(RULE 14a-101)
Information Required in Proxy Statement
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
1450 Brickell Avenue, 31st Floor
Miami, Florida 33131
18, 2018
Sincerely yours,
Stuart Aronson
Chief Executive Officer
| Sincerely yours, | | | | |
| | | | | |
| Stuart Aronson Chief Executive Officer | | | | |
1450 Brickell Avenue, 31st Floor
Miami, Florida 33131
(305) 381-6999
TO BE HELD ON AUGUST 3, 2017
1, 2018
By Order of the Board of Directors,
Richard Siegel
Secretary
Miami, Florida
June 23, 2017
| By Order of the Board of Directors, | | | | |
| | | | | |
| Richard Siegel Secretary | | | | |
| Miami, Florida June 18, 2018 | | | | |
1450 Brickell Avenue, 31st Floor
Miami, Florida 33131
(305) 381-6999
For
2017
2018 Annual Meeting of Stockholders
To Be Held on August 3, 2017
1, 2018
Votes Required
1 or Proposal 3.
Stockholders may provide their voting instructions through the Internet, by telephone or by mail by following the instructions on the Notice of Internet Availability of Proxy Materials. These options require Stockholders to input the control number, which is provided with the Notice of Internet Availability of Proxy Materials. If you vote using the Internet, after visitingwww.proxyvote.com and inputting your control number, you will be prompted to provide your voting instructions. Stockholders will have an opportunity to review their voting instructions and make any necessary changes before submitting their voting instructions and terminating their Internet link. Stockholders that vote via the Internet, in addition to confirming their voting instructions prior to submission, will, upon request, receive an e-mail confirming their instructions.
Percentage of Common Stock outstanding | ||||||||||
Name and address
| Type of ownership
| Shares owned
| Percentage
| |||||||
H.I.G. Bayside Debt & LBO Fund II, L.P.(1) | Record/Beneficial | 6,337,976 | 34.6 | % | ||||||
H.I.G. Bayside Loan Opportunity Fund II, L.P.(1) | Record/Beneficial | 5,164,646 | 28.2 | % | ||||||
Stuart Aronson(2) | Record/Beneficial | 10,000 | * | |||||||
John Bolduc(2)(3) | Record/Beneficial | 184,774 | 1.0 | % | ||||||
Jay Carvell(2) | Record/Beneficial | 15,629 | * | |||||||
Sami Mnaymneh(4)(5) | Record/Beneficial | 11,736,441 | 64.1 | % | ||||||
Anthony Tamer(4)(6) | Record/Beneficial | 11,727,821 | 64.0 | % | ||||||
Kevin F. Burke(2) | Record/Beneficial | — | * | |||||||
Rick P. Frier(2) | Record/Beneficial | — | * | |||||||
Rick D. Puckett(2) | Record/Beneficial | 18,912 | * | |||||||
G. Stacy Smith(2) | Record/Beneficial | 30,000 | * | |||||||
Marco Collazos(2) | Record/Beneficial | — | * | |||||||
Edward J. Giordano(2) | Record/Beneficial | — | * | |||||||
All officers and directors as a group (9 persons) | Record/Beneficial | 259,315 | 1.4 | % |
As of June 15, 2018, there were 20,531,948 shares of Common Stock outstanding.
* |
4
Name of Director | | | Dollar Range of Equity Securities in
| |
Independent Directors | | | | |
Kevin F. Burke | | | — | |
Rick P. Frier | | | — | |
Rick D. Puckett | | | Over $100,000 | |
G. Stacy Smith | | | Over $100,000 | |
Interested Directors | | | | |
Stuart Aronson | | | Over $100,000 | |
John Bolduc | | | Over $100,000 | |
Jay Carvell | | | Over $100,000 |
5
Name, Age and
| | | Position(s)
with the
| | | Term of Office and Length of Served | | | Principal Occupation(s)
| | | Other Directorships
| |
Nominee for Independent Director | | | | | | | | | | | | | |
| | | Director, Chairman of the Audit Committee | | | Class III director since 2012; term expires 2021 (if re-elected) | | | Until his retirement in December 2017, Mr. Puckett served as Executive Vice President, Chief Financial Officer and Treasurer of Snyder’s-Lance, Inc., a food manufacturer since December 2010. Prior to holding this position, Mr. Puckett served as Executive Vice President, Chief Financial Officer and Treasurer of Lance, Inc. | | | Mr. Puckett currently serves on the board of directors of SPX Corporation, an industrial equipment and manufacturing company, to which he was elected in October 2015. Mr. Puckett also serves on the board of Driven Brands, Inc., an automotive aftermarket conglomerate. | |
Nominee for Interested Director | | | | | | | | | | | | | |
John Bolduc (53)(3) | | | Chairman of the Board | | | Class III director since 2012; term expires 2021 (if re-elected) | | | Mr. Bolduc serves as an Executive Managing Director of H.I.G. Capital, L.L.C. (“H.I.G. Capital”). | | | None | |
Name, Age and Address(1) | | | Position(s) Held with the Company | | | Term of Office and Length of Time Served | | | Principal Occupation(s) During the Past Five Years | | | Other Directorships Held by Director or Nominee for Director During the Past Five Years(2) | |
Independent Directors | | | | | | | | | | | | | |
Kevin F. Burke (64) | | | Director | | | Class I director since 2017; term expires 2019 | | | Mr. Burke serves as a Senior Advisor to THL Credit Advisors LLC, an alternative credit investment manager for both direct lending and broadly syndicated investments through public and private vehicles, and to Churchill Asset Management LLC, a leading provider of senior and unitranche debt financing to middle market companies. Previously, from January 2016 until December 2016, Mr. Burke was a Senior Managing Director responsible for Loan Syndication, Sales and Trading at Antares Capital, a company specializing in acquisition finance for private equity firms. Prior to this position, from April 2003 until December 2015, Mr. Burke was a Senior Managing Director of GE Capital, a leading provider of debt financing to the U.S. sponsor middle market. | | | None | |
Rick P. Frier | | | Director, Chairman of the Compensation Committee | | | Class II director since 2016; term expires | | | Mr. Frier was Executive Vice President, Chief Financial Officer of Chiquita Brands International, Inc., a producer and distributor of produce, from April 2013 until January 2015. Before his position with Chiquita Brands, from March 2005 until October 2012, Mr. Frier served as the Executive Vice President and Chief Financial Officer of Catalina Marketing Corporation, a personalized digital media marketing firm. | | | Mr. Frier currently serves on the board of directors of Affinion Group, Inc., a company that provides loyalty program and customer engagement solutions for other businesses, to which he was elected in November 2015. He also serves as the Chairman of the board of directors of Exal Corporation, a producer of aluminum | |
Name, Age and Address(1) | | | Position(s) Held with the Company | | | Term of Office and Length of Time Served | | | Principal Occupation(s) During the Past Five Years | | | Other Directorships Held by Director or Nominee for Director During the Past Five Years(2) | |
G. Stacy Smith (50) | | | Director, Chairman of the Nominating and Corporate Governance Committee | | | Class I director since 2015; term expires 2019 | | | Mr. Smith has served as a partner of each of Trinity Investment Group, an investment firm, and SCW Capital, LP, a hedge fund, since 2013. From 1997 through December 2012, Mr. Smith was a partner at Walker Smith Capital, a hedge fund. | | | Mr. Smith currently serves on the board of directors of Independent Bank Group, a bank holding company, to which he was elected in February 2013. He also serves on the board of directors of USD Partners LP, an energy-related logistics company, to which he was elected in October 2015. | |
| | | | | | | | | | | | | |
Stuart Aronson | | | Chief Executive Officer and Director | | | Class II director since 2017; term expires | | | Mr. Aronson serves as Group Head of the U.S. direct lending platform of H.I.G. Capital, a position he has held since February 2016. Prior to joining H.I.G. Capital, from July 1990 through December 2015 Mr. Aronson served as an officer of the General Electric Company and as the President and Chief Executive Officer of the U.S. Sponsor Finance business of GE Capital (“GSF”), a leading provider of debt financing to the U.S. sponsor middle market. | | | Mr. Aronson currently serves on the board of Kids in Crisis, a non-profit organization located in Greenwich, Connecticut. | |
Jay Carvell | | | Director | | | Class II director since 2012; term expires | | | Mr. Carvell serves as a Managing Director at an investment adviser affiliated with H.I.G. Capital. Prior to joining H.I.G. Capital, Mr. Carvell was a partner at WhiteHorse Capital Partners, L.P. | | | None |
6
Class I and III Directors (continuing directors not up for re-election at the Annual Meeting)
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8
The Board’s Composition and Leadership Structure
Directors.
Mr. Smith’s experience as a board member, partner for several investment companies and manager for a hedge fund are among the attributes that led to the conclusion that Mr. Smith should serve on the Board.
Criteria considered by the Nominating and Corporate Governance Committee in evaluating the qualifications of individuals for election as members of the Board include compliance with the independence and other applicable requirements of the NASDAQ corporate governance requirements, the 1940 Act and the SEC, and all other applicable laws, rules, regulations and listing standards, the criteria, policies and principles set forth in the Nominating and Corporate Governance Committee charter and the ability to contribute to the effective management of the Company, taking into account its needs and such factors as the individual’s experience, perspective, skills and knowledge of the industry in which the Company operates. The Nominating and Corporate Governance Committee has not adopted a formal policy with regard to the consideration of diversity in identifying individuals for election as members of the Board, but the Nominating and Corporate Governance Committee will consider such factors as it may deem are in the best interests of the Company and its Stockholders. Such factors may include the individual’s professional experience, education, skills and other individual qualities or attributes, including gender, race or national origin.
Name | | | Age | | | Position | |
Edward J. Giordano | | 47 | | | Interim Chief Financial Officer | | |
Marco Collazos | | 42 | | | Chief Compliance Officer | |
Code of Conduct and Joint Code of Ethics
Name | Aggregate Compensation from WhiteHorse Finance | Pension or Retirement Benefits Accrued as Part of Our Expenses(1) | Total Compensation from WhiteHorse Finance | |||||||||
Independent Directors | ||||||||||||
Kevin F. Burke(2) | $ | — | — | $ | — | |||||||
Thomas C. Davis(3) | 40,250 | — | 40,250 | |||||||||
Rick P. Frier(4) | 22,320 | — | 22,320 | |||||||||
Rick D. Puckett | 87,000 | — | 87,000 | |||||||||
G. Stacy Smith | 76,347 | — | 76,347 | |||||||||
Interested Directors | ||||||||||||
Stuart Aronson(5) | — | — | — | |||||||||
John Bolduc | — | — | — | |||||||||
Jay Carvell | — | — | — |
Name | | | Aggregate Compensation from WhiteHorse Finance | | | Pension or Retirement Benefits Accrued as Part of Our Expenses(1) | | | Total Compensation from WhiteHorse Finance | | |||||||||
Independent Directors | | | | | | | | | | | | | | | | | | | |
Kevin F. Burke(2) | | | | $ | 42,875 | | | | | | — | | | | | $ | 42,125 | | |
Rick P. Frier | | | | | 85,750 | | | | | | — | | | | | | 85,750 | | |
Rick D. Puckett | | | | | 89,250 | | | | | | — | | | | | | 89,250 | | |
G. Stacy Smith | | | | | 85,750 | | | | | | — | | | | | | 85,750 | | |
Interested Directors | | | | | | | | | | | | | | | | | | | |
Stuart Aronson(2) | | | | | — | | | | | | — | | | | | | — | | |
John Bolduc | | | | | — | | | | | | — | | | | | | — | | |
Jay Carvell | | | | | — | | | | | | — | | | | | | — | | |
13
The management fee and incentive fee paid to WhiteHorse Advisers are based on the value of our investments and there may be a conflict of interest when personnel of WhiteHorse Advisers are involved in the valuation process for our portfolio investments. For the fiscal year ended December 31, 2016,2017, WhiteHorse Advisers earned a base management fee, net of fees waived, of $9.0$9.5 million and ana performance-based incentive fee of $6.8$6.6 million.
15
Fiscal Years Ended December 31, | ||||||||
2016 | 2015 | |||||||
Audit Fees | $ | 277 | $ | 290 | ||||
Audit-Related Fees | 7 | 45 | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | — | ||||||
Total Fees | $ | 284 | $ | 335 |
| | | Fiscal Years Ended December 31, | | |||||||||
| | | 2017 | | | 2016 | | ||||||
Audit Fees | | | | $ | 358 | | | | | $ | 277 | | |
Audit-Related Fees | | | | | 30 | | | | | | 7 | | |
Tax Fees | | | | | — | | | | | | — | | |
All Other Fees | | | | | — | | | | | | — | | |
Total Fees | | | | $ | 388 | | | | | $ | 284 | | |
|
2016.
16
In addition, the Board, based on the recommendation of the Audit Committee has engaged Crowe to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018 and has directed that the selection of Crowe should be submitted to the Company’s stockholders for ratification.
18, 2018
Kevin F. Burke
Rick P. Frier
G. Stacy Smith
17
Selected Consolidated Financial Statement Data (Unaudited) | | | | | | | | | Hypothetical Amounts as of March 31, 2018 Assuming That the Company Had Incurred the Maximum Amount of Borrowings That Could Be Incurred by the Company | | |||||||||
(dollar amounts in millions) | | | Actual Amounts As of March 31, 2018(1) | | | Under the Currently Applicable 200% Minimum Asset Coverage Ratio(2) | | | Under the Proposed 150% Minimum Asset Coverage Ratio(3) | | |||||||||
Total Assets | | | | $ | 492.6 | | | | | $ | 601.2 | | | | | $ | 894.0 | | |
Total Debt Outstanding | | | | $ | 185.0 | | | | | $ | 293.5 | | | | | $ | 586.3 | | |
Net Assets | | | | $ | 293.5 | | | | | $ | 293.5 | | | | | $ | 293.5 | | |
Asset Coverage Ratio | | | | | 259% | | | | | | 200% | | | | | | 150% | | |
| Assumed Return on the Company’s Portfolio (Net of Expenses) | | | | | (10.00)% | | | | | | (5.00)% | | | | | | 0.00% | | | | | | 5.00% | | | | | | 10.00% | | |
| Corresponding return to common stockholder assuming actual asset coverage as of March 31, 2018 (259%)(1) | | | | | (19.2)% | | | | | | (11.2)% | | | | | | (3.3)% | | | | | | 4.7% | | | | | | 12.7% | | |
| Corresponding return to common stockholder assuming 200% asset coverage(2) | | | | | (24.6)% | | | | | | (14.8)% | | | | | | (5.0)% | | | | | | 4.9% | | | | | | 14.7% | | |
| Corresponding return to common stockholder assuming 150% asset coverage(3) | | | | | (39.3)% | | | | | | (24.5)% | | | | | | (9.7)% | | | | | | 5.1% | | | | | | 19.9% | | |
| | | | | | | | | Annualized Expenses Based on Hypothetical Expenses for the Quarter Ended March 31, 2018 Assuming That the Company Has Incurred the Maximum Amount of Borrowing That Could Be Incurred By the Company | | |||||||||
Estimated Annual Expenses (As A Percentage of Net Assets Attributable to Common Stock) | | | Annualized Expenses Based on Actual Expenses for the Quarter Ended March 31, 2018 | | | Under the Currently Applicable 200% Minimum Asset Coverage Ratio | | | Under the Proposed 150% Minimum Asset Coverage Ratio | | |||||||||
Annual expenses (as a percentage of net assets attributable to common stock): | | | | | |||||||||||||||
Base management fees(1) | | | | | 3.33% | | | | | | 4.10% | | | | | | 6.09% | | |
Incentive fees payable under Investment Advisory Agreement (20% of Pre-Incentive Fee Net Investment Income and 20% of realized capital gains)(2)(3) | | | | | 2.92% | | | | | | 3.30% | | | | | | 4.48% | | |
Interest payments on borrowed funds(4) | | | | | 3.50% | | | | | | 5.22% | | | | | | 9.05% | | |
Acquired fund fees and expenses(5) | | | | | 0.75% | | | | | | 0.75% | | | | | | 0.75% | | |
Other expenses(6) | | | | | 1.19% | | | | | | 1.19% | | | | | | 1.19% | | |
Total annual expenses | | | | | 11.69% | | | | | | 14.56% | | | | | | 21.56% | | |
Stockholders would pay the following expenses on a $1,000 common stock investment: | | | 1 year | | | 3 years | | | 5 years | | | 10 years | | ||||||||||||
Under the Company’s Actual Asset Coverage Ratio of 259% as of March 31, 2018: assuming a 5% annual return (none of which is subject to the incentive fee) | | | | $ | 86.0 | | | | | $ | 248.4 | | | | | $ | 398.8 | | | | | $ | 728.0 | | |
Under the Currently Applicable 200% Asset Coverage Ratio: assuming a 5% annual return (none of which is subject to the incentive fee) | | | | $ | 109.1 | | | | | $ | 307.2 | | | | | $ | 481.2 | | | | | $ | 829.6 | | |
Under the Proposed 150% Minimum Asset Coverage Ratio: assuming a 5% annual return (none of which is subject to the incentive fee) | | | | $ | 160.5 | | | | | $ | 425.6 | | | | | $ | 630.6 | | | | | $ | 961.9 | | |
Stockholders would pay the following expenses on a $1,000 common stock investment: | | | 1 year | | | 3 years | | | 5 years | | | 10 years | | ||||||||||||
Under the Company’s Actual Asset Coverage Ratio of 259% as of March 31, 2018: assuming a 5% annual return resulting entirely from net realized capital gains (which is subject to the incentive fee based on capital gains) | | | | $ | 96.0 | | | | | $ | 277.3 | | | | | $ | 445.2 | | | | | $ | 812.6 | | |
Under the Currently Applicable 200% Asset Coverage Ratio: assuming a 5% annual return resulting entirely from net realized capital gains (which is subject to the incentive fee based on capital gains) | | | | $ | 119.1 | | | | | $ | 335.3 | | | | | $ | 525.4 | | | | | $ | 905.6 | | |
Under the Proposed 150% Minimum Asset Coverage Ratio: assuming a 5% annual return resulting entirely from net realized capital gains (which is subject to the incentive fee based on capital gains) | | | | $ | 170.5 | | | | | $ | 452.2 | | | | | $ | 669.9 | | | | | $ | 1,021.8 | | |
The Chief Compliance Officer may be contacted at:
Attn: Chief Compliance Officer
1450 Brickell Avenue, 31stFloor
Miami, Florida 33131
Attn: Chairman of Audit Committee
1450 Brickell Avenue, 31stFloor
Miami, Florida 33131
By Order of the Board of Directors,
Richard Siegel
Secretary
Miami, Florida
June 23, 2017
19
| By Order of the Board of Directors, | | | | |
| | | | | |
| Richard Siegel Secretary | | | | |
| Miami, Florida June 18, 2018 | | | | |