SecProbe.io

CORRESP
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filename1.htm

Correspondence

 1775 I Street, N.W.

Washington, DC 20006-2401

 +1 202 261 3300
Main

 +1 202 261 3333 Fax

www.dechert.com

 THOMAS J. FRIEDMANN

 thomas.friedmann@dechert.com

 +1 202 261 3313 Direct

 +1 202 261 3016 Fax

 July 13, 2012

 VIA SECURE EMAIL PORTAL AND OVERNIGHT DELIVERY

 United States
Securities and Exchange Commission

 Division of Investment Management

100 F Street, N.E.

 Washington, DC 20549

 Attn: Edward P. Bartz

Re:
WhiteHorse Finance, LLC

Registration Statement on Form N-2

 Confidentially Submitted: May 14, 2012

 Ladies and Gentlemen:

WhiteHorse Finance, LLC, a Delaware limited liability company (the “Fund”), has today submitted with the Securities and
Exchange Commission (the “Commission”) for confidential non-public review Amendment No. 1 (“Amendment No. 1”) to its Registration Statement on Form N-2 (the “Registration Statement”). On
behalf of the Fund, we hereby respond to the comments raised by the staff of the Commission (the “Staff”) in a letter dated June 13, 2012 from Mr. Edward P. Bartz, Staff Attorney, to Thomas J. Friedmann of Dechert
LLP, outside counsel to the Fund. For your convenience, the Staff’s comments are included in this letter and are followed by the applicable response. We will also provide courtesy copies of Amendment No. 1, as submitted and marked with the
changes from the original submission of the Registration Statement. Except as provided in this letter, terms used in this letter have the meanings given to them in Amendment No. 1.

PROSPECTUS

 Prospectus Summary

 WhiteHorse Finance

1.
The fourth paragraph of this section describes the characteristics of the loans and notes held in the Fund’s existing investment portfolio. Please also disclose
the credit quality of these investments, and include the term “junk bonds” in describing the loans and notes that are rated below investment-grade. Please also describe the speculative nature of these types of investments. Additionally,
please describe the Fund’s policies regarding the anticipated credit quality and maturity of its future investments.

 US Austin  Boston  Charlotte  Hartford  New York  Orange County  Philadelphia  Princeton  San
Francisco  Silicon Valley  Washington DC

EUROPE  Brussels  London  Luxembourg  Moscow  Munich  Paris
ASIA  Beijing  Hong Kong

 Edward P. Bartz

 July
13, 2012

  Page
 2

 Response:

As requested, the Fund has included the following language in its description of its existing investments and in the investments in which
it intends to invest in the future, “We have invested, and expect in the future to invest, in securities that are rated below investment grade by rating agencies or that may be rated below investment grade if they were so rated. Below
investment grade securities, which are often referred to as ‘junk bonds,’ are viewed as speculative investments because of concerns with respect to the issuer’s capacity to pay interest and repay principal.” The Fund has also
included the following language in relation to the maturity of its future investments, that they “ typically carry a floating interest rate based on LIBOR and have a term of three to six years.”

2.
The fourth paragraph also provides statistics regarding the average size, yield to maturity, and weighted average remaining term of the nine debt instruments held in
the existing investment portfolio. Please also describe the high and low ranges for the size, yield to maturity, and remaining term of each of these nine investments.

Response:

As requested, the Fund has added additional summary disclosure regarding its existing investment portfolio in terms of the range of
investment size, yield to maturity and remaining term.

 H.I.G. Capital

3.
This section, as well as the sections titled “Our Investment Adviser,” “Market Opportunity” and “Competitive Strengths” that follow,
are extremely detailed for the summary portion of the prospectus. Please either provide a more abbreviated narrative for these sections, or move these sections to more appropriate locations in the prospectus.

Response:

As requested, the Fund has streamlined its disclosure under the subheadings “H.I.G. Capital,” “Market Opportunity” and
“Competitive Strengths” in the Prospectus Summary. The language omitted from the Prospectus Summary still appears under the caption “The Company.”

 Edward P. Bartz

 July
13, 2012

  Page
 3

 Our Investment Adviser

4.
The second paragraph of this section states that H.I.G. Capital is obligated to allocate investment opportunities among its managed affiliates in accordance with its
allocation policy. Additionally, on page 5 of the prospectus, disclosure provides that, as part of the BDC Conversion, the existing members of WhiteHorse Finance, LLC will receive shares of common stock in the Fund in exchange for the limited
liability company interests they currently own in WhiteHorse Finance, LLC. Please provide an analysis of these transactions under Section 57 of the Investment Company Act of 1940 (the “1940 Act”), including a discussion of whether an
exemption from the provisions of this Section is necessary.

 Response:

The Fund respectfully submits that the allocation policies to be implemented by WhiteHorse Advisers, the Fund’s investment adviser,
and its affiliates, including H.I.G. Capital, do not require exemptive relief under Section 57 of the 1940 Act as currently contemplated. As noted in the “Prospectus Summary – Conflicts of Interest”:

“In situations where co-investment with other accounts managed by our investment adviser or its affiliates is not permitted or
appropriate, H.I.G. Capital and our investment adviser will need to decide which client will proceed with the investment. Our investment adviser’s allocation policy provides, in such circumstances, for investments to be allocated on a random or
rotational basis to assure that all clients have fair and equitable access to such investment opportunities. Moreover, except in certain circumstances, we will be unable to invest in any issuer in which a fund managed by our investment adviser or
its affiliates has previously invested.”

 The Fund intends to rely initially upon existing Staff interpretive guidance
regarding rotational and random allocation processes and upon supplemental guidance with respect to permissible allocation methodologies. See, e.g., Massachusetts Mutual Life Insurance Company (pub. avail. June 7, 2000). As discussed in
response to Comment 31 below, the Fund, the investment adviser, H.I.G. Capital and affiliates of H.I.G. Capital may elect in the future to submit an application for exemptive relief with respect to co-investing, but no such determination has been
made at this time.

 With respect to the BDC Conversion, existing members of WhiteHorse Finance, LLC will receive shares of
common stock in the Fund in exchange for the limited liability company interests they currently own in WhiteHorse Finance, LLC. This conversion from a Delaware limited liability company into a Delaware corporation will occur by action of law through
the filing of a certificate of conversion with the Secretary of State of the State of Delaware. The Fund does not

 Edward P. Bartz

 July
13, 2012

  Page
 4

believe that this conversion is a transaction subject to Section 57 of the 1940 Act for two reasons. First, the BDC Conversion will occur by action of law, will not require any issuance or
exchange of securities by the Fund, and will not require an investment decision by members in WhiteHorse Finance, LLC. In the absence of an investment decision, the conversion of liability interests in WhiteHorse Finance, LLC into shares of common
stock under state law will not constitute a “transaction” subject to Section 57 of the 1940 Act. Second, at the time the BDC Conversion occurs, WhiteHorse Finance, LLC will not yet have filed an election to be treated as a business
development company on Form N-54A and, consequently, the Fund will not yet be subject to Section 57 pursuant to Section 6(f) of the 1940 Act. For these reasons, the Fund respectfully submits that the implementation of the BDC Conversion
does not require exemptive relief under Section 57 of the 1940 Act.

 Formation Transactions

5.
Our Formation. This paragraph states that an independent third-party valuation firm was used to determine the fair value of the contributed
assets. Please identify the third-party valuation firm in this section, and file a copy of the valuation and the consent of the third-party valuation firm as exhibits to the registration statement. See Section 7(a) of the Securities Act
of 1933 (the “Securities Act”) and Item 25.2.n of Form N-2.

 Response:

In the Formation Transaction, two private investment funds, H.I.G. Bayside Debt & LBO Fund II, L.P. and H.I.G. Bayside Loan
Opportunity Fund II, L.P. (together, the “Contributing Funds”), both of which are managed by an affiliate of the Fund’s investment adviser, capitalized the Fund through contributions of assets for which they received
consideration in the form of limited liability company interests in the Fund. In connection with the Formation Transaction, the investment adviser provided to the general partner of each Contributing Fund an analysis of the fair value of each asset
contributed to the Fund. In addition, to assist the Contributing Funds in their analysis of the Formation Transaction, an affiliate of the investment adviser engaged a nationally recognized independent valuation firm to provide additional,
independent input regarding the fair value of such contributed assets, other than those assets which had been recently acquired from an independent third party seller in an arm’s length transaction. The analytical input provided by such
valuation firm served as one factor considered by the Contributing Funds and their investment adviser in evaluating the Formation Transaction but was not a dispositive factor. Such analysis, together with analyses of the Fund’s proposed fee
arrangements, corporate governance structure, liquidity profile and other factors, were considered by the general partners of the Contributing Funds and their investment adviser before they decided to proceed with the Formation Transaction. At this
time, the valuations obtained from such valuation firm are more than five months old and will be still more dated at the time of the proposed initial public offering of shares of common stock (the “Offering”) by the Fund.

 Edward P. Bartz

 July
13, 2012

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 Moreover, it is the intention of the Fund and the Fund’s investment adviser to
update the fair values at which such assets are carried on the Fund’s balance sheet through a process described in detail in the prospectus under “Management’s Discussion and Analysis of Financial Condition and Results of Operations
– Critical Accounting Policies – Valuation of Portfolio Investments.” The Fund respectfully submits that it is these updated fair values, to be determined by the Fund’s board of directors, and not fair values determined several
months ago by a third party, to which prospective investors in the Offering should direct their attention in making an investment decision.

 For the reasons discussed below, the Fund further submits that disclosing the name of this independent valuation firm will only increase the cost to the board of directors of the Fund of obtaining
independent valuation data in the future, without any corresponding improvement in the quality of such information for the benefit of investors and stockholders. First, public disclosure of the valuation firm’s name would, at a minimum, cause
such valuation firm to seek additional compensation from the Fund, which amount would be borne indirectly by the stockholders in the Fund. Even without any such increases, the cost of such valuations renders them of marginal value to the board of
directors, particularly with respect to smaller investments. Second, such valuation firm may refuse to be named or to consent to be named as an expert in the prospectus and may refuse to act as a valuation agent for the board of directors under such
conditions in the future. Third, the Fund is concerned that disclosing the name of such valuation firm could mislead investors by implying that stockholders in the Fund could obtain or rely upon future valuation reports provided to the Fund’s
board of directors by an independent valuation firm. The Fund’s public stockholders will not receive, and will have no basis to assert reliance upon, the analytical data provided from time to time to the Fund’s board of directors by
independent valuation firms.

 Consistent with the requirements of the 1940 Act, the regulations promulgated thereunder and the
related accounting literature, the fair value of the Fund’s assets will be determined by its board of directors and not by the Fund’s investment adviser or by independent, third party valuation agents. Accordingly, the Fund respectfully
submits that it would be inappropriate to name the valuation firm retained by an affiliate of the Fund’s investment adviser in connection with the Formation Transaction in the Fund’s public disclosure, and that such disclosure would
ultimately harm investors by potentially depriving the Fund’s board of directors of an important source of comparative valuation data that it could otherwise use in determining the fair value of the Fund’s assets in the future.

Use of Leverage

6.
The first paragraph of this section provides that the Fund expects to use leverage consistent with the rules and regulations under the 1940 Act. Please describe how
much leverage the Fund is permitted to use, as well as how much leverage the Fund expects to use, under the 1940 Act.

 Edward P. Bartz

 July
13, 2012

  Page
 6

 Response:

As requested, the Fund has added to this section a discussion of the extent to which it is permitted to use leverage consistent with the
rules and regulations under the 1940 Act. With respect to the Fund’s intentions regarding the use of leverage, the Fund is finalizing the terms of a proposed credit facility at this time. As soon as such terms are agreed, the Fund will amend
its disclosure to provide all of the material terms of the proposed credit facility, including the amount of debt that it may incur. The Fund undertakes to provide such disclosure, including anticipated leverage levels at the time of the Offering,
for review by the Staff in an amendment to the Registration Statement prior to the commencement of the road show in connection with the Offering.

 The Offering

 Concurrent Private Placement

7.
Please provide in this section a description of the registration rights discussed on page 90 of the draft registration statement. Also, please disclose the length of
the lock-up period for the shares being offered in the Concurrent Private Placement.

 Response:

 As requested, the Fund has provided under the caption “Concurrent Private Placement” a description of the
registration rights discussed on page 90 of the Registration Statement. The Fund anticipates that shares of common stock acquired by investors in the Concurrent Private Placement, if any, will be subject to a 180-day lock-up agreement with the
underwriters of the Offering.

 Investment Advisory Agreement

8.
This section describes the Investment Advisory Agreement with WhiteHorse Advisers. Please also disclose the interim investment advisory agreement with Bayside
Capital, Inc., referenced on page F-13 in Note 5 to the Financial Statements.

 Response:

The Fund notes that the obligation of Bayside Capital, Inc. to provide investment advisory services under its interim advisory agreement
will expire by its terms upon the pricing of the Offering, and the Investment Advisory Agreement will take effect at that time. The interim investment advisory agreement serves only to govern the relationship between the interim investment adviser
and the Fund prior to the Offering and will not aff