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Correspondence 0001193125-23-240616 from Senior Credit Investments, LLC (CIK 0001959568)

Senior Credit Investments, LLC (CIK 0001959568)
Date: Sept. 22, 2023 · CIK: 0001959568 · Accession: 0001193125-23-240616

AI Filing Summary & Sentiment

File numbers found in text: 000-56585

Referenced dates: September 11, 2023

Date
September 22, 2023
Author
Not clearly detected
Form
CORRESP
Company
Senior Credit Investments, LLC (CIK 0001959568)

Letter

VIA EDGAR Division of Investment Management 100 F Street, N.E. Washington, DC 20549 Re: Senior Credit Investments, LLC File No. 000-56585

Dear Mr. Be:

On behalf of Senior Credit Investments, LLC (the “Company”), we hereby file with the staff (the “Staff”) of the Division of Investment Management of the Securities and Exchange Commission (the “Commission”) this letter in response to the Staff’s comments received in a letter dated September 11, 2023 with respect to the registration statement on Form 10 (the “Registration Statement”) in connection with the registration of the Company’s shares of common limited liability company units under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

For convenience of reference, the Staff’s comments have been reproduced herein. The responses to the Staff’s comments are reflected below and will be incorporated in an amendment to the Registration Statement that will be filed on or before September 29, 2023 (the “Amended Registration Statement”). All capitalized terms used but not defined in this letter have the meanings given to them in the Registration Statement. Where the Company has revised certain disclosure in the Amended Registration Statement in response to a comment, additions are underlined and deletions are struck.

LEGAL COMMENTS

Comment 1: We note that portions of the filing, including the Company’s financial statements, are incomplete. We may have additional comments on such portions when you complete them in an amendment, on disclosures made in response to this letter, on information supplied supplementally, or on exhibits added in any amendments.

Response: The Company respectfully acknowledges the Staff’s comment.

Comment 2: Please advise us whether you have submitted, or expect to submit, any exemptive applications or no-action requests in connection with the registration statement. Please advise us regarding the status of any pending applications or requests.

Response: The Company notes that, other than the exemptive order the Company received (together with the Investment Adviser) from the SEC that permits the Company to participate in negotiated co-investment transactions with certain affiliates, the Company has not submitted, or expects to submit, any additional exemptive applications or no-action requests in connection with the Registration Statement.

Item 1. Business (Page 3)

Comment 3: The disclosure indicates that the Company was formed on December 8, 2022. Please advise supplementally, with a view to improve the disclosure, what activities that the Company has engaged in since its formation.

Response: The Company notes that it has not yet commenced operations. Since its formation in the State of Delaware on December 8, 2022, management of the Company has been coordinating with outside counsel and third-party service providers to organize the Company and prepare for its commencement of operations. Additionally, the Company notes that the Investment Adviser made a capital contribution of $1,000 to the Company to provide the basis for the initial capitalization of the Company, including the conduct of the initial seed capital audit and the preparation of the corresponding audited seed financial statements, which will be included with the Amended Registration Statement. Further, we note that the Company will not commence operations as a BDC until the Form 10 is effective on October 10, 2023, and the Company has filed its election on Form N-54A to be regulated as a BDC under the Investment Company Act.

Comment 4: The disclosure uses the term “large-cap market” to refer to the “upper middle market.” Given the normal usage of the term “large-cap market” to refer to the larger capitalized corporations listed on national exchanges, to avoid confusion, please use a different term to refer to the market in which you intend to invest.

Response: The Company respectfully disagrees that the term “large-cap market” refers to larger capitalized corporations listed on national exchanges, in the context of a registration statement for a business development company with an investment thesis focused on private credit. The Company acknowledges the Staff’s comment as it relates to equities and funds that have an equities strategy, and that the term “large-cap” refers to larger capitalized companies that are listed on national exchanges, but the Company believes that “large-cap” has a different understood meaning in the private credit market – that is, to refer to companies that are larger than the “middle market.” However, the Company acknowledges the Staff’s comment and has revised the relevant disclosure in the Amended Registration Statement to add disclosure that the Company uses the “large-cap market” and “upper middle market” interchangeably and that “large-cap” companies refer to large private U.S. borrowers, which the Company generally defines as companies with more than $75 million in earnings before interest, taxes, depreciation and amortization.

The Company (page 4)

Comment 5: Please revise your disclosure to clarify what you mean by “relatively more conservative loan-to-value ratios.” It is unclear, for example, how this ratio is calculated and what ratios you will typically target. In addition, please clarify whether your “direct security interest(s)” will have priority or may be subordinate to other portfolio company obligations.

Response: The Company respectfully acknowledges the Staff’s comment. The Company notes that its investments are generally expected to have loan-to-value ratios of approximately 50%. Further, the Company has supplemented the relevant disclosure in the Amended Registration Statement to clarify the loan-to-value ratio and whether “direct security interest(s)” will have priority or may be subordinate to other portfolio company obligations as follows:

“We believe our investment strategy has the ability to benefit from strong downside protections. By investing primarily in senior secured loans in the upper middle market, our investments are generally expected to have relatively more what we believe are conservative loan-to-value ratios of 50% or less and benefit from a direct security interest in all or substantially all of the assets of a Portfolio Company (subject to usual and customary exceptions). A Portfolio Company may also be permitted to issue additional indebtedness that would increase the overall leverage and fixed charges to which the Portfolio Company is subject. Such additional indebtedness could have structural or contractual priority, either as to specific assets or generally, over the ranking of the investments held by us or could rank on a parity or seniority basis with respect to our investments. In the event of any default, restructuring or insolvency event of a Portfolio Company, we could be subordinated to, or be required to share on a ratable basis with, any recoveries in favor of the holders of such other or additional indebtedness. Our recoveries may be impaired as a result of the rights of holders of other indebtedness under any intercreditor agreement governing the relative rights of the indebtedness. To achieve our investment objective, we will leverage the Adviser’s investment team and its disciplined investment approach, with a focus on capital preservation.”

Comment 6: The disclosure on page 4 indicates that the Company intends to incur leverage as part of its investment strategy. In an appropriate location, provide a table illustrating the potential effects of leverage on the Company’s value. Also, to the extent know, disclose an estimate of the amount of leverage that the Company intends to use.

Response: The Company respectfully declines to comply with this comment. Given the fact that the Form 10 registration statement does not require such disclosure, such disclosure has not typically been included in the Form 10 registration statements of other private unlisted business development companies, and given the sophisticated nature of the Company’s investors (i.e., not retail investors), the Company does not believe it is necessary to include such disclosure. In addition, the Company does not yet know the amount of leverage that the Company intends to use and therefore is unable to provide an estimate at this time.

Comment 7: The paragraph near the top of page 5 discussing the history of Section 61(a)(2) is long and confusing. Clearly state that the Company can use the 150% threshold for leverage. Move unnecessary historical background elsewhere.

Response: The Company respectfully acknowledges the Staff’s comment and has revised the relevant disclosure in the Amended Registration Statement to clarify that the Company can use the 150% threshold for leverage in response to the Staff’s comment.

Comment 8: In the third paragraph on page 5, clarify that below-grade debt investments are commonly referred to as “junk bonds” and are predominantly speculative in nature.

Response: The Company respectfully acknowledges the Staff’s comment and has added the requested disclosure in the third paragraph on page 5 in response to the Staff’s comment.

Formation Transactions (page 5)

Comment 9: Supplementally provide us with a detailed description of how the Warehousing Entities were formed and operated. We may have further comment.

Response: The Company respectfully acknowledges the Staff’s comment and notes that the assets in the Warehouse Portfolio will be acquired from Jefferies Finance LLC (formed in July 2004), a registered investment adviser under the Advisers Act (“Jefferies Finance”), and two special purpose vehicles (SPVs) (i.e., JFIN Fund III, formed in October 2011, and Jefferies Senior Lending LLC, formed in April 2021) (together, the “Warehousing Entities”), prior to the Company’s election to be regulated as a BDC. The Warehousing Entities have been in operation since their formation and will continue to operate after the Company acquires the Warehouse Portfolio. Jefferies Finance established and manages the Warehousing Entities that were created to identify and purchase loan opportunities that might be attractive to advisory clients that may not be able to otherwise participate in these investments at the time they were available. These advisory clients include private funds, individual advisory accounts and now the Company. The investments held by Jefferies Finance and the Warehousing Entities were not purchased expressly for the Company. Rather, the Investment Adviser selected these investments for the Formation Transactions based upon its diligence process for identifying investment opportunities, including which loans held by Jefferies Finance and the Warehousing Entities met the stated investment objectives and strategies of the Company at the time of selection. Additionally, the Warehousing Entities may be utilized to acquire assets in circumstances where advisory clients may not otherwise participate due to concentration limits or other restrictions. The Warehousing Entities will remain in place after the acquisition of the Warehouse Portfolio.

Investment Advisory Agreement (page 15)

Comment 10: Please consider including a fee table in this section that conforms to the requirements of Item 3.1 of Form N-2. Please also consider including an expense example that conforms to the requirements of Instruction 11 to Item 3.1 of Form N-2. The staff believes that such disclosure would be helpful to investors.

Response: The Company respectfully submits that it is not aware of any affirmative requirement to include a fee table that conforms to the requirements of Item 3.1 of Form N-2 in a registration statement

on Form 10. The Company believes that such disclosure was omitted from Form 10 for good reason, in that such disclosure would be inappropriate and potentially misleading to a fund that is not undertaking a public securities offering and remains at an early stage of development. The Company respectfully submits that the disclosure requirements of Item 3.1 of Form N-2 are intended to apply to a prospectus that is or will be used in connection with a public offering of securities by a registrant. The Company further submits that the fees and expenses to be borne by shareholders through the investment advisory agreement and other contractual arrangements are fully described in several places throughout the Registration Statement and would not, in any case, include disclosure related to sales load or offering expenses as required by Item 3.1 of Form N-2, which are not applicable to the Company at this time.

Incentive Fee Based on Income (page 16)

Comment 11: Because it would be helpful to investors, please include examples demonstrating the application of the income and capital gain incentive fees. Also, please include a graphic to illustrate the application of the income portion of the incentive fee and the soft hurdle.

Response: The Company respectfully advises the Staff that it does not believe that it is necessary to include examples demonstrating the application of the income and capital gain incentive fees, or to include a graphic to illustrate the application of the income portion of the incentive fee and the soft hurdle in the Form 10 because the incentive fee disclosure matches the description of the Incentive Fee in the Company’s Investment Advisory Agreement. The Company further advises the Staff that examples demonstrating the operation of the incentive fee are not required by Form 10. The purpose of the Form 10 is to register the Company’s shares under the Exchange Act.

Share Repurchase Program (page 21)

Comment 12: The disclosure indicates that the Company intends to offer to repurchase shares on a quarterly basis. Disclose the material terms of such repurchase offers, including any restrictions pursuant to federal securities laws concerning tender offers.

Response: The Company respectfully acknowledges the Staff’s comment and has enhanced the relevant disclosure in the Amended Registration Statement in relation to the material terms of the Share Repurchase Program, including any restrictions pursuant to federal securities laws concerning tender offers, in response to the Staff’s comment.

Item 1A. Risk Factors (page 41)

Comment 13: The Risk Factors section spans 39 pages, and includes a significant amounts of repetitive and/or generic disclosures. In Release No. 34-89670 (Aug. 26, 2020), the Commission amended Item 105 of Regulation S-K to, among other matters, “discourage repetition and the disclosure of information that is not material.” Please review and revise your Risk Factor disclosures to more closely comport with Item 105 of Regulation S-K, as amended.

Response: The Company respectfully acknowledges the Staff’s comment and has revised the Risk Factor disclosures to more closely comport with Item 105 of Regulation S-K, as amended, in response to the Staff’s comment.

A shareholder’s interest in us will be diluted if we issue additional shares, which could reduce the overall value of an investment in us. (page 56)

Comment 14: Clarify in the caption that the stated dilution will be to a shareholder’s ownership percentage, as opposed to economic dilution.

Response: The Company respectfully acknowledges the Staff’s comment and has revised the cited caption in response to the Staff’s comment, in part, to reflect that the stated dilution will be to a shareholder’s ownership percentage.

We borrow money, which may magnify the potential for gain or loss and may increase the risk of investing in us. (page 63)

Comment 15: Supplementally explain the exemptive relief referenced in this risk factor regarding excluding the debt of any small business investment company subsidiary. Explain whether y

Show Raw Text
CORRESP
1
filename1.htm

CORRESP

 (212) 318-6095

thomaspeeney@paulhastings.com

 September 22, 2023

VIA EDGAR

 Mr. Raymond A. Be

U.S. Securities and Exchange Commission

 Division of Investment
Management

 100 F Street, N.E.

 Washington, DC 20549

Re:
 Senior Credit Investments, LLC

 
 File No. 000-56585

Dear Mr. Be:

 On behalf of Senior Credit
Investments, LLC (the “Company”), we hereby file with the staff (the “Staff”) of the Division of Investment Management of the Securities and Exchange Commission (the “Commission”) this letter in response to the
Staff’s comments received in a letter dated September 11, 2023 with respect to the registration statement on Form 10 (the “Registration Statement”) in connection with the registration of the Company’s shares of common
limited liability company units under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

For convenience of reference, the Staff’s comments have been reproduced herein. The responses to the Staff’s comments are reflected
below and will be incorporated in an amendment to the Registration Statement that will be filed on or before September 29, 2023 (the “Amended Registration Statement”). All capitalized terms used but not defined in this letter have the
meanings given to them in the Registration Statement. Where the Company has revised certain disclosure in the Amended Registration Statement in response to a comment, additions are underlined and deletions are struck.

 LEGAL COMMENTS

 Comment 1: We note that
portions of the filing, including the Company’s financial statements, are incomplete. We may have additional comments on such portions when you complete them in an amendment, on disclosures made in response to this letter, on information
supplied supplementally, or on exhibits added in any amendments.

 Response: The Company respectfully acknowledges the Staff’s
comment.

 1

 Comment 2: Please advise us whether you have submitted, or expect to submit, any exemptive
applications or no-action requests in connection with the registration statement. Please advise us regarding the status of any pending applications or requests.

Response: The Company notes that, other than the exemptive order the Company received (together with the Investment Adviser) from the
SEC that permits the Company to participate in negotiated co-investment transactions with certain affiliates, the Company has not submitted, or expects to submit, any additional exemptive applications or no-action requests in connection with the Registration Statement.

 Item 1. Business (Page 3)

Comment 3: The disclosure indicates that the Company was formed on December 8, 2022. Please advise supplementally, with a view to improve the
disclosure, what activities that the Company has engaged in since its formation.

 Response: The Company notes that it has not yet
commenced operations. Since its formation in the State of Delaware on December 8, 2022, management of the Company has been coordinating with outside counsel and third-party service providers to organize the Company and prepare for its
commencement of operations. Additionally, the Company notes that the Investment Adviser made a capital contribution of $1,000 to the Company to provide the basis for the initial capitalization of the Company, including the conduct of the initial
seed capital audit and the preparation of the corresponding audited seed financial statements, which will be included with the Amended Registration Statement. Further, we note that the Company will not commence operations as a BDC until the Form 10
is effective on October 10, 2023, and the Company has filed its election on Form N-54A to be regulated as a BDC under the Investment Company Act.

Comment 4: The disclosure uses the term “large-cap market” to refer to the “upper middle
market.” Given the normal usage of the term “large-cap market” to refer to the larger capitalized corporations listed on national exchanges, to avoid confusion, please use a different term to
refer to the market in which you intend to invest.

 Response: The Company respectfully disagrees that the term “large-cap market” refers to larger capitalized corporations listed on national exchanges, in the context of a registration statement for a business development company with an investment thesis focused on
private credit. The Company acknowledges the Staff’s comment as it relates to equities and funds that have an equities strategy, and that the term “large-cap” refers to larger capitalized
companies that are listed on national exchanges, but the Company believes that “large-cap” has a different understood meaning in the private credit market – that is, to refer to companies that
are larger than the “middle market.” However, the Company acknowledges the Staff’s comment and has revised the relevant disclosure in the Amended Registration Statement to add disclosure that the Company uses the “large-cap market” and “upper middle market” interchangeably and that “large-cap” companies refer to large private U.S. borrowers, which the
Company generally defines as companies with more than $75 million in earnings before interest, taxes, depreciation and amortization.

 2

 The Company (page 4)

Comment 5: Please revise your disclosure to clarify what you mean by “relatively more conservative loan-to-value ratios.” It is unclear, for example, how this ratio is calculated and what ratios you will typically target. In addition, please clarify whether your “direct security interest(s)”
will have priority or may be subordinate to other portfolio company obligations.

 Response: The Company respectfully acknowledges
the Staff’s comment. The Company notes that its investments are generally expected to have loan-to-value ratios of approximately 50%. Further, the Company has
supplemented the relevant disclosure in the Amended Registration Statement to clarify the loan-to-value ratio and whether “direct security interest(s)” will
have priority or may be subordinate to other portfolio company obligations as follows:

 “We believe our investment
strategy has the ability to benefit from strong downside protections. By investing primarily in senior secured loans in the upper middle market, our investments are generally expected to have relatively more what we believe
are conservative loan-to-value ratios of 50% or less and benefit from a direct security interest in all or substantially all of the assets of a Portfolio
Company (subject to usual and customary exceptions). A Portfolio Company may also be permitted to issue additional indebtedness that would increase the overall leverage and fixed charges to which the Portfolio Company is subject. Such additional
indebtedness could have structural or contractual priority, either as to specific assets or generally, over the ranking of the investments held by us or could rank on a parity or seniority basis with respect to our investments. In the event of any
default, restructuring or insolvency event of a Portfolio Company, we could be subordinated to, or be required to share on a ratable basis with, any recoveries in favor of the holders of such other or additional indebtedness. Our recoveries may be
impaired as a result of the rights of holders of other indebtedness under any intercreditor agreement governing the relative rights of the indebtedness. To achieve our investment objective, we will leverage the Adviser’s investment team and
its disciplined investment approach, with a focus on capital preservation.”

 Comment 6: The disclosure on page 4 indicates that the Company
intends to incur leverage as part of its investment strategy. In an appropriate location, provide a table illustrating the potential effects of leverage on the Company’s value. Also, to the extent know, disclose an estimate of the amount of
leverage that the Company intends to use.

 Response: The Company respectfully declines to comply with this comment. Given the fact
that the Form 10 registration statement does not require such disclosure, such disclosure has not typically been included in the Form 10 registration statements of other private unlisted business development companies, and given the sophisticated
nature of the Company’s investors (i.e., not retail investors), the Company does not believe it is necessary to include such disclosure. In addition, the Company does not yet know the amount of leverage that the Company intends to use
and therefore is unable to provide an estimate at this time.

 3

 Comment 7: The paragraph near the top of page 5 discussing the history of Section 61(a)(2) is
long and confusing. Clearly state that the Company can use the 150% threshold for leverage. Move unnecessary historical background elsewhere.

Response: The Company respectfully acknowledges the Staff’s comment and has revised the relevant disclosure in the Amended
Registration Statement to clarify that the Company can use the 150% threshold for leverage in response to the Staff’s comment.

 Comment 8: In
the third paragraph on page 5, clarify that below-grade debt investments are commonly referred to as “junk bonds” and are predominantly speculative in nature.

Response: The Company respectfully acknowledges the Staff’s comment and has added the requested disclosure in the third paragraph
on page 5 in response to the Staff’s comment.

 Formation Transactions (page 5)

Comment 9: Supplementally provide us with a detailed description of how the Warehousing Entities were formed and operated. We may have further comment.

 Response: The Company respectfully acknowledges the Staff’s comment and notes that the assets in the Warehouse Portfolio will
be acquired from Jefferies Finance LLC (formed in July 2004), a registered investment adviser under the Advisers Act (“Jefferies Finance”), and two special purpose vehicles (SPVs) (i.e., JFIN Fund III, formed in October 2011, and
Jefferies Senior Lending LLC, formed in April 2021) (together, the “Warehousing Entities”), prior to the Company’s election to be regulated as a BDC. The Warehousing Entities have been in operation since their formation and will
continue to operate after the Company acquires the Warehouse Portfolio. Jefferies Finance established and manages the Warehousing Entities that were created to identify and purchase loan opportunities that might be attractive to advisory clients
that may not be able to otherwise participate in these investments at the time they were available. These advisory clients include private funds, individual advisory accounts and now the Company. The investments held by Jefferies Finance and the
Warehousing Entities were not purchased expressly for the Company. Rather, the Investment Adviser selected these investments for the Formation Transactions based upon its diligence process for identifying investment opportunities, including which
loans held by Jefferies Finance and the Warehousing Entities met the stated investment objectives and strategies of the Company at the time of selection. Additionally, the Warehousing Entities may be utilized to acquire assets in circumstances
where advisory clients may not otherwise participate due to concentration limits or other restrictions. The Warehousing Entities will remain in place after the acquisition of the Warehouse Portfolio.

Investment Advisory Agreement (page 15)

 Comment 10:
Please consider including a fee table in this section that conforms to the requirements of Item 3.1 of Form N-2. Please also consider including an expense example that conforms to the requirements of
Instruction 11 to Item 3.1 of Form N-2. The staff believes that such disclosure would be helpful to investors.

Response: The Company respectfully submits that it is not aware of any affirmative requirement to include a fee table that conforms to
the requirements of Item 3.1 of Form N-2 in a registration statement

 4

on Form 10. The Company believes that such disclosure was omitted from Form 10 for good reason, in that such disclosure would be inappropriate and potentially misleading to a fund that is not
undertaking a public securities offering and remains at an early stage of development. The Company respectfully submits that the disclosure requirements of Item 3.1 of Form N-2 are intended to apply to a
prospectus that is or will be used in connection with a public offering of securities by a registrant. The Company further submits that the fees and expenses to be borne by shareholders through the investment advisory agreement and other contractual
arrangements are fully described in several places throughout the Registration Statement and would not, in any case, include disclosure related to sales load or offering expenses as required by Item 3.1 of Form
N-2, which are not applicable to the Company at this time.

 Incentive Fee Based on Income (page 16)

Comment 11: Because it would be helpful to investors, please include examples demonstrating the application of the income and capital gain incentive
fees. Also, please include a graphic to illustrate the application of the income portion of the incentive fee and the soft hurdle.

Response: The Company respectfully advises the Staff that it does not believe that it is necessary to include examples demonstrating
the application of the income and capital gain incentive fees, or to include a graphic to illustrate the application of the income portion of the incentive fee and the soft hurdle in the Form 10 because the incentive fee disclosure matches the
description of the Incentive Fee in the Company’s Investment Advisory Agreement. The Company further advises the Staff that examples demonstrating the operation of the incentive fee are not required by Form 10. The purpose of the Form 10 is to
register the Company’s shares under the Exchange Act.

 Share Repurchase Program (page 21)

Comment 12: The disclosure indicates that the Company intends to offer to repurchase shares on a quarterly basis. Disclose the material terms of such
repurchase offers, including any restrictions pursuant to federal securities laws concerning tender offers.

 Response: The Company
respectfully acknowledges the Staff’s comment and has enhanced the relevant disclosure in the Amended Registration Statement in relation to the material terms of the Share Repurchase Program, including any restrictions pursuant to federal
securities laws concerning tender offers, in response to the Staff’s comment.

 Item 1A. Risk Factors (page 41)

Comment 13: The Risk Factors section spans 39 pages, and includes a significant amounts of repetitive and/or generic disclosures. In Release No. 34-89670 (Aug. 26, 2020), the Commission amended Item 105 of Regulation S-K to, among other matters, “discourage repetition and the disclosure of information
that is not material.” Please review and revise your Risk Factor disclosures to more closely comport with Item 105 of Regulation S-K, as amended.

Response: The Company respectfully acknowledges the Staff’s comment and has revised the Risk Factor disclosures to more closely
comport with Item 105 of Regulation S-K, as amended, in response to the Staff’s comment.

 5

 A shareholder’s interest in us will be diluted if we issue additional shares, which could reduce the
overall value of an investment in us. (page 56)

 Comment 14: Clarify in the caption that the stated dilution will be to a shareholder’s
ownership percentage, as opposed to economic dilution.

 Response: The Company respectfully acknowledges the Staff’s comment
and has revised the cited caption in response to the Staff’s comment, in part, to reflect that the stated dilution will be to a shareholder’s ownership percentage.

We borrow money, which may magnify the potential for gain or loss and may increase the risk of investing in us. (page 63)

Comment 15: Supplementally explain the exemptive relief referenced in this risk factor regarding excluding the debt of any small business investment
company subsidiary. Explain whether y