Runway Growth Finance Corp. (RWAY) Earnings Call Transcript & Summary

Hello, and welcome to the 2022 Runway Growth Finance Corporation Annual Meeting of Shareholders. Please note that this meeting is being recorded. [Operator Instructions]. It is my pleasure to now turn the meeting over to David Spreng. David, the floor is yours.

Good morning, ladies and gentlemen. I'm David Spreng, the President and Chief Executive Officer of Runway Growth Finance Corp. It is my pleasure, on behalf of the Officers and Directors of Runway Growth Finance Corp., to extend a warm welcome and to express our appreciation to you for attending this virtual Annual Meeting of the Stockholders. Pursuant to the company's bylaws, I will be serving as Chairman for this meeting. Runway Growth Finance Corp. has already supplied each stockholder with a copy of its proxy statement and annual report to stockholders. Copies of these documents are available on virtual meeting website to any stockholder who does not have them. At this time, I will first go through the administrative matters and then introduce the various proposals included in the proxy statement. As each of you log into the meeting this morning, you were provided with a copy of the agenda and the rules of conduct for the annual meeting. The meeting will be conducted according to the agenda. After the meeting has been adjourned, everyone will have the opportunity to ask questions that he or she may have. The principal business of this meeting is to elect 2 directors for a term of 3 years each and/or until his or her successor is duly elected and qualifies; ratify the appointment of our independent registered public accounting firm for the fiscal year ending December 31, 2022; approve the proposal to authorize Runway Growth Finance Corp. to issue options, warrants or securities to subscribe to, convert to or purchase common stock, subject to the conditions as set forth in the proxy statement; and approve Runway Growth Finance Corp. becoming subject to a minimum asset coverage ratio of at least 150%, permitting Runway Growth Finance Corp. to double its amount of debt incurrence pursuant to Section 61(a)(2) of the Investment Company Act of 1940 as amendment by the Small Business Credit Availability Act. I would like to introduce the members of our Board of Directors and Executive Officers who are present today in person, i.e. virtually, Julie Persily, who is a member of the Board of Directors, as well as from the management team, Thomas Raterman, our CFO and COO; and Carmela Thomson from Tom's finance team in Chicago. I will also note that Kate Seitz, representative of RSM USA LLP, Runway Growth Finance Corp.'s independent registered public accounting firm, is present for the meeting today. At this time, I would ask Secretary of Runway Growth Finance Corp., Tom Raterman, to please read the Notice of Annual Meeting of Stockholders that was sent to all stockholders entitled to vote at this meeting. Tom?

Thank you, David. The notice reads as follows. Dear stockholder, you are cordially invited to attend the 2022 Annual Meeting of Stockholders, the Annual Meeting of Growth Runway Growth Finance Corp., the company, to be held virtually on June 16, 2022 at 10 a.m. Central Time. The annual meeting will be held solely on the Internet by virtual means. Only stockholders of record at the close of business on April 18, 2022 are entitled to the notice of and to vote at the annual meeting, including any postponement or adjournment thereof. The Notice of the Annual Meeting and proxy statement accompanying this letter provide an outline of the business to be conducted at the meeting. At the meeting, you will be asked to elect 2 directors of the company, to ratify the selection of RSM US LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2022; to approve a proposal to authorize the company to issue options, warrants or securities to subscribe to, to convert to or purchase common stock, subject to the conditions as set forth in the proxy statement; and to approve the company becoming subject to a minimum asset coverage ratio of at least 150%, permitting the company to double its amount of debt incurrence, pursuant to Section 61(a)(2) of the Investment Company Act of 1940, as amended by the Small Business Credit Availability Act. The company has elected to provide access to its proxy materials to certain of its stockholders over the Internet under the Securities Exchange Commission, the SEC, notice and access rules. On or about May 6, 2022, the company intends to mail to most of its stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access the proxy statement and annual report on Form 10-K for the year ended December 31, 2021, the annual report, and how to submit proxies over the Internet. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy statement and proxy card, unless you request them. All other stockholders will receive a copy of the proxy statement and annual report by mail. The Notice of Internet Availability of Proxy Materials also contains instructions on how you can elect to receive a printed copy of the proxy statement and annual report. The company believes that providing its proxy materials over the Internet will expedite stockholders receipt of proxy materials, lower the costs associated with the annual meeting and conserve resources. It is important that your shares be represented at the annual meeting, and you are encouraged to vote your shares as soon as possible. The proxy card contains instructions for voting over the Internet by electronic mail or by returning your proxy card via mail in the envelope provided. If you are unable to attend the annual meeting in person, that is virtually, I urge you to vote your shares by completing, dating and signing the enclosed proxy card and promptly returning it in the envelope provided or follow the instructions printed on the Notice of Internet Availability of Proxy Materials or the proxy card to authorize a proxy through the Internet. Your vote is important. We look forward to seeing you at the annual meeting, sincerely yours, R. David Spreng, Chairman of the Board of Directors, President and Chief Executive Officer. I have here an affidavit sworn to by myself and duly signed that the notice as previously read was mailed to each stockholder as required by Runway Growth Finance Corp.'s bylaws. The affidavit will be accepted into the corporate records of the company.

The affidavit is accepted.

In addition, resolutions were adopted by the Board of Directors of Runway Growth Finance Corp. on March 22, 2022 providing for the meeting to be held at this time and place and directing that notice be given as provided in the bylaws. The Board also fixed April 18, 2022 as the record date for determining persons entitled to notice of and entitled to vote at the Annual Meeting of Stockholders. Finally, the complete alphabetical list of the stockholders of record as of April 18, 2022, who are entitled to vote, showing their respective addresses and the number of shares held by each, is available on the virtual meeting website for inspection by stockholders in accordance with the bylaws and applicable law.

Thank you, Tom. Please file the minutes of this meeting a copy of the notice you have read together with the excerpts from the March 22, 2022 Board of Directors' resolutions. Please also file with those documents the affidavit as to the mailing of the Notice of Annual Meeting of Stockholders. Marianela Patterson, a representative of American Stock Transfer & Trust Company, LLC, has been appointed to serve as Inspector of Election. Marianela, will you please present your report of the number of shares present in person, i.e., virtually, by proxy or by attorney at this meeting so that we can determine whether a quorum is present?

Good morning. There were 41,340,232 shares entitled to vote as of the record date, April 18, 2022, record date. The Proxy Committee, which is composed of [ Messrs. ], Spreng and Raterman is acting as proxy and representatives of the holders of record of 31,298,580 shares of common stock of Runway Growth Finance Corp. There are 31,298,580 shares present in person, by proxy or by attorney. Accordingly, a quorum is present.

Thank you, Marianela. On the basis of the report of the Secretary and the Inspector of Election, I find that proper notice has been given and that a quorum is present. Accordingly, this meeting has been properly convened. The polls for voting on all matters are hereby opened at this time, 10:10 a.m. Central Time on June 16, 2022. If you have returned your proxy, whether by e-mail or regular mail, your vote has already been recorded. If there are any stockholders present who wish to vote in person, i.e., virtually, please use the ballot available on the virtual meeting website. Tom, were there any additional stockholder nominations or proposals for business for this meeting properly filed with you as Secretary that were not included in the notice for this meeting?

No, there were not.

Because no stockholder nominations or proposals were properly filed with the Secretary of Runway Growth Finance Corp. in advance of this meeting as provided in the bylaws, the business of this meeting is limited to the foregoing 4 matters in accordance with the provisions of the bylaws. The first proposal we will consider is election of 2 directors. The Board of Directors has nominated David Spreng and Brian Laibow, each to serve 3-year terms as director, which terms will expire at the Annual Meeting of Stockholders to be held in 2025 or at such time as their respective successor is elected and qualifies. Information concerning the principal occupations of David Spreng and Brian Laibow, their respective service with Runway Growth Finance Corp. and other matters may be -- that may be of interest are contained in the proxy statement. Is there any discussion with respect to the nominees for Director? I will now entertain a motion on the election of David Spreng to serve a 3-year term as Director, which term would expire at the Annual Meeting of Stockholders to be held in 2025 or at such time as his successor is elected and qualifies.

I am Thomas Raterman, a stockholder of Runway Growth Finance Corp., and I move that the following resolution be adopted. Resolved that R. David Spreng be and hereby is elected to the Board of Directors of Runway Growth Finance Corp., to serve a 3-year term or until his successor is elected and qualifies.

I am Mick Solimene, a stockholder of Runway Growth Finance Corp., and I second the motion.

The motion has been made and seconded, and the vote will now be taken on the election of Mr. Spreng. [Voting]

Marianela, please report on the votes cast to elect the nominated director.

We received 24,573,142 votes for and had 1,061,050 votes withheld from the director -- from the election of R. David Spreng. This is a preliminary tabulation and all votes cast in person, virtually, at today's meeting will be included in the final tabulation. It is not anticipated that the votes cast in person, i.e., virtually at the meeting today, if any, will change the outcome.

The motion is passed. The nominee has been duly elected to serve a 3-year term as director, which term would expire at the Annual Meeting of Stockholders to be held in 2025 or at such time as his successor is elected and qualifies. I will now entertain a motion on the election of Brian Laibow, to serve a 3-year term as Director, which term would expire at the Annual Meeting of Stockholders to be held in 2025 or at such time as his successor is elected and qualifies.

I am Thomas Raterman, a stockholder of Runway Growth Finance Corp., and I move that the following resolution be adopted. Resolved that Brian Laibow be and hereby is elected to the Board of Directors of Runway Growth Finance Corp. to serve a 3-year term or until his successor is elected and qualifies.

I am Mick Solimene, a stockholder of Runway Growth Finance Corp., and I second the motion.

The motion has been made and seconded, and the vote will now be taken on the election of Brian Laibow. [Voting]

Marianela, please report on the votes asked to elect the nominated director.

We received 20,895,554 votes for and had 4,738,643 votes withheld from the election of Brian Laibow. This is a preliminary tabulation and all votes cast in person, virtually, at today's meeting will be included in the final tabulation. It is not anticipated that the votes cast in person, virtually, at the meeting today, if any, will change the outcome.

The motion is passed. The nominee has been duly elected to serve a 3-year term as Director, which term would expire at the Annual Meeting of Stockholders to be held in 2025 or at such time as his successor is elected and qualifies. The second proposal we will consider is the ratification of the appointment of RSM US LLP as independent registered public accounting firm for the fiscal year ending December 31, 2022. Ms. Seitz is present today on behalf of RSM to answer any questions. Is there any discussion with respect to the ratification of RSM US LLP as independent registered public accounting firm? I will now entertain a motion on the appointment of RSM US LLP, as independent registered public accounting firm for the fiscal year ending December 31, 2022.

I am Thomas Raterman, a stockholder of Runway Growth Finance Corp., and I move that the following resolution be adopted. Resolved that the appointment by the Board of Directors of the firm of RSM US LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2022, having been presented and considered at this meeting be and hereby is ratified and approved in all respects.

I am Mick Solimene, a stockholder of Runway Growth Finance Corp., and I second the motion.

The motion has been made and seconded, and the vote will now be taken on the ratification of RSM US LLP as the independent registered public accounting firm of Runway Growth Finance Corp. for the fiscal year ending December 31, 2022. [Voting]

Marianela, please report on the ratification of RSM US LLP as independent registered public accounting firm of Runway Growth Finance Corp. for the fiscal year ending December 31, 2022.

We received 30,978,504 votes for and 256,059 votes against and 64,017 votes that abstained from voting on the ratification of the selection of RSM US LLP as independent registered public accounting firm for Runway Growth Finance Corp. for the fiscal year ending December 31, 2022. This is a preliminary tabulation, but it is not anticipated that the votes cast in person, virtually, at this meeting today, if any, will change the outcome.

The motion is passed. The third proposal we will consider is the approval of the proposal to authorize Runway Growth Finance Corp. to issue options, warrants or securities to subscribe to, convert to or purchase common stock, subject to conditions stated in our proxy statement. Our proxy statement, which was previously provided to the stockholders eligible to vote at this meeting, sets forth the reasons for the proposal, including the factors the Board of Directors considered in recommending its approval to our stockholders. Is there any discussion with respect to the proposal to approve the issuance of warrants, options or rights to subscribe to, convert to or purchase common stock of Runway Growth Finance Corp. in one or more offerings? I will now entertain a motion on the proposal.

I'm Thomas Raterman, a stockholder of Runway Growth Finance Corp., and I move that the following resolution be adopted. Resolved that the issuance of options, warrants or rights to subscribe to, convert to or purchase Runway Growth Finance Corp's common stock in one or more offering be, and it hereby is approved in all respects.

I am Mick Solimene, a stockholder of Runway Growth Finance Corp., and I second the motion.

The motion has been made and seconded, and the vote will now be taken on the approval of the issuance of options, warrants or rights to subscribe to, convert to or purchase Runway Growth Finance Corp.'s common stock in one or more offerings. [Voting]

Marianela, please report on the approval of the issuance of options, warrants or rights to subscribe to, convert to or purchase Runway Growth Finance Corp.'s common stock in one or more offerings?

We received 22,308,313 votes for, 3,296,716 votes against and had 29,168 votes abstained from the vote to approve the issuance of options, warrants or rights to subscribe to, convert to or purchase Runway Growth Finance Corp.'s common stock in one or more offerings. This is a preliminary tabulation and all votes cast in person, virtually, at today's meeting will be included in the final tabulation. It is not anticipated that the votes cast in person, virtually, at this meeting today, if any, will change the outcome.

The motion is passed. The fourth proposal we will consider is the approval of the reduction of Runway Growth Finance Corp's minimum asset coverage ratio from 200% to 150% with immediate effect, pursuant to Section 61(a)(2) of the Investment Company Act of 1940, as amended by the Small Business Credit Availability Act. Our proxy statement, which was previously provided to the stockholders eligible to vote at this meeting, also sets forth the reasons for the proposal, including the factors the Board of Directors considered in recommending its approval to our stockholders. Is there any discussion with respect to the proposal to reduce Runway Growth Finance Corp.'s minimum asset coverage ratio from 200% to 150%? I will now entertain a motion on the proposal.

I'm Thomas Raterman, a stockholder of Runway Growth Finance Corp., and I move that the following resolution be adopted. Resolved that the proposal to allow Runway Growth Finance Corp to reduce its asset coverage ratio to 150%, pursuant to Section 61(a)(2) of the Investment Company Act of 1940, as amended, to become effective immediately, be and hereby is approved in all respects.

I am Mick Solimene, a stockholder of Runway Growth Finance Corp., and I second the motion.

The motion has been made and seconded, and the vote will now be taken on the approval of the proposal to allow Runway Growth Finance Corp. to reduce its asset coverage ratio from 150%, pursuant to Section 61(a)(2) of the Investment Company Act of 1940 with immediate effect. [Voting]

Marianela, please report on the approval of proposal to allow Runway Growth Finance Corp. to reduce its asset coverage ratio to 150%, pursuant to Section 61(a)(2) of the Investment Company Act of 1940 with immediate effect.

We received 25,397,109 votes for, 197,056 votes against and had 40,031 votes abstained from the vote to approve the proposal to allow Runway Growth Finance Corp. to reduce its asset covering ratio to 150% pursuant to section 61(a)(2) of the Investment Company Act of 1940 with immediate effect. This is a preliminary tabulation and all votes cast in person, virtually, at today's meeting will be included in the final tabulation. It is not anticipated that the votes cast in person, virtually, at the meeting today, if any, will change the outcome.

The motion is passed. The polls for voting are now closed. Tom, please safeguard the notice of the Annual Meeting of Stockholders and proof of mailing thereof; the proxies and ballots voted at this meeting, including the ballot cast for the number of shares represented by Proxy Committee; and the oath and certificate of report of the Inspector of Election and maintain them among the records of Runway Growth Finance Corp. The chair will entertain a motion to adjourn.

I move that the meeting be adjourned.

I second the motion.

All of those in favor signify by saying, aye.

Aye.

Aye.

Those opposed, no, the ayes have it. This meeting is adjourned at 10:25 a.m. Central time.