DEF 14A: WhiteHorse Finance Sets Date for 2024 Annual Stockholders Meeting, Outlines Key Proposals

WhiteHorse Finance, Inc. will hold its 2024 Annual Meeting of Stockholders virtually on July 31, 2024, to elect two directors and ratify the selection of Crowe LLP as its independent accounting firm.

Summary

• WhiteHorse Finance, Inc. is holding its 2024 Annual Meeting of Stockholders virtually on July 31, 2024.
• Stockholders will vote to elect two Class III directors to serve until the 2027 annual meeting.
• The meeting will also include a vote to ratify the selection of Crowe LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024.
• The record date for determining stockholders eligible to vote is June 6, 2024.
• The Board of Directors recommends voting in favor of both proposals.
• The company will bear the expenses of soliciting proxies for the meeting.
• Stockholders can vote online, by phone, or by mail following the instructions on the Notice of Internet Availability of Proxy Materials.

Sentiment

Score: 7

Explanation: The document is primarily informational and procedural, with a neutral to slightly positive tone due to the emphasis on corporate governance and stockholder participation. The board recommends voting for the proposals.

Positives

• The Board of Directors is committed to increasing diversity on the Board.
• The company has a Code of Conduct and Joint Code of Ethics in place to ensure high standards of integrity and compliance.
• Stockholders have multiple options for voting, including online, by phone, and by mail.
• The company has an Audit Committee in place to oversee financial reporting and internal controls.
• The company has a Nominating and Corporate Governance Committee responsible for selecting and nominating directors.

Negatives

• The incentive fee structure for WhiteHorse Advisers may create incentives that are not fully aligned with the interests of stockholders.
• The company relies on investment professionals from H.I.G. Capital or WhiteHorse Advisers to assist the Board with the valuation of portfolio investments, which may present a conflict of interest.
• Not all conflicts of interest can be expected to be resolved in the company's favor.
• The company has no legal right to the WhiteHorse name other than with respect to a limited license.

Risks

• The Board's oversight function cannot eliminate all risks or ensure that particular events do not adversely affect the value of the Company's investments.
• Material non-public information obtained by the company's senior management may restrict the ability to buy or sell securities of certain companies.
• There can be no assurance that WhiteHorse Advisers or its affiliates' efforts to allocate any particular investment opportunity fairly among all clients for whom such opportunity is appropriate will result in an allocation of all or part of such opportunity to the company.
• The company may co-invest with other affiliates, which could present conflicts of interest.

Future Outlook

The Company expects that the 2025 annual meeting of Stockholders will be held in July 2025, but the exact date, time and location of such meeting have yet to be determined.

Management Comments

• Stuart Aronson, Chief Executive Officer, cordially invites stockholders to participate in the 2024 Annual Meeting.
• Stuart Aronson will report on the Company's progress during the past year and respond to stockholders' questions.

Industry Context

As a business development company (BDC), WhiteHorse Finance operates within the broader financial services industry, specifically focusing on direct lending to middle-market companies. The company's activities are subject to regulations under the Investment Company Act of 1940.

Comparison to Industry Standards

• WhiteHorse Finance's corporate governance practices, such as having a majority of independent directors and various committees, align with industry standards for publicly traded companies and registered investment companies.
• The company's fee structure, including base management and incentive fees, is typical for BDCs, although the specific rates may vary among peers.
• Comparable BDCs include Ares Capital Corporation (ARCC), Main Street Capital Corporation (MAIN), and Prospect Capital Corporation (PSEC), which also focus on direct lending to middle-market companies.
• The co-investment exemptive relief obtained by WhiteHorse Finance is a common practice among BDCs to enhance investment opportunities, similar to those obtained by other BDCs like ARCC and PSEC.

Corporate Governance

Related Party Transactions

• The company has entered into an Investment Advisory Agreement with WhiteHorse Advisers, which is an affiliate of H.I.G. Capital.
• The company has entered into a Staffing Agreement with an affiliate of H.I.G. Capital.
• The company has entered into an Administration Agreement with WhiteHorse Administration.
• The company has entered into a License Agreement with an affiliate of H.I.G. Capital for the use of the WhiteHorse name.

Stakeholder Impact

• Stockholders have the opportunity to vote on key proposals and participate in the governance of the company.
• The election of directors and ratification of the independent accounting firm directly impact the oversight and financial reporting of the company.
• The company's policies and procedures are designed to manage conflicts of interest and ensure fair treatment of all stakeholders.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• Stockholders can attend the virtual Annual Meeting on July 31, 2024.
• The Board will consider the results of the votes on the proposals.
• The company will continue to operate under the terms of the Investment Advisory Agreement and Administration Agreement.

Key Dates

Keywords

Annual Meeting, Proxy Statement, Directors, Crowe LLP, Stockholders, WhiteHorse Finance, Corporate Governance, Audit Committee, Investment Advisory Agreement