agreement after receiving stockholder approval and revise the disclosure as necessary to remove anticipatory language (except where such language is used in connection with the continued relationship of the Adviser and certain personnel).
Response: The Company does not foresee any scenario in which the change of control would not transpire or under which the Company and the Adviser would not enter into the New Advisory Agreement after receiving stockholder approval. However, any statement regarding the change of control or entry into the New Advisory Agreement is a forward-looking statement and not a statement of historical fact. As such and to account for potential scenarios that are currently unknown to or unforeseen by the Company and the Adviser and to be consistent with the Company’s treatment of forward-looking statements in other disclosures, the Company respectfully declines to remove the anticipatory language when discussing the change of control and entry into the New Advisory Agreement.
12. The Staff notes the lack of definitive timing regarding when the change of control will occur.
(a) Please revise the disclosure to provide a definitive time for when the change of control will occur and the New Advisory Agreement will be entered into and describe such definitive time consistently throughout the disclosure.
Response: The Company respectfully declines to revise the disclosure as requested. The Board believes that it is in the best interests of the Company to allow Mr. Gladstone the flexibility to engage in succession planning as he deems appropriate, provided the change of control occurs within five years of entry into the Voting Trust Agreement. The Company will revise the disclosure to state that entry into the New Advisory Agreement will not take place until the Effective Date.
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(b) Please supplementally explain why the Company is seeking approval for the New Advisory Agreement at this time rather than seeking approval at the time of the change of control (and entering into an interim advisory agreement at such time, if needed).
Response: The Company respectfully submits that the proposal is the result of a series of extensive discussions between the Company’s independent directors and Mr. Gladstone regarding succession planning at the Adviser and the mutual desire to seek to ensure the seamless continuity of services provided to the Company in the event of the death of Mr. Gladstone without the necessity of reliance upon Rule 15a-4 under the 1940 Act (and the uncertainty that stockholder approval of an investment advisory agreement under Section 15(a) could be achieved within 150 days). Given the anticipated time and cost required to convene a special in-person meeting of the Board, prepare a proxy statement for a new investment advisory agreement, engage in the comment process with the Staff and complete a proxy solicitation effort targeted at the Company’s predominantly retail stockholder base (i.e., a large number of stockholders with relatively small holdings), the independent directors, Mr. Gladstone and management of the Company all expressed concern that the 150-day period set forth in Rule 15a-4 might prove insufficient to garner stockholder approval of a new investment a
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CORRESP 1 filename1.htm Gladstone Investment Corporation William J. Tuttle To Call Writer Directly: +1 202 389 3350 william.tuttle@kirkland.com 1301 Pennsylvania Avenue, N.W. Washington, D.C. 20004 United States +1 202 389 5000 www.kirkland.com Facsimile: +1 202 389 5200 September 20, 2023 By EDGAR United States Securities and Exchange Commission Division of Investment Management 100 F Street, N.E. Washington, D.C. 20549 Attn: Kimberly Browning Re: Gladstone Investment Corporation Preliminary Proxy Statement on Schedule 14A Dear Ladies and Gentlemen: On behalf of Gladstone Investment Corporation, a Delaware corporation (the “Company”), we hereby respond to the comments raised by the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) regarding the Company’s Preliminary Proxy Statement on Schedule 14A, filed on August 31, 2023 (File No. 814-00704 and Accession No. 0001193125-23-226377), in a telephone call on September 11, 2023 between Kimberly Browning of the Staff and William J. Tuttle and Erin M. Lett of Kirkland & Ellis LLP, outside counsel to the Company. For your convenience, a transcription of the Staff’s comments is included in this letter, with each comment followed by the Company’s response. Except as provided in this letter, terms used in this letter have the meanings given to them in the Preliminary Proxy Statement. 1. 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. In addition, where a comment is made with respect to disclosure in one location, it may be applicable to other places in the proxy statement. Response: The Company acknowledges the Staff’s comment. Austin Bay Area Beijing Boston Brussels Chicago Dallas Hong Kong Houston London Los Angeles Miami Munich New York Paris Salt Lake City Shanghai United States Securities and Exchange Commission September 20, 2023 Page 2 2. The Staff notes that a preliminary proxy statement relating to a similar proposal was filed by Gladstone Capital Corporation (“GLAD”) on August 31, 2023. Please confirm supplementally that the Company’s proxy statement and that of GLAD are materially the same, except for (1) matters relating to the respective states of incorporation, (2) the applicable loan servicing arrangements of the Company and GLAD and (3) the incentive fees payable under the applicable investment advisory agreement of the Company and GLAD. Response: The Company confirms that the Company’s proxy statement and that of GLAD are materially the same other than (1) the names of the registrants, (2) matters related to the respective dates and states of incorporation, (3) matters related to the dates of the respective annual stockholder meetings, (4) directors and officers, (5) fee waivers granted by the Adviser to GLAD, (6) the terms and rates of the fees payable under the applicable investment advisory agreements, (7) the applicable loan servicing arrangements of the Company and GLAD and (8) beneficial ownership of shares. 3. The preliminary Proxy Statement notes that the Special Meeting of Stockholders (the “Meeting”) will be held in a virtual format. (a) Please confirm that the Company has reviewed the Staff’s guidance titled “Staff Guidance for Conducting Shareholder Meetings in Light of COVID-19 Concerns” and that the Meeting will be held in accordance with the requirements of such guidance. Response: The Company confirms that it has reviewed, and that the Meeting will be held in accordance with, the requirements of the above-referenced guidance. (b) Please confirm that the Meeting will be held in compliance with applicable state law and the Company’s governing documents. Response: The Company confirms that a virtual stockholder meeting is consistent with Delaware corporate law and the Company’s governing documents. In particular, Section 211 of the Delaware General Corporation Law provides that if a “board of directors is authorized to determine the place of a meeting of stockholders, the board of directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication.” The Company’s Second Amended and Restated Bylaws expressly provide that the Board “may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as provided under the Delaware General Corporation Law….” United States Securities and Exchange Commission September 20, 2023 Page 3 (c) Please confirm whether the Company contemplates any material changes to a stockholder’s experience at the proposed virtual stockholder meeting when compared to a stockholder’s experience at an in-person stockholder meeting. Response: The Company notes that it has been conducting its stockholder meetings virtually since 2017 and, in its experience, virtual meetings have not materially impacted a stockholder’s meeting experience. The Company further confirms that it does not contemplate any material changes to a stockholder’s virtual meeting experience at the Meeting when compared to a stockholder’s in-person meeting experience. For example, stockholders will still have an opportunity to ask questions and make statements to the extent such questions or statements relate to the business of the Meeting. (d) Please consider providing a technical assistance phone number for stockholders to call in the event of a day of meeting problem. Response: The Company acknowledges the Staff’s request and will consider making such a number available. 4. Please confirm that Item 22(c)(6) of Schedule 14A is not applicable or revise the disclosure accordingly. Response: The Company respectfully submits that the preliminary Proxy Statement complies with the requirements of Item 22(c)(6) of Schedule 14A by disclosing that David Gladstone, a director of the Company, is the sole indirect owner of the Adviser (as detailed in the response to Comment #19 below) and providing the aggregate dollar amount paid to the Adviser pursuant to the Original Advisory Agreement for the last fiscal year. In the interests of providing robust disclosure to investors, the Company also will add disclosure to the Proxy Statement regarding amounts paid to the Administrator pursuant to the Administration Agreement consistent with the proxy statements for the Company’s annual stockholder meetings. 5. We understand that the Adviser will bear the cost of solicitation of proxies. Please confirm that (1) the Adviser will pay both Alliance’s fees for distribution and collection of proxies and the pass-through charges and (2) any fees or expenses paid by the Adviser in connection with solicitation of proxies will be paid out of the Adviser’s own legitimate profits and will not be subject to recoupment. Response: The Company confirms that (1) the Adviser will pay both Alliance’s fees for distribution and collection of proxies and the pass-through charges and (2) any fees or expenses paid by the Adviser in connection with solicitation of proxies will be paid out of the Adviser’s United States Securities and Exchange Commission September 20, 2023 Page 4 own legitimate profits and will not be subject to recoupment. The Company will revise its disclosure to clarify both items. 6. Please clarify how David Gladstone “indirectly” owns and controls the Adviser. Response: The Adviser is a wholly owned subsidiary of The Gladstone Companies, Inc., which is in turn a wholly owned subsidiary of The Gladstone Companies, Ltd., which is in turn wholly owned by Mr. Gladstone. The Company will add disclosure describing this ownership structure in response to Comment #19. 7. Pursuant to Rule 14a-6(e) under the Securities Exchange Act of 1934, as amended, all copies of preliminary proxy statements and forms of proxy filed pursuant to Rule 14a-6(a) are required to be clearly marked as “Preliminary Copies.” Please confirm that you will mark such proxy statements and forms of proxy as “Preliminary Copies” in future filings made pursuant to Rule 14a-6(a). Response: The Company acknowledges the Staff’s comment and will mark future preliminary proxy materials accordingly. 8. Please consider adding the disclosure regarding the Board’s determination that the New Advisory Agreement was in the best interests of the Company and its stockholders to the stockholder letter and the “Questions and Answers About This Proxy Material and Voting” section of the Proxy Statement. Response: As requested, the Company will add disclosure regarding the Board’s determination that the New Advisory Agreement was in the best interests of the Company and its stockholders to the stockholder letter and the “Questions and Answers About This Proxy Material and Voting” section of the Proxy Statement. 9. Please confirm that Item 22(a)(3)(iv) of Schedule 14A is not applicable or revise the disclosure accordingly. Response: The Company confirms that Item 22(a)(3)(iv) of Schedule 14A is not applicable. 10. We note the disclosure that “There are no changes to the terms of the Original Advisory Agreement in the New Advisory Agreement, including the fee structure and services to be provided.” (a) Please revise the disclosure to clarify that the dates will change between the agreements. United States Securities and Exchange Commission September 20, 2023 Page 5 Response: As requested, the Company will revise the disclosure in the Proxy Statement to clarify that the date and term of the agreement will change between the Original Advisory Agreement and the New Advisory Agreement. (b) Please confirm that there are no other material changes to the terms of the advisory agreement. Response: The Company confirms that there are no other material changes to the terms of the advisory agreement between the Original Advisory Agreement and the New Advisory Agreement. (c) Please add similar disclosure to the stockholder letter and the “Questions and Answers About This Proxy Material and Voting” section of the Proxy Statement. Response: As requested, the Company will add disclosure regarding there being no material changes between the Original Advisory Agreement and the New Advisory Agreement other than the date and term of the agreement to the stockholder letter and the “Questions and Answers About This Proxy Material and Voting” section of the Proxy Statement. (d) Please expand upon the disclosure regarding there being no changes to the fee structure by disclosing whether any other fees or expenses paid by the Company are expected to change as a result of entry into the New Advisory Agreement. Response: As requested, the Company will add disclosure to note that, in addition to there being no changes to the fee structure, no other fees or expenses paid by the Company are expected to change as a result of entry into the New Advisory Agreement. (e) Please disclose whether any changes will occur to the Company’s principal investment objective, investment strategies, fundamental policies or risk profile as a result of the entry into the Voting Trust Agreement or the New Advisory Agreement. Response: As requested, the Company will add disclosure that there will be no changes to the Company’s principal investment objective, investment strategies, fundamental policies or risk profile as a result of the entry into the Voting Trust Agreement or the New Advisory Agreement. United States Securities and Exchange Commission September 20, 2023 Page 6 (f) Please confirm that the disclosure regarding the New Advisory Agreement complies with Item 22(c)(8) of Schedule 14A or revise the disclosure accordingly. Response: The Company confirms that the disclosure regarding the New Advisory Agreement complies with the requirements of Item 22(c)(8) of Schedule 14A. 11. The Staff notes the use of anticipatory language throughout the Proxy Statement in connection with the change of control of the Adviser and the entry into the New Advisory Agreement. Please advise whether there is any scenario under which the change of control would not transpire or under which the Company and the Adviser would not enter into the New Advisory Agreement after receiving stockholder approval and revise the disclosure as necessary to remove anticipatory language (except where such language is used in connection with the continued relationship of the Adviser and certain personnel). Response: The Company does not foresee any scenario in which the change of control would not transpire or under which the Company and the Adviser would not enter into the New Advisory Agreement after receiving stockholder approval. However, any statement regarding the change of control or entry into the New Advisory Agreement is a forward-looking statement and not a statement of historical fact. As such and to account for potential scenarios that are currently unknown to or unforeseen by the Company and the Adviser and to be consistent with the Company’s treatment of forward-looking statements in other disclosures, the Company respectfully declines to remove the anticipatory language when discussing the change of control and entry into the New Advisory Agreement. 12. The Staff notes the lack of definitive timing regarding when the change of control will occur. (a) Please revise the disclosure to provide a definitive time for when the change of control will occur and the New Advisory Agreement will be entered into and describe such definitive time consistently throughout the disclosure. Response: The Company respectfully declines to revise the disclosure as requested. The Board believes that it is in the best interests of the Company to allow Mr. Gladstone the flexibility to engage in succession planning as he deems appropriate, provided the change of control occurs within five years of entry into the Voting Trust Agreement. The Company will revise the disclosure to state that entry into the New Advisory Agreement will not take place until the Effective Date. United States Securities and Exchange Commission September 20, 2023 Page 7 (b) Please supplementally explain why the Company is seeking approval for the New Advisory Agreement at this time rather than seeking approval at the time of the change of control (and entering into an interim advisory agreement at such time, if needed). Response: The Company respectfully submits that the proposal is the result of a series of extensive discussions between the Company’s independent directors and Mr. Gladstone regarding succession planning at the Adviser and the mutual desire to seek to ensure the seamless continuity of services provided to the Company in the event of the death of Mr. Gladstone without the necessity of reliance upon Rule 15a-4 under the 1940 Act (and the uncertainty that stockholder approval of an investment advisory agreement under Section 15(a) could be achieved within 150 days). Given the anticipated time and cost required to convene a special in-person meeting of the Board, prepare a proxy statement for a new investment advisory agreement, engage in the comment process with the Staff and complete a proxy solicitation effort targeted at the Company’s predominantly retail stockholder base (i.e., a large number of stockholders with relatively small holdings), the independent directors, Mr. Gladstone and management of the Company all expressed concern that the 150-day period set forth in Rule 15a-4 might prove insufficient to garner stockholder approval of a new investment a