NEW YORK--(BUSINESS WIRE)--TPG Specialty Lending, Inc. (NYSE:TSLX), a specialty finance company focused on lending to middle-market companies, today sent a letter to Mr. Steven P. Novak, Chairman of the Board of TICC Capital Corp. (“TICC”; Nasdaq:TICC) questioning TICC’s strategy of insider share purchases to build a position to defend the existing external manager, while the Company has failed to set a date for its 2016 Annual Meeting of Stockholders.
“[t]he Board of Directors of TICC believes that ownership of TICC stock by management is an effective way to align the interests of management with the long-term interests of the Company and our stockholders, and encourages management and members of the board to own stock in TICC.”
TSLX has published a complete copy of a letter written by Mr. Novak to TSLX, dated May 25, 2016, to ensure all TICC stockholders understand the troubling nature of TICC’s actions and highly concerning response of Mr. Novak to the questions and concerns of TSLX.
TSLX encourages interested stakeholders to visit the website,www.changeticcnow.com, to view other materials relating to TSLXs efforts to effect positive change at TICC to maximize stockholder value.
A copy of the letter follows:
Mr. Steven P. Novak
TICC Capital Corp.
8 Sound Shore Drive, Suite 255
Greenwich, CT 06830
Dear Mr. Novak,
We are in receipt of your letter dated May 25, 2016. As the largest stockholder of TICC Capital Corp. (“TICC” or the “Company”) we continue to be disappointed and highly concerned by the Board’s actions.
Your letter demonstrates a profound, but no longer shocking, misalignment with the best interests of stockholders.
The simple fact is that despite the shares trading below net asset value (“NAV”) for 634 consecutive days as of June 6, 2016, Mr. Charles Royce, Mr. Jonathan Cohen and Mr. Saul Rosenthal are for the first time in over four years buying shares on the open market. This is also the first time in the same time period that ANY BOARD MEMBER has bought shares on the open market.
Faced with a proxy contest that puts the manager’s income stream at risk, it is hard to see the Board’s continued and unprecedented failure to schedule TICC’s annual stockholder meeting as anything but a blatant and highly concerning effort to buy time to acquire enough shares to block change at TICC to the detriment of stockholders.
Your letter endorsing this share accumulation is a shocking dismissal of your role as Chairman and the lead independent director of TICC. It is self-serving for you to say “[t]he Board of Directors of TICC believes that ownership of TICC stock by management is an effective way to align the interests of management with the long-term interests of the Company and our stockholders, and encourages management and members of the board to own stock in TICC.” Was this not the case over the previous four years? We have included a complete copy of this letter to ensure all stockholders understand the disingenuous nature of your response.
Your defense of this behavior implies that you and the Board are:
- Unable to see that personally buying up TICC stock without an authorized stock repurchase program is simply putting personal interests ahead of stockholder interests. This is an abdication of your fiduciary duties to all stockholders. Individual board members clearly see TICC stock as a strong investment and are happy to take it for themselves while failing to approve a repurchase program that would be accretive to TICC's long-suffering stockholders.
and
- Complicit in a self-serving strategy to build a position to defend the existing external manager, at the expense of stockholders and in violation of your duties as Chairman of the Board and an independent director. Stockholders already question your ability to act independently following your role in the flawed and failed transaction in 2015 that led a federal judge to find TICC to have misled stockholders and to have likely violated federal securities laws.
Your new enthusiasm for TICC stock as a personal investment is particularly troubling in light of the Board’s delay in setting the Annual Meeting date.
The longer the Company delays setting a date for the 2016 Annual Meeting, the more inappropriate it becomes for insiders to continue to buy TICC shares. Stockholders deserve to vote on material issues put before them in a timely manner consistent with TICC's past practice - this is the first time in 11 years that proxy materials for the Company’s Annual Meeting have not been filed by now. Stockholders can only draw the conclusion that you and the Board are intentionally failing to act to provide insiders the time to purchase stock to protect the existing external manager’s income stream. Otherwise, why are you delaying? And if there is another reason for delaying the meeting that is yet to be disclosed to the public, how can insiders continue to purchase stock?
You first endorse and lead a strategy to put millions of dollars into the management team’s hands by the proposed sale of the manager to a third party. After those efforts failed by a vote of TICC stockholders, you are now facilitating trying to put millions of dollars in the pockets of fellow board members by delaying the Annual Meeting. These efforts to save the external management contract at all costs have directly impacted stockholder value.
You have lost significant value for stockholders by acting in a self-interested manner, ignoring our compelling proposal to deliver real value for TICC stockholders, refusing to authorize a stock repurchase program for ALL stockholders, and continuing to delay setting the 2016 Annual Meeting.
Furthermore, we have seen no evidence that you intend to align your interests with stockholders’ interests, as doing so would jeopardize the current external manager contract and the related fees the contract generates.
TICC stockholders deserve directors who will act in stockholders’ best interests and deliver real value. TICC stockholders need answers now.
Very truly yours,
TPG SPECIALTY LENDING, INC.
Joshua E. Easterly
Chairman and Co-Chief Executive Officer
Michael Fishman
Co-Chief Executive Officer
ATTN: TICC LETTER
May 25, 2016
Mr. Joshua Easterly
Chairman and Co-Chief Executive Officer
and
Mr. Michael Fishman
Co-Chief Executive Officer
TPG Specialty Lending
8888 Seventh Avenue – 38th Fl
New York, NY 10106
Mr. Easterly and Mrs. Fishman,
The Special Committee is in receipt of your letter dated May 17, 2016.
We have carefully considered the allegations contained in your letter and find nothing improper with the TICC management team’s purchase of stock in our company. These purchases were consistent with TICC’s Code of Ethics and Insider Trading Policy, both of which are publicly available on TICC’s website, and were publicly announced in accordance with SEC rules and regulations.
The Board of Directors of TICC believes that ownership of TICC stock by management is an effective way to align the interests of management with the long-term interests of the Company and our stockholders, and encourages management and members of the board to own stock in TICC.
As we have previously stated, TICC has bought back shares of its common stock opportunistically to maximize the value of our company. Consistent with that policy, during the first quarter of 2016, TICC repurchased approximately 4.9 million shares of common stock for a total of approximately $25.6 million.
Sincerely,
TICC CAPITAL CORP.
Steven P. Novak
Chairman,
Special Committee of the TICC Board of Directors
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 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 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 $16 billion of assets under management as of March 31, 2016, and the broader TPG platform, a global private investment firm with over $74 billion of assets under management as of December 31, 2015. For more information, visit the Company’s website at www.tpgspecialtylending.com.
