<SEC-DOCUMENT>0000017313-19-000061.txt : 20190918
<SEC-HEADER>0000017313-19-000061.hdr.sgml : 20190918
<ACCEPTANCE-DATETIME>20190814170047
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000017313-19-000061
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20190814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CAPITAL SOUTHWEST CORP
		CENTRAL INDEX KEY:			0000017313
		IRS NUMBER:				751072796
		STATE OF INCORPORATION:			TX
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		5400 LYNDON B. JOHNSON FREEWAY
		STREET 2:		SUITE 1300
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75240
		BUSINESS PHONE:		2142385700

	MAIL ADDRESS:	
		STREET 1:		5400 LYNDON B. JOHNSON FREEWAY
		STREET 2:		SUITE 1300
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75240
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd">
<html>
	<head>
		<!-- Document created using Wdesk 1 -->
		<!-- Copyright 2019 Workiva -->
		<title>Document</title>
	</head>
	<body style="font-family:Times New Roman;font-size:10pt;">
<div><a name="s5ef6e666a7d7428e8466b9afc83ebdfb"></a></div><div></div><div><br></div><div style="line-height:120%;text-align:center;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">[EVERSHEDS SUTHERLAND (US) LLP LETTERHEAD]</font></div><div style="line-height:120%;text-align:left;padding-left:384px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:240px;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:240px;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">August 14, 2019</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">VIA EDGAR</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Lisa Larkin, Esq.</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Megan Miller</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Division of Investment Management, Disclosure Review Office</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">U.S. Securities and Exchange Commission</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">100 F Street, N.E.</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Washington, D.C.  20549</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Re:&#160;&#160;&#160;&#160;Capital Southwest Corporation</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Registration Statement on Form N-2 Filed on July 1, 2019</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">File No. 333-232492</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Dear Ms. Larkin and Ms. Miller:</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">On behalf of Capital Southwest Corporation (the </font><font style="font-family:inherit;font-size:11pt;font-style:italic;font-weight:bold;">&#8220;Company&#8221;</font><font style="font-family:inherit;font-size:11pt;">), set forth below are the Company&#8217;s responses to the (i) oral comments provided by the staff of the Division of Investment Management (the </font><font style="font-family:inherit;font-size:11pt;font-style:italic;font-weight:bold;">&#8220;Staff&#8221;</font><font style="font-family:inherit;font-size:11pt;">) of the Securities and Exchange Commission (the </font><font style="font-family:inherit;font-size:11pt;font-style:italic;font-weight:bold;">&#8220;SEC&#8221;</font><font style="font-family:inherit;font-size:11pt;">) to the Company on August 1, 2019 and August 6, 2019 with respect to the Company&#8217;s registration statement on Form N-2 (File No. 333-232492), filed with the SEC on July 1, 2019 (the </font><font style="font-family:inherit;font-size:11pt;font-style:italic;font-weight:bold;">&#8220;Registration Statement&#8221;</font><font style="font-family:inherit;font-size:11pt;">), and the prospectus included therein (the </font><font style="font-family:inherit;font-size:11pt;font-style:italic;font-weight:bold;">&#8220;Prospectus&#8221;</font><font style="font-family:inherit;font-size:11pt;">).  The Staff&#8217;s comments are set forth below and are followed by the Company&#8217;s responses. Where revisions to the Registration Statement are referenced in the responses set forth below, such revisions have been included in Pre-Effective Amendment No. 1 to the Registration Statement filed with the SEC on August 14, 2019 (the </font><font style="font-family:inherit;font-size:11pt;font-style:italic;font-weight:bold;">&#8220;Amended Registration Statement&#8221;</font><font style="font-family:inherit;font-size:11pt;">).</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">&#160;&#160;&#160;&#160;</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">Legal Comments</font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:11pt;">1.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Comment</font><font style="font-family:inherit;font-size:11pt;">: The Staff refers to the following disclosure on page 6 under the sub-heading entitled &#8220;Overview&#8221;: &#8220;We invest primarily in senior debt securities, secured by security interests in portfolio company assets, and in secured and unsecured subordinated debt securities.&#8221; The Staff notes that rating agencies as well as the financial media have recently reported that traditional lender protections are being eroded and that so called &#8220;covenant-lite&#8221; loans are increasing common. See e.g., </font><font style="font-family:inherit;font-size:11pt;font-style:italic;">Leveraged Loans Not as Safe as They Once Were</font><font style="font-family:inherit;font-size:11pt;">, Wall Street Journal (Aug. 16, 2018). If the Company intends to invest in covenant-lite loans, please describe such loans, the extent to which the Company will invest in such loans, and consider enhancing the disclosure to describe the risks associated with such loans.</font></div></td></tr></table><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:justify;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Response</font><font style="font-family:inherit;font-size:11pt;">: The Company respectfully advises the Staff on a supplemental basis that the Company&#8217;s investment strategy does not contemplate investing in covenant-lite loans and the Company has no current intention in investing in such loans. </font></div><div style="line-height:120%;text-align:justify;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:11pt;">2.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Comment</font><font style="font-family:inherit;font-size:11pt;">: If there is a charge associated with receiving cash under the Company&#8217;s dividend reinvestment plan, please disclose such charge in footnote 3 to the &#8220;Fees and Expenses&#8221; table on page 10 of the Registration Statement.</font></div></td></tr></table><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div><br></div><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><hr style="page-break-after:always"><div><div style="line-height:120%;text-align:left;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">Lisa Larkin Esq.</font></div><div style="line-height:120%;text-align:left;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">Megan Miller</font></div><div style="line-height:120%;text-align:left;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">August 14, 2019</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">Page 2</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;"><br></font></div></div><div><br></div><div style="line-height:120%;text-align:justify;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Response</font><font style="font-family:inherit;font-size:11pt;">:&#160;&#160;&#160;&#160;The Company respectfully advises the Staff on a supplemental basis that there is no charge associated with receiving cash under the Company&#8217;s dividend reinvestment plan. </font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:11pt;">3.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Comment</font><font style="font-family:inherit;font-size:11pt;">: Please provide in correspondence a representation that the Company reasonably believes its assets will provide adequate cover to allow it to satisfy all of its unfunded commitments. Please provide a general explanation as to why the Company believes it will be able to satisfy its unfunded commitments.</font></div></td></tr></table><div style="line-height:120%;text-align:justify;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:justify;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Response</font><font style="font-family:inherit;font-size:11pt;">: The Company hereby confirms to the Staff that it believes that its assets provide adequate coverage to satisfy all of the Company&#8217;s unfunded commitments. The Company can use its cash, liquidate a cash equivalent or draw on its credit facility in order to satisfy any such unfunded commitments.</font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:11pt;">4.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Comment</font><font style="font-family:inherit;font-size:11pt;">: On page 28 of the Registration Statement, the Staff notes that the header for the third and fourth column in the table both present information assuming an offering of 10% of the Company&#8217;s outstanding shares at a 10% discount from net asset value. Please correct the header of the fourth column to reflect the appropriate assumptions of the calculation. In addition, if there is no limit on the potential discount, please present information assuming a 100% discount from net asset value.</font></div></td></tr></table><div style="line-height:120%;text-align:justify;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:justify;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Response</font><font style="font-family:inherit;font-size:11pt;">: The Company has revised the fourth column header of the table on page 28 of the Amended Registration Statement to reflect an offering of 25% of the Company&#8217;s outstanding shares at a 20% discount from net asset value. In addition, the Company has presented an example of an offering assuming a 100% discount from net asset value on pages 28 and 30 of the Amended Registration Statement. </font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:11pt;">5.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Comment</font><font style="font-family:inherit;font-size:11pt;">: On page 56 of the Registration Statement under the heading entitled &#8220;Incorporation by Reference&#8221;, please revise the date referenced in the third bullet from &#8220;June 5, 2019&#8221; to &#8220;June 5, 2018.&#8221;</font></div></td></tr></table><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:justify;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Response</font><font style="font-family:inherit;font-size:11pt;">: The Company has revised the disclosure on page 56 of the Amended Registration Statement accordingly. </font></div><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">Accounting Comment </font></div><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman; font-size:10pt;"><tr><td style="width:24px;"></td><td></td></tr><tr><td style="vertical-align:top"><div style="line-height:120%;font-size:11pt;padding-left:0px;"><font style="font-family:inherit;font-size:11pt;">1.</font></div></td><td style="vertical-align:top;"><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Comment</font><font style="font-family:inherit;font-size:11pt;">: Under Item 6 of the Company&#8217;s Annual Report on Form 10-K filed with the SEC on June 4, 2019, please disclose the total expenses, including interest expense, in addition to the total expenses, excluding interest expense, under the &#8220;Expense ratios (as percentage of average net assets)&#8221; heading.</font></div></td></tr></table><div style="line-height:120%;text-align:justify;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:justify;padding-left:24px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;text-decoration:underline;">Response</font><font style="font-family:inherit;font-size:11pt;">: The Company acknowledges the Staff&#8217;s comment and confirms to the Staff that it will disclose the total expenses, including interest expense, in the Selected Financial Data table on a going forward basis. </font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div><br></div><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><hr style="page-break-after:always"><div><div style="line-height:120%;text-align:left;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">Lisa Larkin Esq.</font></div><div style="line-height:120%;text-align:left;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">Megan Miller</font></div><div style="line-height:120%;text-align:left;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">August 14, 2019</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;">Page 3</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;"><br></font></div></div><div><br></div><div style="line-height:120%;text-align:center;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">*          *          *</font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:justify;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">If you have any questions or additional comments concerning the foregoing, please contact the undersigned at (202) 383-0176 or Payam Siadatpour at (202) 383-0278.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:336px;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Sincerely,</font></div><div style="line-height:120%;text-align:left;padding-left:336px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:336px;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"></font><font style="font-family:inherit;font-size:11pt;text-decoration:underline;">/s/ Steven B. Boehm</font></div><div style="line-height:120%;text-align:left;padding-left:336px;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Steven B. Boehm</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">cc: </font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:11pt;">Michael S. Sarner / Capital Southwest Corporation</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:11pt;"><font style="font-family:inherit;font-size:10pt;"></font><font style="font-family:inherit;font-size:11pt;">Payam Siadatpour, Esq. / Eversheds Sutherland (US) LLP</font></div><div style="line-height:120%;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div><br></div><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div>	</body>
</html>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
