Subject: Our phone conversation with you last week

October 2, 2008

Dear Mr. Plaze:

I and my partner Paul Schreiber, together with Ken Berman of Debevoise & Plimpton LLP, spoke with you on Friday, Sept. 26, 2008 regarding the Commission's proposed Investment Company Act Rule 3a-7 amendments. This email summarizes that call.

While commenters have expressed concerns with many aspects of the rulemaking, we limited our call to the practical matter of the effective date of any amendments. Because Rule 3a-7 issuances require a substantial advance investment of resources, we and our clients believe that any changes to the rule should be (a) prospective (which we are certain is the Commission's intent) and (b) provide for a sufficient post-adoption delay in their effectiveness to permit deals "in the pipeline" to proceed without disruption.

As we told you, our two firms' clients are working on a number of Rule 3a-7 issuances that necessarily conform with the rule as it currently operates. Also as we told you, these issuances can take upwards of six months from conception to market in a process that includes negotiation with underwriters and prospective investors, assembly and risk-testing of the underlying income-generating assets, and multiple internal - and sometimes regulatory - approvals.

We therefore recommend that the effective date for any of the proposed Rule 3a-7 amendments be delayed at least six months from the date of adoption. Any shorter lead-in period risks an unnecessary break in capital raising activity as pipeline deals are modified or abandoned. (This is especially the case for issuances currently being planned that include a public offering tranche.)

We note that each of Shearman & Sterling and Debevoise & Plimpton previously submitted a comment letter that addressed other issues relating to the proposed amendments (those letters are dated Sept. 24, 2008 and Sept. 3, 2008, respectively). In addressing the transition issues set forth above, neither of our firms is intending to suggest that it no longer has other concerns about the proposals, so that this email should not be read to represent a change in the views of our respective firms concerning the serious issues raised by the proposals.

Thank you again for your time. We believe these suggestions are fully consistent with the Commission's rulemaking goals and would be pleased to speak with you again if that will be of assistance.


Nathan J. Greene
Shearman & Sterling LLP

Paul S. Schreiber
Shearman & Sterling LLP

Kenneth J. Berman
Debevoise & Plimpton LLP