TSLX Stands Ready and Willing to Engage with TICC Toward Making
the TSLX Proposal a Reality
TSLX Calls on TICC to Commit to Changes Endorsed by TICC Special
Committee Should BSP Transaction Not Move Forward
TPG Specialty Lending, Inc. (“TSLX”; NYSE:TSLX), a specialty
finance company focused on lending to middle-market companies,
today sent a letter to the Board of Directors of TICC Capital Corp.
(“TICC”; Nasdaq: TICC) in which TSLX urged TICC to provide an
update to stockholders regarding the status of the proposed
transaction with Benefit Street Partners L.L.C. (“BSP”), the
associated special meeting of stockholders and whether TICC intends
to change the status quo at the company should the BSP transaction
not move forward.
A copy of the letter follows:
Board of DirectorsTICC Capital Corp.8 Sound Shore Drive, Suite
255Greenwich, CT 06830
Members of the Board,
We are writing both as a stockholder of TICC Capital Corp.
(“TICC”) and in the greater interest of all stockholders to urge
you to address the true owners of TICC and provide an update on the
status of our investment.
Since October 27, 2015, more than a month ago, you have not
publicly discussed:
- The status of the proposed transaction
with Benefit Street Partners L.L.C. (“BSP”), a Providence Equity
Partners L.L.C. affiliate or the associated Special Meeting,
- TPG Specialty Lending, Inc.’s (“TSLX”)
revised offer for TICC, or
- Plans to change the status quo at TICC
should the BSP transaction fail to be approved.
We are surprised and disappointed that the members of the
Special Committee continue to ignore our proposal and have failed
to acknowledge or respond to our revised offer, which we publicly
announced on November 2, 2015, approximately one month ago.
Your silence has undoubtedly left the impression with your
stockholders that you are negotiating a material transaction as
evidenced by the recent movement in TICC’s stock price from $6.39
per share to $6.93 per share.1 Knowing we have the only credible
proposal on the table and you are not negotiating with us, we
presume your silence means that the BSP transaction is dead and you
wish to return to the status quo.
Despite your lack of direct engagement, we and our fellow
stockholders remain resolute in making this transaction a reality.
As the Special Committee has made clear, the status quo is simply
unacceptable.
Our updated proposal adds certainty for TICC stockholders by
indexing the value of TSLX’s proposal to 90% of TICC’s most
recently reported net asset value at the time of execution of a
definitive agreement. Most importantly, the TSLX proposal delivers
immediate and upfront value to TICC stockholders for their
investment. Throughout the last few months, you have repeatedly
outlined four primary reasons as support for the sale of TICC’s
adviser to BSP. These reasons are as follows:
- Management fees under the BSP
transaction would be reduced to 1.5%, which is lower than the
current rate and also below that of most BDCs.23 Under the current
terms of the agreement, management fees under the BSP transaction
would be further reduced to 1.25% for twenty-four months.
- Under the BSP transaction, the gap
between net asset value and market value would be reduced via a $50
million to $100 million tender offer or repurchase program for TICC
shares. The tender offer would be at a minimum price of ~90% of
TICC net asset value.4
- BSP would significantly change TICC’s
investment strategy to primarily focus on private debt
investments.5
- The BSP transaction would change TICC’s
Board, through the expansion and addition of four new independent
directors.6
As we have made clear many times, our proposal more than
adequately addresses these points and offers many other important
benefits for stockholders. Again, we outline these aspects of our
proposal below:
- Whereas the share repurchase program
under the BSP transaction would result in the acquisition of only
$50-$100 million of shares at 90% of net asset value, representing
only a quarter of TICC’s outstanding shares (based on its October
30, 2015 closing stock price of $6.39 per share), the TSLX proposal
would pay ALL TICC stockholders 90% of net asset value for their
shares.
- In addition, TSLX has a
stockholder-friendly approach to share buybacks and is committed to
repurchasing its stock if the share price falls below net asset
value. We are confident stockholders recognize the strength and
clarity of our approach and value this above TICC’s long history of
never meaningfully executing a buyback program.
- TSLX has a proven record of delivering
superior returns to stockholders, consistently generating total
returns over and above the BDC Composite.7 TICC stockholders would
benefit from TSLX’s ability to generate industry-leading return on
equity for stockholders.
The Board has a fiduciary duty to make the right choice and act
in the best interest of stockholders by engaging in substantive
discussions with us. In the meantime, we think it is imperative
that the TICC Board act now to protect the interests of
stockholders by making improvements in the management and
governance of TICC.
In light of this reality, we are astounded by the silence from
the Board. You have clearly acknowledged that the status quo at
TICC is unsustainable and publicly stated your intentions to pursue
change at TICC. It’s time to stand by these words. With the Board’s
insistence that change is a clear priority, stockholders deserve a
much more detailed understanding of the status and future of their
investment. The company’s lack of communication this past month,
especially the stunning refusal to take questions from investors or
analysts on your quarterly earnings call -- breaking years of
tradition -- is simply unacceptable.
More than words, however, TICC’s stockholders are entitled to
actual change. First and foremost, there must be an immediate
termination of the existing investment advisory agreement. If the
TICC Board is unwilling to fulfill its fiduciary duty, stockholders
will be forced to consider exercising their rights to take direct
action to change the manager.
TICC’s Special Committee has endorsed the need for change, as
outlined in their argument in support of the BSP transaction, and
can make these changes independent of the transaction. Given the
uncertainty around the future of the BSP transaction, we encourage
the Board to confirm the following actions will be taken even if
the BSP transaction does not proceed:
- Permanently reduce management fees to
1.5% and further reduce such fees for the next 24 months to
1.25%;
- Enter into a 10b5-1 share buyback plan
that repurchases $100MM of stock at a price up to 90% of the most
recently reported NAV; and
- Reconstitute the existing Board in a
meaningful fashion.
If the TICC Special Committee does not enact such changes
immediately, it will be clear that such endorsements were not
genuine and were only promised to facilitate a value transfer from
stockholders to the other members of the Board.
To be absolutely clear, we do not think any of these changes
will produce certain value over and above what we have presented to
stockholders through our proposal. We implore you not to stand idly
by while the power to enact meaningful change at TICC rests in your
hands.
We believe strongly that you should do what is right for TICC’s
stockholders and pursue a transaction with TSLX. There is no other
proposal currently on the table for TICC stockholders that would
deliver the significant and tangible benefits provided by our
superior proposal. We stand by our proposal and remain confident
that, as revised, it is the most compelling option for TICC
stockholders. And, as a current TICC stockholder owning
approximately 3% of TICC’s outstanding common stock, we have a
strong interest in delivering real value to all TICC
stockholders.
At a minimum, with the current future of TICC unclear for
stockholders, this Board must communicate clearly and frequently
with its stockholders.
We trust that you will ultimately see the clear and compelling
value our proposal offers and will engage with us to deliver that
value to TICC stockholders who, we believe, are strongly in support
of our proposal. We look forward to hearing from you, and stand
ready and willing to immediately engage in a constructive dialogue
and to address any questions or concerns you may have.
Sincerely,
Joshua EasterlyChairman, Board of DirectorsCo-Chief Executive
Officer
Michael FishmanCo-Chief Executive Officer
About TPG Specialty Lending
TPG Specialty Lending, Inc. (“TSLX”, or the “Company”) is a
specialty finance company focused on lending to middle-market
companies. The Company seeks to generate current income primarily
in U.S.-domiciled middle-market companies through direct
originations of senior secured loans and, to a lesser extent,
originations of mezzanine loans and investments in corporate bonds
and equity securities. The Company has elected to be regulated as a
business development company, or a BDC, under the Investment
Company Act of 1940 and the rules and regulations promulgated
thereunder. TSLX is externally managed by TSL Advisers, LLC, a
Securities and Exchange Commission (“SEC”) registered investment
adviser. TSLX leverages the deep investment, sector, and operating
resources of TPG Special Situations Partners, the dedicated special
situations and credit platform of TPG, with over $12 billion of
assets under management, and the broader TPG platform, a global
private investment firm with over $74 billion of assets under
management. For more information, visit the Company’s website
at www.tpgspecialtylending.com.
Forward-Looking Statements
Information set forth herein includes forward-looking
statements. These forward-looking statements include, but are not
limited to, statements regarding TSLX proposed business combination
transaction with TICC Capital Corp. (“TICC”) (including any
financing required in connection with the proposed transaction and
the benefits, results, effects and timing of a transaction), all
statements regarding TPG Specialty Lending, Inc.’s (“TSLX”, or the
“Company”) (and TSLX and TICC’s combined) expected future financial
position, results of operations, cash flows, dividends, financing
plans, business strategy, budgets, capital expenditures,
competitive positions, growth opportunities, plans and objectives
of management, and statements containing the words such as
“anticipate,” “approximate,” “believe,” “plan,” “estimate,”
“expect,” “project,” “could,” “would,” “should,” “will,” “intend,”
“may,” “potential,” “upside,” and other similar expressions.
Statements set forth herein concerning the business outlook or
future economic performance, anticipated profitability, revenues,
expenses, dividends or other financial items, and product or
services line growth of TSLX (and the combined businesses of TSLX
and TICC), together with other statements that are not historical
facts, are forward-looking statements that are estimates reflecting
the best judgment of TSLX based upon currently available
information.
Such forward-looking statements are inherently uncertain, and
stockholders and other potential investors must recognize that
actual results may differ materially from TSLX’s expectations as a
result of a variety of factors, including, without limitation,
those discussed below. Such forward-looking statements are based
upon management’s current expectations and include known and
unknown risks, uncertainties and other factors, many of which TSLX
is unable to predict or control, that may cause TSLX’s plans with
respect to TICC, actual results or performance to differ materially
from any plans, future results or performance expressed or implied
by such forward-looking statements. These statements involve risks,
uncertainties and other factors discussed below and detailed from
time to time in TSLX’s filings with the Securities and Exchange
Commission (“SEC”).
Risks and uncertainties related to the proposed transaction
include, among others, uncertainty as to whether TSLX will further
pursue, enter into or consummate the transaction on the terms set
forth in the proposal or on other terms, potential adverse
reactions or changes to business relationships resulting from the
announcement or completion of the transaction, uncertainties as to
the timing of the transaction, adverse effects on TSLX’s stock
price resulting from the announcement or consummation of the
transaction or any failure to complete the transaction, competitive
responses to the announcement or consummation of the transaction,
the risk that regulatory or other approvals and any financing
required in connection with the consummation of the transaction are
not obtained or are obtained subject to terms and conditions that
are not anticipated, costs and difficulties related to the
integration of TICC’s businesses and operations with TSLX’s
businesses and operations, the inability to obtain, or delays in
obtaining, cost savings and synergies from the transaction,
unexpected costs, liabilities, charges or expenses resulting from
the transaction, litigation relating to the transaction, the
inability to retain key personnel, and any changes in general
economic and/or industry specific conditions.
In addition to these factors, other factors that may affect
TSLX’s plans, results or stock price are set forth in TSLX’s Annual
Report on Form 10-K and in its reports on Forms 10-Q and 8-K.
Many of these factors are beyond TSLX’s control. TSLX cautions
investors that any forward-looking statements made by TSLX are not
guarantees of future performance. TSLX disclaims any obligation to
update any such factors or to announce publicly the results of any
revisions to any of the forward-looking statements to reflect
future events or developments.
Third Party-Sourced Statements and Information
Certain statements and information included herein have been
sourced from third parties. TSLX does not make any representations
regarding the accuracy, completeness or timeliness of such third
party statements or information. Except as expressly set forth
herein, permission to cite such statements or information has
neither been sought nor obtained from such third parties. Any such
statements or information should not be viewed as an indication of
support from such third parties for the views expressed herein. All
information in this communication regarding TICC, including its
businesses, operations and financial results, was obtained from
public sources. While TSLX has no knowledge that any such
information is inaccurate or incomplete, TSLX has not verified any
of that information. TSLX reserves the right to change any of its
opinions expressed herein at any time as it deems appropriate. TSLX
disclaims any obligation to update the data, information or
opinions contained herein.
Proxy Solicitation Information
The information set forth herein is provided for informational
purposes only and does not constitute an offer to purchase or the
solicitation of an offer to sell any securities. TSLX has filed
with the SEC and mailed to TICC stockholders a definitive proxy
statement and accompanying GOLD proxy card to be used to solicit
votes at a special meeting of stockholders of TICC originally
scheduled for October 27, 2015 against (a) approval of the new
advisory agreement between TICC and TICC Management, LLC (the
“Adviser”), to take effect upon a change of control of the Adviser
in connection with the entrance of the Adviser into a purchase
agreement with an affiliate of Benefit Street Partners L.L.C.
(“BSP”), pursuant to which BSP will acquire control of the Adviser,
(b) the election of six directors nominated by TICC’s board of
directors, and (c) the proposal to adjourn the meeting if necessary
or appropriate to solicit additional votes.
TSLX STRONGLY ADVISES ALL STOCKHOLDERS OF TICC TO READ THE TSLX
PROXY STATEMENT AND ITS OTHER PROXY MATERIALS AS THEY BECOME
AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION. SUCH TSLX
PROXY MATERIALS ARE AND WILL BECOME AVAILABLE AT NO CHARGE ON THE
SEC’S WEB SITE AT HTTP://WWW.SEC.GOV AND AT TSLX’S
WEBSITE AT HTTP://WWW.TPGSPECIALTYLENDING.COM. IN ADDITION,
TSLX WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE UPON
REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO TSLX’S PROXY
SOLICITOR AT TPG@MACKENZIEPARTNERS.COM.
The participant in the solicitation is TSLX and certain of its
directors and executive officers may also be deemed to be
participants in the solicitation. As of the date hereof, TSLX
directly beneficially owned 1,633,660 shares of common stock of
TICC.
Security holders may obtain information regarding the names,
affiliations and interests of TSLX’s directors and executive
officers in TSLX’s Annual Report on Form 10-K for the year ended
December 31, 2014, which was filed with the SEC on February 24,
2015, its proxy statement for the 2015 Annual Meeting, which was
filed with the SEC on April 10, 2015, and certain of its Current
Reports on Form 8-K. These documents can be obtained free of charge
from the sources indicated above. Additional information regarding
the interests of these participants in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, will also be included in any proxy statement
and other relevant materials to be filed with the SEC when they
become available.
1 Represents closing price on October 30, 2015 (the day before
the revised TSLX offer was publically announced) and November 27,
2015, respectively.
2 TICC Sends Letter to Stockholders Highlighting the Five Most
Important and Undisputed Points in Support of the BSP Agreement,
Oct. 20, 2015.
3 Wells Fargo Securities, LLC report dated Oct. 8, 2015
4 TICC Sends Letter to Stockholders Highlighting the Five Most
Important and Undisputed Points in Support of the BSP Agreement,
Oct. 20, 2015.
5 Benefit Street Partners Issues Open Letter to TICC
Stockholders, Oct. 7, 2015.
6 TICC Capital’s Investment Advisor to Be Acquired by Benefit
Street Partners, Aug. 4, 2015.
7 BDC Composite comprised of ACAS, AINV, ARCC, FSC, GBDC, HTGC,
MAIN, MCC, NMFC, PNNT, PSEC, SLRC, TCAP, TCRD and BKCC.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151129005036/en/
InvestorsTPG Specialty LendingRobert Ollwerther,
212-430-4119bollwerther@tpg.comorTPG Specialty LendingLucy Lu,
212-601-4753llu@tpg.comorMacKenzie Partners, Inc.Charlie Koons,
212-929-5708ckoons@mackenziepartners.comorMediaTPG Specialty
LendingLuke Barrett, 212-601-4752lbarrett@tpg.comorAbernathy
MacGregorTom Johnson or Pat Tucker, 212-371-5999tbj@abmac.com /
pct@abmac.com
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