Item 7. Disclosure of Proxy
Voting Policies and Procedures for Closed-End Management Investment Companies.
Attached, as Exhibit 99.7, is a copy of the registrant’s policies
and procedures.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
The lead portfolio manager for the registrant
(also referred to as the “Fund”) is Robert Zable, who is primarily responsible for the day-to-day management of the
Fund and is a member of the U.S. Syndicated Credit Investment Committee (the “Investment Committee”) of GSO / Blackstone
Debt Funds Management LLC (the “Adviser”). Gordon McKemie is also a portfolio manager for the Fund and sits on the
Investment Committee. The Investment Committee approves core investments made by the Fund, but is not primarily responsible for
the Fund’s day-to-day management.
Portfolio Managers Name
|
Title
|
Length of Service
|
Business Experience During Past 5 Years
|
Robert Zable
|
Portfolio Manager
|
Since September 2015
|
Mr. Zable is a Senior Managing Director and Senior Portfolio Manager of the U.S. CLOs and closed-end funds in GSO’s Liquid Credit Strategies (“LCS”) unit. He is also a member of GSO’s LCS Management Committee and sits on LCS’s U.S. Syndicated Credit Investment Committee, Global Structured Credit Investment Committee, LCS Global Asset Allocation Committee, and CLO Origination Committee. Before joining GSO, Mr. Zable was a Vice President at FriedbergMilstein LLC, where he was responsible for credit opportunity investments and junior capital origination and execution. Prior to that, Mr. Zable was a Principal with Abacus Advisors Group, a boutique restructuring and distressed investment firm. Mr. Zable began his career at JP Morgan Securities Inc., where he focused on leveraged finance in New York and London.
|
Gordon McKemie
|
Portfolio Manager
|
Since April 2015
|
Mr. McKemie is a Principal and Portfolio Manager of the closed-end and exchange-traded funds in LCS. He is also a U.S. credit research analyst involved with the ongoing analysis and evaluation of primary and secondary fixed income investments. He sits on LCS’s U.S. Syndicated Credit Investment Committee. Prior to joining GSO, Mr. McKemie was an Associate in Leveraged Finance at Citigroup and an Assistant Vice President in high yield research at Barclays Capital. He began his career at Lehman Brothers.
|
(a)(2) As of December 31, 2019, the Portfolio Managers listed
above are also responsible for the day-to-day management of the following:
|
|
|
Advisory Fee Based on
Performance
|
|
Type of Accounts
|
Number of
Accounts
|
Total Assets
($mm)
|
Number of
Accounts
|
Total Assets
($mm)
|
Material
Conflicts if Any
|
Robert Zable
|
|
|
|
|
See below(1)
|
Registered Investment Companies
|
4
|
$2,367
|
0
|
$0
|
|
Other Pooled Accounts
|
34
|
$20,321
|
34
|
$20,321
|
|
Other Accounts
|
1
|
$157
|
0
|
$0
|
|
|
|
|
|
|
|
Gordon McKemie
|
|
|
|
|
See below(1)
|
Registered Investment Companies
|
5
|
$4,932
|
0
|
$0
|
|
Other Pooled Accounts
|
0
|
$0
|
0
|
$0
|
|
Other Accounts
|
0
|
$0
|
0
|
$0
|
|
|
*
|
Including the registrant.
|
(1)
Potential Conflicts of Interest
The purchase of common
shares of beneficial interest (“Common Shares”) in the Fund involves a number of significant risks that should be considered
before making any investment. The Fund and holders of Common Shares (“Common Shareholders”) will be subject to a number
of actual and potential conflicts of interest involving the Firm (defined below). In addition, as a consequence of The Blackstone
Group Inc. (collectively with its affiliates as the context requires, “Blackstone” and together with GSO, the “Firm”)
holding a controlling interest in GSO and Blackstone’s status as a public company, the officers, directors, members, managers
and employees of GSO will take into account certain additional considerations and other factors in connection with the management
of the business and affairs of the Fund that would not necessarily be taken into account if Blackstone were not a public company.
The following discussion enumerates certain, but not all, potential conflicts of interest that should be carefully evaluated before
making an investment in the Fund, but is not intended to be an exclusive list of all such conflicts. The Firm and its personnel
may in the future engage in further activities that may result in additional conflicts of interest not addressed below. Any references
to the Firm, GSO, Blackstone or the Adviser in this section will be deemed to include their respective affiliates, partners, members,
shareholders, officers, directors and employees, except that portfolio companies of managed clients shall only be included to the
extent the context shall require and references to GSO affiliates shall only be to affiliates operating as a part of Blackstone’s
credit focused business group.
Broad and Wide-Ranging
Activities. The Firm engages in a broad spectrum of activities. In the ordinary course of its business activities, the
Firm will engage in activities where the interests of certain divisions of the Firm or the interests of its clients will conflict
with the interests of the Common Shareholders in the Fund. Other present and future activities of the Firm will give rise to additional
conflicts of interest. In the event that a conflict of interest arises, the Adviser will attempt to resolve such conflict in a
fair and equitable manner, subject to the limitations of the 1940 Act. Common Shareholders should be aware that conflicts will
not necessarily be resolved in favor of the Fund’s interests.
The Firm’s
Policies and Procedures. Certain policies and procedures implemented by the Firm to mitigate potential conflicts
of interest and address certain regulatory requirements and contractual restrictions will from time to time reduce the synergies
across the Firm’s various businesses that the Fund expects to draw on for purposes of pursuing attractive investment opportunities.
Because the Firm has many different asset management and advisory businesses, which GSO investment teams and portfolio companies
may engage to advise on and to execute debt and equity financings, it is subject to a number of actual and potential conflicts
of interest, greater regulatory oversight and more legal and contractual restrictions than that to which it would otherwise be
subject if it had just one line of business. In addressing these conflicts and regulatory, legal and contractual requirements across
its various businesses, the Firm has implemented certain policies and procedures (e.g., information walls) that reduce the positive
synergies that GSO may utilize for purposes of managing the Fund. For example, the Firm will from time to time come into possession
of material non-public information with respect to companies, including portfolio companies, in which the Fund may be considering
making an investment or companies that are the Firm’s advisory clients. The information, which could be of benefit to the
Fund, is likely to be restricted to those other businesses of the Firm and otherwise be unavailable to the Fund, and will also
restrict the Fund’s investment opportunities. Additionally, the operations of the Firm’s policies may restrict or otherwise
limit the Fund from entering into agreements with, or related to, companies that either are advisory clients of the Firm or in
which any Other Clients have invested or have considered making an investment. Furthermore, there will be circumstances in which
affiliates of the Firm (including Other Clients) may refrain from taking certain confidential information in order to avoid trading
restrictions. Finally, the Firm has and will enter into one or more strategic relationships in certain regions or with respect
to certain types of investments that, although possibly intended to provide greater opportunities for the Fund, may require the
Fund to share such opportunities or otherwise limit the amount of an opportunity the Fund can otherwise take.
Other Firm Businesses,
Activities and Relationships. As part of its regular business, Blackstone provides a broad range of investment banking,
advisory and other services. In addition, Blackstone and its affiliates may provide services in the future beyond those currently
provided. Common Shareholders will not receive any benefit from any fees received by Blackstone. In the regular course of its capital
markets, investment banking, real estate, advisory and other businesses, Blackstone represents potential purchasers, sellers and
other involved parties, including corporations, financial buyers, management, shareholders and institutions, with respect to transactions
that could give rise to investments that are suitable for the Fund. In such a case, a Blackstone advisory client would typically
require Blackstone to act exclusively on its behalf. Such advisory client requests may preclude all Blackstone-affiliated clients,
including the Fund, from participating in related transactions that would otherwise be suitable. Blackstone will be under no obligation
to decline any such engagements in order to make an investment opportunity available to the Fund. In connection with its capital
markets, investment banking, real estate, advisory and other businesses, Blackstone will from time to time determine that there
are conflicts of interest or come into possession of information that limits its ability to engage in potential transactions. The
Fund’s activities are expected to be constrained as a result of such conflicts of interest and the inability of Blackstone
personnel to use such information. For example, employees of Blackstone from time to time are prohibited by law or contract from
sharing information with members of the Fund’s investment team. Additionally, there are expected to be circumstances in which
one or more of certain individuals associated with Blackstone affiliates (including clients) will be precluded from providing services
related to the Fund’s activities because of certain confidential information available to those individuals or to other parts
of Blackstone (e.g., trading may be restricted). Where Blackstone affiliates are engaged to find buyers or financing sources for
potential sellers of assets, the seller may permit the Fund to act as a participant in such transactions (as a buyer or financing
partner), which would raise certain conflicts of interest inherent in such a situation (including as to the negotiation of the
purchase price). The Firm has long-term relationships with a significant number of corporations and their senior management. In
determining whether to invest in a particular transaction on behalf of the Fund, the Adviser will consider those relationships
and may decline to participate in a transaction as a result of one or more of such relationships. The Firm is under no obligation
to decline any engagements or investments in order to make an investment opportunity available to the Fund. The Fund may be forced
to sell or hold existing investments as a result of investment banking relationships or other relationships that the Firm may have
or transactions or investments the Firm may make or have made. Subject to the 1940 Act, the Fund may also co-invest with clients
of the Firm in particular investment opportunities, and the relationship with such clients could influence the decisions made by
the Adviser with respect to such investments. There can be no assurance that all potentially suitable investment opportunities
that come to the attention of the Firm will be made available to the Fund.
The Fund may invest in
securities of the same issuers as Other Clients or other investment vehicles, accounts and clients of the Firm and the Adviser.
To the extent that the Fund holds interests that are different (or more senior or junior) than those held by such Other Clients,
GSO may be presented with decisions involving circumstances where the interests of such Other Clients are in conflict with those
of the Fund. Furthermore, it is possible the Fund’s interest may be subordinated or otherwise adversely affected by virtue
of such Other Clients’ involvement and actions relating to its investment.
Blackstone, its affiliates
and their related parties and personnel will from time to time participate in underwriting or lending syndicates with respect to
current or potential portfolio companies, or may otherwise be involved in and/or act as arrangers of financing, including with
respect to the public offering and/or private placement of debt or equity securities issued by, or loan proceeds borrowed by, such
portfolio companies, or otherwise in arranging financing (including loans) for such portfolio companies or advise on such transactions.
Such underwritings or engagements may be on a firm commitment basis or may be on an uncommitted “best efforts” basis
or on an uncommitted, or “best efforts”, basis, and the underwriting or financing parties are under no duty to provide
any commitment unless specifically set forth in the relevant contract. Blackstone may also provide placement or other similar services
to purchasers or sellers of securities, including loans or instruments issued by portfolio companies. There may also be circumstances
in which the Fund commits to purchase any portion of such issuance from its portfolio company, some or all of which portion a Blackstone
broker-dealer intends to syndicate to third parties and, in connection therewith and as a result thereof, subject to the limitations
of the 1940 Act, Blackstone may receive commissions or other compensation, thereby creating a potential conflict of interest. This
could include, by way of example, fees and/or commissions for equity syndications to co-investment vehicles. In certain cases,
subject to the limitations of the 1940 Act, a Blackstone broker-dealer will from time to time act as the managing underwriter or
a member of the underwriting syndicate or broker for the Fund or portfolio companies, or as dealer, broker or advisor to a counterparty
to the Fund or a portfolio company and purchase securities from or sell securities to the Fund, Other Clients or portfolio companies
or Other Clients or advise on such transactions.
Blackstone will also from
time to time, on behalf of the Fund or other parties to a transaction involving the Fund, effect transactions, including transactions
in the secondary markets, where it will nonetheless have a potential conflict of interest regarding the Fund and the other parties
to those transactions to the extent it receives commissions or other compensation from the Fund and/or such other parties. Subject
to applicable law, Blackstone will from time to time receive underwriting fees, discounts, placement commissions, lending arrangement
and syndication fees (or, in each case, rebates of any such fees, whether in the form of purchase price discounts or otherwise,
even in cases where Blackstone or an Other Client or account is purchasing debt) or other compensation with respect to the foregoing
activities, none of which are required to be shared with the Fund or its Common Shareholders. In addition, the advisory fee generally
will not be reduced by such amounts. Therefore, Blackstone will have a potential conflict of interest regarding the Fund and the
other parties to those transactions to the extent it receives commissions, discounts or such other compensation from such other
parties. Subject to applicable law, the Fund may approve any transactions in which a Blackstone broker-dealer acts as an underwriter,
as broker for the Fund, or as dealer, broker or advisor, on the other side of a transaction with the Fund. Firm employees, including
employees of GSO, are generally permitted to invest in alternative investment funds, private equity funds, real estate funds, hedge
funds or other investment vehicles, including potential competitors of the Fund. Common Shareholders will not receive any benefit
from any such investments. Additionally, it can be expected that GSO and/or Blackstone will, from time to time, enter into arrangements
or strategic relationships with third parties, including other asset managers, financial firms or other businesses or companies,
which, among other things, provide for referral, sourcing or sharing of investment opportunities. Blackstone or GSO may pay management
fees and performance-based compensation in connection with such arrangements. Blackstone or GSO may also provide for or receive
reimbursement of certain expenses incurred or received in connection with these arrangements, including diligence expenses and
general overhead, administrative, deal sourcing and related corporate expenses. The amount of these rebates may relate to allocations
of co-investment opportunities and increase if certain co-investment allocations are not made. While it is possible that the Fund
will, along with GSO and/or Blackstone itself, benefit from the existence of those arrangements and/or relationships, it is also
possible that investment opportunities that would otherwise would be presented to or made by the Fund would instead be referred
(in whole or in part) to such third party, or, as indicated above, to other third parties. For example, a firm with which GSO and/or
Blackstone has entered into a strategic relationship may be afforded with “first-call” rights on a particular category
of investment opportunities, although there is not expected to be substantial overlap in the investment strategies and/or objectives
between the Fund and any such firm.
On October 1, 2015, Blackstone
spun-off its financial and strategic advisory services, restructuring and reorganization advisory services, and its Park Hill fund
placement businesses and combined these businesses with PJT Partners (“PJT”), an independent financial advisory firm
founded by Paul J. Taubman. While the new combined business operates independently from Blackstone and is not an affiliate thereof,
nevertheless conflicts may arise in connection with transactions between or involving the Fund and the entities in which it invests
on the one hand and PJT on the other. Specifically, given that PJT is not an affiliate of Blackstone, there may be fewer or no
restrictions or limitations placed on transactions or relationships engaged in by PJT’s new advisory business as compared
to the limitations or restrictions that might apply to transactions engaged in by an affiliate of Blackstone. It is expected that
there will be substantial overlapping ownership between Blackstone and PJT for a considerable period of time going forward. Therefore,
conflicts of interest in doing transactions involving PJT will still arise. The pre-existing relationship between Blackstone and
its former personnel involved in such financial and strategic advisory services, the overlapping ownership, co-investment and other
continuing arrangements, may influence GSO in deciding to select or recommend PJT to perform such services for the Fund (the cost
of which will generally be borne directly or indirectly by the Fund). Nonetheless, the Adviser and GSO will be free to cause the
Fund to transact with PJT generally without restriction under the applicable governing documents notwithstanding such overlapping
interests in, and relationships with, PJT. See also “Service Providers and Counterparties” below.
In addition, other present
and future activities of the Firm and its affiliates (including GSO and the Adviser) will from time to time give rise to additional
conflicts of interest relating to the Firm and its investment activities. In the event that any such conflict of interest arises,
the Adviser will attempt to resolve such conflict in a fair and equitable manner. Common Shareholders should be aware that, subject
to applicable law, conflicts will not necessarily be resolved in favor of the Fund’s interests.
Other Affiliate
Transactions and Investments in Different Levels of Capital Structure. From time to time, the Fund and the Other
Clients may make investments at different levels of an issuer’s capital structure or otherwise in different classes of an
issuer’s securities, subject to the limitations of the 1940 Act. In addition, the Fund may invest in securities of the same
issuers as Other Clients. Such investments may inherently give rise to conflicts of interest or perceived conflicts of interest
between or among the various classes of securities that may be held by such entities. To the extent the Fund holds securities that
are different (including with respect to their relative seniority) from those held by an Other Client, the Adviser and its affiliates
may be presented with decisions when the interests of the Fund and Other Clients are in conflict. For example, conflicts could
arise where the Fund lends funds to a portfolio company while an Other Client invests in equity securities of such portfolio company.
In this circumstance, for example, if such portfolio company goes into bankruptcy, becomes insolvent or is otherwise unable to
meet its payment obligations or comply with its debt covenants, conflicts of interest could arise between the holders of different
types of securities as to what actions the portfolio company should take. In addition, purchases or sales of securities for the
account of the Fund (particularly marketable securities) will be bunched or aggregated with orders for Other Clients, including
other funds. It is frequently not possible to receive the same price or execution on the entire volume of securities sold, and
the various prices may be averaged, which may be disadvantageous to the Fund. In addition, the 1940 Act may limit the Fund’s
ability to undertake certain transactions with its affiliates that are registered under the 1940 Act or regulated as business development
companies under the 1940 Act. As a result of these restrictions, the Fund may be prohibited from executing “joint”
transactions with such affiliates, which could include investments in the same portfolio company (whether at the same or different
times). These limitations may limit the scope of investment opportunities that would otherwise be available to the Fund. Further
conflicts could arise after the Fund and other affiliates have made their respective initial investments. For example, if additional
financing is necessary as a result of financial or other difficulties, it may not be in the best interests of the Fund to provide
such additional financing. If the other affiliates were to lose their respective investments as a result of such difficulties,
the ability of the Adviser to recommend actions in the best interests of the Fund might be impaired. GSO may in its discretion
take steps to reduce the potential for adversity between the Fund and the Other Clients, including causing the Fund and/or such
Other Clients to take certain actions that, in the absence of such conflict, it would not take, including selling Fund assets (possibly
at disadvantageous times or disadvantageous conditions) or taking other actions in order to comply with the 1940 Act. In addition,
there may be circumstances where GSO agrees to implement certain procedures to ameliorate conflicts of interest that may involve
a forbearance of rights relating to the Fund or Other Clients, such as where GSO may cause Other Clients to decline to exercise
certain control- and/or foreclosure-related rights with respect to a portfolio company. In addition, conflicts may arise in determining
the amount of an investment, if any, to be allocated among potential investors and the respective terms thereof. There can be no
assurance that any conflict will be resolved in favor of the Fund and a decision by GSO to take any particular action could have
the effect of benefiting an Other Client (and, incidentally, may also have the effect of benefiting GSO) and therefore may not
have been in the best interests of, and may be adverse to, the Fund. There can be no assurance that the return on the Fund’s
investment will be equivalent to or better than the returns obtained by the Other Clients participating in the transaction. The
Common Shareholders will not receive any benefit from fees paid to any affiliate of the Adviser from a portfolio company in which
an Other Client also has an interest, to the extent permitted by the 1940 Act.
Other Blackstone
and GSO Clients; Allocation of Investment Opportunities. Certain inherent conflicts of interest arise from the fact
that GSO and Blackstone provide investment management and sub-advisory services to the Fund and Other Clients.
The respective investment
programs of the Fund and the Other Clients may or may not be substantially similar. GSO and/or Blackstone may give advice to, and
recommend securities for, Other Clients that may differ from advice given to, or securities recommended or bought for, the Fund,
even though their investment objectives may be the same as or similar to those of the Fund. While GSO will seek to manage potential
conflicts of interest in a fair and equitable manner, the portfolio strategies employed by GSO and Blackstone in managing their
respective Other Clients could conflict with the transactions and strategies employed by GSO in managing the Fund and may affect
the prices and availability of the securities and instruments in which the Fund invests. Conversely, participation in specific
investment opportunities may be appropriate, at times, for both the Fund and Other Clients. In addition, certain exceptions exist
that allow specified types of investment opportunities that fall within the Fund’s investment objectives or strategy to be
allocated in whole or in part to Blackstone or GSO itself or Other Clients, such as strategic investments made by Blackstone or
GSO itself (whether in financial institutions or otherwise) and the exception for Other Clients that have investment objectives
or guidelines similar to or overlapping with those of the Fund. In any event, it is the policy of GSO to allocate investment opportunities
and sale opportunities on a basis deemed by GSO, in its sole discretion, to be fair and equitable over time.
Allocation Methodology Considerations
GSO will share appropriate
investment opportunities (and sale opportunities) with Other Clients and the Fund in accordance with the Investment Advisers Act
of 1940, as amended (the “Advisers Act”), and Firm-wide allocation policies, which generally provide for sharing pro
rata based on targeted acquisition size (generally based on available capacity) or targeted sale size (or, in some sales cases,
the aggregate positions), taking into account capital commitments, available cash and the relative capital of the respective funds
and accounts and such other factors as the Adviser determines in good faith to be appropriate.
Notwithstanding the foregoing,
GSO may also consider the following factors in making any allocation determinations (which determinations shall be on a basis that
GSO believes in good faith to be fair and reasonable), and such factors may result in a different allocation of investment and/or
sale opportunities:
(a) the risk-return and target return
profile of the proposed investment relative to the Fund’s and the Other Clients’ current risk profiles;
(b) the Fund’s and/or the
Other Clients’ investment objectives, policies, guidelines, restrictions and terms, including whether such objectives are
considered solely in light of the specific investment under consideration or in the context of the respective portfolios’
overall holdings;
(c) the need to re-size risk in
the Fund’s or the Other Clients’ portfolios (including the potential for the proposed investment to create an industry,
sector or issuer imbalance in the Fund’s and Other Clients’ portfolios, as applicable) and taking into account any
existing non-pro rata investment positions in the portfolio of the Fund and Other Clients;
(d) liquidity considerations of
the Fund and the Other Clients, including during a ramp-up of the Fund or such Other Clients or wind-down of Other Clients, proximity
to the end of the Other Clients’ specified term or investment period, any redemption/withdrawal/repurchase requests, anticipated
future contributions and available cash;
(e) legal, tax, accounting and other
consequences;
(f) regulatory or contractual restrictions
or consequences;
(g) avoiding a de minimis or odd
lot allocation;
(h) availability and degree of leverage
and any requirements or other terms of any existing leverage facilities;
(i) the Fund’s or Other Clients’
investment focus on a classification attributable to an investment or issuer of an investment, including, without limitation, investment
strategy, geography, industry or business sector;
(j) the nature and extent of involvement
in the transaction on the part of the respective teams of investment professionals dedicated to the Fund or such Other Clients;
(k) the management of any actual
or potential conflict of interest;
(l) with respect to investments
that are made available to GSO by counterparties pursuant to negotiated trading platforms (e.g., ISDA contracts), the absence of
such relationships that may not be available for the Fund and all Other Clients; and
(m) any other considerations deemed
relevant by GSO in good faith.
GSO shall not have any
obligation to present any investment opportunity to the Fund if GSO determines in good faith that such opportunity should not be
presented to the Fund for any one or a combination of the reasons specified above, or if GSO is otherwise restricted from presenting
such investment opportunity to the Fund. Subject to the Advisers Act and as further set forth herein, certain Other Clients may
receive certain priority or other allocation rights with respect to certain investments, subject to various conditions set forth
in such Other Clients’ respective governing agreements, provided, however, the Adviser does not anticipate that such priority
or other allocation rights will impact the investments available to the Fund in the ordinary course. It should be noted that investment
opportunities originated by business units of the Firm other than GSO will be allocated in accordance with such business units’
allocation policies, which will result in such investment opportunities being allocated, in whole or in part, away from GSO. Additionally,
investment opportunities originated by GSO will be allocated in accordance with GSO’s allocation policy, which may provide
that investment opportunities will be allocated in part to other business units of the Firm on a basis that GSO believes in good
faith to be fair and reasonable, based on various factors, including the involvement of the respective teams from GSO and such
other units. Furthermore, for the avoidance of doubt, any investment opportunity that is allocated to the Fund may be allocated
to co-investors in GSO’s discretion to the extent that an amount of such investment opportunity remains after the Fund has
received its target allocation in respect of such investment opportunity. Moreover, with respect to GSO’s ability to allocate
investment opportunities, including where such opportunities are within the common objectives and guidelines of the Fund and an
Other Client (which allocations are to be made on a basis that GSO believes in good faith to be fair and reasonable), GSO and Blackstone
have established general guidelines and policies, which it may update from time to time, for determining how such allocations are
to be made, which, among other things, set forth priorities and presumptions regarding what constitutes “debt” investments,
ranges of rates of returns for defining “core” investments, presumptions regarding allocation for certain types of
investments (e.g., distressed investments) and other matters. The application of those guidelines may result in the Fund not participating
(and/or not participating to the same extent) in certain investment opportunities in which it would have otherwise participated
had the related allocations been determined without regard to such guidelines and/or based only on the circumstances of those particular
investments.
When GSO determines not
to pursue some or all of an investment opportunity for the Fund that would otherwise be within the Fund’s objectives and
strategies, and Blackstone or GSO provides the opportunity or offers the opportunity to Other Clients, Blackstone or GSO, including
their personnel (including GSO personnel), may receive compensation from the Other Clients, whether or not in respect of a particular
investment, including an allocation of referral fees, and any such compensation could be greater than amounts paid by the Fund
to GSO. As a result, GSO (including GSO personnel who receive such compensation) could be incentivized to allocate investment opportunities
away from the Fund to or source investment opportunities for Other Clients. In addition, in some cases Blackstone or GSO may earn
greater fees when Other Clients participate alongside or instead of the Fund in an Investment.
GSO makes good faith determinations
for allocation decisions based on expectations that may prove inaccurate. Information unavailable to GSO, or circumstances not
foreseen by GSO at the time of allocation, may cause an investment opportunity to yield a different return than expected. Conversely,
an investment that GSO expects to be consistent with the Fund’s return objectives may fail to achieve them.
Orders may be combined
for the Fund and all other participating Other Clients, and if any order is not filled at the same price, they may be allocated
on an average price basis. Similarly, if an order on behalf of more than one account cannot be fully executed under prevailing
market conditions, securities may be allocated among the different accounts on a basis that GSO or its affiliates consider equitable.
Co-Investment Opportunities.
As a registered investment company under the 1940 Act, the Fund is subject to certain limitations relating to co-investments
and joint transactions with affiliates, which likely will in certain circumstances limit the Fund’s ability to make investments
or enter into other transactions alongside the Other Clients. There can be no assurance that such regulatory restrictions will
not adversely affect the Fund’s ability to capitalize on attractive investment opportunities. However, subject to the 1940
Act, the Fund may co-invest with Other Clients (including co-investment or other vehicles in which the Firm or its personnel invest
and that co-invest with such Other Clients) in investments that are suitable for the Fund and one or more of such Other Clients.
Even if the Fund and any such Other Clients and/or co-investment or other vehicles invest in the same securities, conflicts of
interest may still arise.
The Fund has received
an exemptive order from the SEC that permits it, among other things, to co-invest with certain affiliates of the Adviser and certain
funds managed and controlled by the Adviser and its affiliates, subject to certain terms and conditions. Such order may restrict
the Fund’s ability to enter into follow-on investments or other transactions. Pursuant to such order, the Fund may co-invest
in a negotiated deal with certain affiliates of the Adviser or certain funds managed and controlled by the Adviser and its affiliates,
subject to certain terms and conditions. The Fund may also receive an allocation in such a deal alongside affiliates pursuant to
other mechanisms to the extent permitted by the 1940 Act.
Debt Financings
in connection with Acquisitions and Dispositions. To the extent permitted by the 1940 Act, the Fund may from time to time
provide financing (i) as part of a third party purchaser’s bid for, or acquisition of, a portfolio entity or the underlying
assets thereof owned by one or more Other Clients and/or (ii) in connection with a proposed acquisition or investment by one or
more Other Clients or affiliates of a portfolio company and/or its underlying assets. This generally would include the circumstance
where the Fund is making commitments to provide financing at or prior to the time such third-party purchaser commits to purchase
such investments or assets from one or more Other Clients. While the terms and conditions of any such arrangements will generally
be at arms’ length terms negotiated on a case by case basis, the involvement of the Fund and/or such Other Clients or affiliates
may affect the terms of such transactions or arrangements and/or may otherwise influence the Adviser’s decisions with respect
to the management of the Fund and/or such Other Clients or the relevant portfolio company, which may give rise to potential or
actual conflicts of interest and which could adversely impact the Fund.
The Fund may from time
to time dispose of all or a portion of an investment where the Firm or one or more Other Clients is providing financing to repay
debt issued to the Fund. Such involvement may give rise to potential or actual conflicts of interest.
Activities of Principals
and Employees. Certain of the principals and employees of the Adviser may be subject to a variety of conflicts of
interest relating to their responsibilities to the Fund and the management of the Fund’s investment portfolio. Such individuals
may serve in an advisory capacity to other managed accounts or investment vehicles. Such positions may create a conflict between
the services and advice provided to such entities and the responsibilities owed to the Fund. The other managed accounts and/or
investment funds in which such individuals may become involved may have investment objectives that overlap with the Fund. Furthermore,
certain principals and employees of the Adviser may have a greater financial interest in the performance of such other funds or
accounts than the performance of the Fund. Such involvement may create conflicts of interest in making investments on behalf of
the Fund and such other funds and accounts. Such principals and employees will seek to limit any such conflicts in a manner that
is in accordance with their fiduciary duties to the Fund.
Multiple Firm Business
Lines. The Firm has multiple business lines, including the Blackstone Capital Markets Group, which Blackstone, GSO, the
Fund, Other Clients, portfolio entities of the Fund and Other Clients and third parties may engage for debt and equity financings
and to provide other investment banking, brokerage, investment advisory or other services. As a result of these activities, the
Firm is subject to a number of actual and potential conflicts of interest, greater regulatory oversight and more legal and contractual
restrictions than if it had one line of business. For example, the Firm may come into possession of information that limits the
Fund’s ability to engage in potential transactions. Similarly, other Firm businesses and their personnel may be prohibited
by law or contract from sharing information with GSO that would be relevant to monitoring the Fund’s investments and other
activities. Additionally, Blackstone, GSO or Other Clients can be expected to enter into covenants that restrict or otherwise limit
the ability of the Fund or its portfolio entities and their affiliates to make investments in, or otherwise engage in, certain
businesses or activities. For example, Other Clients could have granted exclusivity to a joint venture partner that limits the
Fund and Other Clients from owning assets within a certain distance of any of the joint venture’s assets, or Blackstone,
GSO or an Other Client could have entered into a non-compete in connection with a sale or other transaction. These types of restrictions
may negatively impact the ability of the Fund to implement its investment program. (See also “Other Blackstone and GSO Clients;
Allocation of Investment Opportunities”). Finally, Blackstone and GSO personnel who are members of the investment team or
investment committee may be excluded from participating in certain investment decisions due to conflicts involving other Firm businesses
or for other reasons, in which case the Fund will not benefit from their experience. The shareholders will not receive a benefit
from any fees earned by the Firm or their personnel from these other businesses.
Service Providers
and Counterparties. Certain of the Fund’s, the Firm’s and/or portfolio companies’ advisors and
other service providers or their affiliates (including accountants, administrators, lenders, bankers, brokers, attorneys, consultants,
and investment or commercial banking firms) also provide goods or services to, or have business, personal, financial or other relationships
with, the Firm, its affiliates and portfolio companies. Such advisors and service providers (or their affiliates) may be investors
in the Fund, sources of investment opportunities, co-investors, commercial counterparties and/or portfolio companies in which the
Firm and/or the Fund has an investment. Accordingly, payments by the Fund and/or such entities may indirectly benefit the Fund
and/or its affiliates. In addition, the retention of such entities as advisors or service providers may give rise to actual or
potential conflicts of interest. Additionally, certain employees and other professionals of the Firm may have family members or
relatives employed by such advisors and service providers (or their affiliates) or otherwise actively involved in (or have business,
financial or other relationships with) relevant industries. For example, such family members or relatives might be employees, officers,
directors or owners of companies or assets that are actual or potential investments of the Fund or other counterparties of the
Fund and its portfolio companies and/or assets. Moreover, in certain instances, the Fund or its portfolio companies may issue loans
to or acquire securities from, or otherwise transact with, companies that are owned by such family members or relatives or in respect
of which such family members or relatives have other involvement. These relationships may influence GSO and/or the Adviser in deciding
whether to select or recommend such advisors or service providers to perform services for the Fund or portfolio companies (the
cost of which will generally be borne directly or indirectly by the Fund or such portfolio companies, as applicable). Notwithstanding
the foregoing, investment transactions relating to the Fund that require the use of a service provider will generally be allocated
to service providers on the basis of best execution, the evaluation of which includes, among other considerations, such service
provider’s provision of certain investment-related services and research that the Adviser believes to be of benefit to the
Fund.
Certain Blackstone-affiliated
service providers and their respective personnel will receive a management promote, an incentive fee and other performance-based
compensation in respect of investments. Furthermore, Blackstone-affiliated service providers may charge costs and expenses based
on allocable overhead associated with personnel working on relevant matters (including salaries, benefits and other similar expenses),
provided that these amounts will not exceed market rates as determined by Blackstone or GSO to be appropriate under the circumstances.
Portfolio company service
providers described in this section are generally owned by an Other Client. In certain instances a similar company could be owned
by Blackstone directly. Blackstone could cause a transfer of ownership of one of these service providers from an Other Client to
a Fund. The transfer of a portfolio company service provider between a Fund and an Other Client will generally be consummated for
minimal or no consideration, and without obtaining any consent from a limited partner advisory committee. In such instances, GSO
may, but is not required to, obtain a third party valuation confirming the same, and if it does, GSO may rely on such valuation.
Advisers and service providers,
or their affiliates, often charge different rates (including below-market or no fee) or have different arrangements for different
types of services. With respect to service providers, for example, the fee for a given type of work may vary depending on the complexity
of the matter as well as the expertise required and demands placed on the service provider. Therefore, to the extent the types
of services used by the Fund and/or portfolio companies are different from those used by the Firm and its affiliates (including
personnel), GSO or its affiliates (including personnel) may pay different amounts or rates than those paid by the Fund and/or portfolio
companies. However, GSO and its affiliates have a longstanding practice of not entering into any arrangements with advisors or
service providers that could provide for lower rates or discounts than those available to the Fund, Other Clients and/or portfolio
companies for the same services. In addition, the Firm and its affiliates, including without limitation, the Fund, the Other Clients
and/or their portfolio companies, may enter into agreements or other arrangements with vendors and other similar counterparties
(whether such counterparties are affiliated or unaffiliated with the Firm) from time to time whereby such counterparty may charge
lower rates (or no fee) and/or provide discounts or rebates for such counterparty’s products and/or services depending on
certain factors, including without limitation, volume of transactions entered into with such counterparty by the Firm, its affiliates,
the Fund, the Other Clients and their portfolio companies in the aggregate. Furthermore, advisors and service providers may provide
services exclusively to GSO and/or Blackstone, including Other Clients and their portfolio companies, although such advisors and
service providers will not be considered employees of Blackstone or GSO.
In addition, certain advisors
and service providers (including law firms) may temporarily provide their personnel to GSO and/or Blackstone pursuant to various
arrangements including at cost or at no cost. While often the Fund is the beneficiary of these types of arrangements, GSO and/or
Blackstone are from time to time the beneficiaries of these arrangements as well, including in circumstances where the advisor
or service provider also provides services to the Fund in the ordinary course. Such personnel may provide services in respect of
multiple matters, including in respect of matters related to GSO and/or Blackstone, their affiliates and/or portfolio companies
and any costs of such personnel may be allocated accordingly.
In addition, investment
banks or other financial institutions, as well as Blackstone employees, may also be Fund investors. These institutions and employees
are a potential source of information and ideas that could benefit the Fund. Blackstone has procedures in place reasonably designed
to prevent the inappropriate use of such information by the Fund.
Blackstone may, from time
to time, encourage service providers to funds and investments to use, at market rates and/or on arm’s length terms, Blackstone-affiliated
service providers in connection with the business of the Fund, portfolio companies, and unaffiliated entities. This practice provides
an indirect benefit to Blackstone in the form of added business for Blackstone-affiliated service providers.
Blackstone-affiliated
service providers are generally expected to receive competitive market rate fees (as determined by the Adviser or its affiliates)
with respect to certain Investments, include:
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COE. The Blackstone Center of Excellence, located in Gurgaon, India (the “COE”) is a captive center of resources administered by Blackstone and ThoughtFocus Technologies LLC (“ThoughtFocus”), an independent firm in which Blackstone holds a minority position and participates as a member of the board. The COE is expected to perform services for certain funds that may have historically been performed by Blackstone personnel, such as funds’ administrative services, data collection and management services, and technology implementation and support services, which may be paid for by the funds that receive such services on a similar basis as a third party providing such services. Blackstone, through its interest in ThoughtFocus, receives an indirect benefit resulting from the funds’ payments for such services. These fees do not offset management fees payable by the shareholders.
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Equity Healthcare. Equity Healthcare LLC (“Equity Healthcare”) is a Blackstone affiliate that negotiates with providers of standard administrative services for health benefit plans and other related services for cost discounts, quality of service monitoring, data services and clinical consulting. Because of the combined purchasing power of its client participants, which include unaffiliated third parties, Equity Healthcare is able to negotiate pricing terms that are believed to be more favorable than those that the portfolio companies could obtain on an individual basis. The fees received by Equity Healthcare in connection with services provided to investments will not offset the management fee payable by shareholders.
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Optiv. Optiv is a portfolio company held by certain Blackstone private equity funds that provides a full slate of information security services and solutions and may provide goods and services for the Blackstone funds and their portfolio companies.
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BTIG. In December 2016, certain funds made a strategic minority investment in BTIG. BTIG is a global financial services firm that provides institutional trading, investment banking, research and related brokerage services and may provide goods and services for the Fund, Other Clients or any of their portfolio companies and the Blackstone Tactical Opportunities Program.
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Refinitiv. In October 2018, a consortium led by Blackstone acquired a 55% equity stake of Refinitiv, formerly the Financial & Risk division of Thomson Reuters, which includes the Evaluated Pricing Service (formerly known as Thomson Reuters Pricing Service). From time to time, Refinitiv is expected to provide valuation and other services to the Fund on an arms-length basis.
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Allocation of Personnel.
The Adviser and their respective members, partners, officers and employees will devote as much of their time to the activities
of the Fund as they deem necessary to conduct its business affairs in an appropriate manner. By the terms of the Investment Advisory
Agreement, the Adviser is not restricted from forming additional investment funds, from entering into other investment advisory
relationships or from engaging in other business activities, even though such activities may be in competition with the Fund and/or
may involve substantial time and resources of the Adviser. These activities could be viewed as creating a conflict of interest
in that the time and effort of the members of the Adviser and GSO, and their officers and employees will not be devoted exclusively
to the business of the Fund, but will be allocated between the business of the Fund and the management of the monies of such other
advisees of the Adviser and GSO. Time spent on these other initiatives diverts attention from the activities of the Fund, which
could negatively impact the Fund and Common Shareholders. Furthermore, GSO and GSO personnel derive financial benefit from these
other activities, including fees and performance-based compensation. Firm personnel outside of GSO may share in the fees and performance-based
compensation from the Fund; similarly, GSO personnel may share in the fees and performance-based compensation generated by Other
Clients. These and other factors create conflicts of interest in the allocation of time by Firm personnel. GSO’s determination
of the amount of time necessary to conduct the Fund’s activities will be conclusive, and Common Shareholders rely on GSO’s
judgment in this regard.
Portfolio Company
Data. The Firm receives or obtains various kinds of data and information from the Fund, Other Clients and their portfolio
companies, including data and information relating to business operations, trends, budgets, customers and other metrics, some of
which are sometimes referred to as “big data.” The Firm can be expected to be better able to anticipate macroeconomic
and other trends, and otherwise develop investment themes, as a result of its access to (and rights regarding) this data and information
from the Fund, Other Clients and their portfolio companies. The Firm has entered and will continue to enter into information sharing
and use arrangements with the Fund, Other Clients and their portfolio companies, related parties and service providers, which may
give the Firm access to (and rights regarding) data that it would not otherwise obtain in the ordinary course. Although the Firm
believes that these activities improve the Firm’s investment management activities on behalf of the Fund and Other Clients,
information obtained from the Fund and portfolio companies also provides material benefits to Blackstone, GSO or Other Clients
without compensation or other benefit accruing to the Fund or Common Shareholders. For example, information from a portfolio company
in which the Fund holds an interest can be expected to enable the Firm to better understand a particular industry and execute trading
and investment strategies in reliance on that understanding for Blackstone, GSO and Other Clients that do not own an interest in
the portfolio company, without compensation or benefit to the Fund or portfolio companies.
Furthermore, except for
contractual obligations to third parties to maintain confidentiality of certain information, and regulatory limitations on the
use of material nonpublic information, the Firm is generally free to use data and information from the Fund’s activities
to assist in the pursuit of the Firm’s various other activities, including to trade for the benefit of the Firm and/or an
Other Client in the securities of unaffiliated issuers while using or otherwise being in possession of such information. Any confidentiality
obligations in the investment sub-advisory agreement do not limit the Firm’s ability to do so. For example, the Firm’s
ability to trade in securities of an issuer relating to a specific industry may, subject to applicable law, be enhanced by information
of a portfolio company and/or entity in the same or related industry. Such trading can be expected to provide a material benefit
to the Firm without compensation or other benefit to the Fund or Common Shareholders.
The Firm believes that
access to this information furthers the interests of the Common Shareholders by providing opportunities for operational improvements
across portfolio companies and/or entities and in connection with the Fund’s investment management activities. Subject to
appropriate contractual arrangements, the Firm may also utilize such information outside of the Fund’s activities in a manner
that provides a material benefit to the Firm and/or its affiliates, but not the Fund. The sharing and use of “big data”
and other information presents potential conflicts of interest and investors acknowledge and agree that any benefits received by
the Firm or its personnel (including fees (in cash or in kind), costs and expenses) will not be subject to management fee offset
provisions or otherwise shared with the Fund or Common Shareholders. As a result, the Adviser may have an incentive to pursue investments
that have data and information that can be utilized in a manner that benefits the Firm or Other Clients.
Material, Non-Public
Information. GSO may come into possession of material non-public information with respect to an issuer. Should this
occur, GSO would be restricted from buying, originating or selling securities, loans of, or derivatives with respect to, the issuer
on behalf of the Fund until such time as the information becomes public or is no longer deemed material such that it would preclude
the Fund from participating in an investment. Disclosure of such information to the Adviser’s personnel responsible for the
affairs of the Fund will be on a need-to-know basis only, and the Fund may not be free to act for the Fund upon any such information.
Therefore, the Fund may not have access to material non-public information in the possession of GSO that might be relevant to an
investment decision to be made for the Fund. In addition, GSO, in an effort to avoid buying or selling restrictions on behalf of
the Fund or Other Clients, may choose to forgo an opportunity to receive (or elect not to receive) information that other market
participants or counterparties, including those with the same positions in the issuer as the Fund, are eligible to receive or have
received, even if possession of such information would otherwise be advantageous to the Fund.
In addition, affiliates
of GSO within Blackstone may come into possession of material non-public information with respect to an issuer. Should this occur,
GSO may be restricted from buying, originating or selling securities, loans of, or derivatives with respect to, the issuer on behalf
of the Fund if the Firm deemed such restriction appropriate. Disclosure of such information to the Adviser’s personnel responsible
for the affairs of the Fund will be on a need-to-know basis only, and the Fund may not be free to act upon any such information.
Therefore, the Fund may not have access to material non-public information in the possession of the Firm that might be relevant
to an investment decision to be made by the Fund. Accordingly, the Fund may not be able to initiate a transaction that it otherwise
might have initiated and may not be able to sell an investment that it otherwise might have sold.
Other Trading and
Investing Activities. Certain Other Clients may invest in securities of publicly traded companies that are actual
or potential investments of the Fund. The trading activities of those vehicles may differ from or be inconsistent with activities
that are undertaken for the account of the Fund in such securities or related securities. In addition, the Fund might not pursue
an investment in an issuer as a result of such trading activities by Other Clients.
Possible Future
Activities. The Firm and its affiliates may expand the range of services that it provides over time. Except as provided
herein, the Firm and its affiliates will not be restricted in the scope of its business or in the performance of any such services
(whether now offered or undertaken in the future) even if such activities could give rise to conflicts of interest, and whether
or not such conflicts are described herein. The Firm and its affiliates have, and will continue to develop, relationships with
a significant number of companies, financial sponsors and their senior managers, including relationships with clients who may hold
or may have held investments similar to those intended to be made by the Fund. These clients may themselves represent appropriate
investment opportunities for the Fund or may compete with the Fund for investment opportunities.
Regulatory Inquiries.
Blackstone is subject to extensive regulation, including periodic examinations, by governmental agencies and self-regulatory organizations
in the jurisdictions in which it operates around the world. These authorities have regulatory powers dealing with many aspects
of financial services, including the authority to grant, and in specific circumstances to cancel, permissions to carry on particular
activities. Many of these regulators, including U.S. and foreign government agencies and self-regulatory organizations, as well
as state securities commissions in the United States, are also empowered to conduct investigations and administrative proceedings
that can result in fines, suspensions of personnel, changes in policies, procedures or disclosure or other sanctions, including
censure, the issuance of cease-and-desist orders, the suspension or expulsion of a broker-dealer or investment adviser from registration
or memberships or the commencement of a civil or criminal lawsuit against Blackstone or its personnel. Blackstone is regularly
subject to requests for information and informal or formal investigations by the SEC and other regulatory authorities, with which
Blackstone routinely cooperates and even historical practices that have been previously examined are being revisited. Even if an
investigation or proceeding did not result in a sanction or the sanction imposed against Blackstone or its personnel by a regulator
were small in monetary amount, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions
could harm Blackstone, GSO, the Adviser and the Fund. While it is difficult to predict what impact, if any, the foregoing may have,
there can be no assurance that any of the foregoing, whether applicable to Blackstone or GSO specifically or the underlying funds
in which Blackstone or GSO invests generally, would not have a material adverse effect on the Fund and its ability to achieve its
investment objective. As a result, there can be no assurance that any of the foregoing will not have an adverse impact on Blackstone,
GSO or the Adviser or otherwise impede the Fund’s ability to effectively achieve its investment objective.
Restrictions Arising
under the Securities Laws. The Firm’s activities and the activities of Other Clients (including, without limitation,
the holding of securities positions or having one of its employees on the board of directors of a portfolio company) could result
in securities law restrictions (including under the 1940 Act) on transactions in securities held by the Fund, affect the prices
of such securities or the ability of such entities to purchase, retain or dispose of such investments, or otherwise create conflicts
of interest, any of which could have an adverse impact on the performance of the Fund and thus the return to the Common Shareholders.
In addition, the 1940
Act limits the Fund’s ability to enter into certain transactions with certain of the Fund’s affiliates. As a result
of these restrictions, the Fund may be prohibited from buying or selling any security directly from or to any portfolio company
of a fund or account managed by the Firm. However, the Fund may under certain circumstances purchase any such portfolio company’s
securities in the secondary market, which could create a conflict for the Adviser between its interests in the Fund and the portfolio
company, in that the ability of the Adviser to act in the Fund’s best interest might be restricted by applicable law. The
1940 Act also prohibits certain “joint” transactions with certain of the Fund’s affiliates, which could include
investments in the same portfolio company (whether at the same or different times) or buying investments from, or selling them
to, Other Clients. These limitations may limit the scope of investment opportunities that would otherwise be available to the Fund.
Additional Potential
Conflicts. The officers, directors, members, managers, and employees of the Adviser and GSO may trade in securities for
their own accounts, subject to restrictions and reporting requirements as may be required by law or the Firm’s policies,
or otherwise determined from time to time by the Adviser or GSO, as applicable. In addition, certain Other Clients may be subject
to the 1940 Act or other regulations that, due to the role of the Firm, could restrict the ability of the Fund to buy investments
from, to sell investments to or to invest in the same securities as, such Other Clients. Such regulations may have the effect of
limiting the investment opportunities available to the Fund.
Transactions with
Clients of Blackstone Insurance Solutions. Blackstone Insurance Solutions (“BIS”) is a business unit of Blackstone
that is comprised of two affiliated registered investment advisers. BIS provides investment advisory services to insurers (including
insurance companies that are owned, directly or indirectly, by Blackstone or Other Clients, in whole or in part). Actual or potential
conflicts of interest may arise with respect to the relationship of the Fund and portfolio companies with the funds, vehicles or
accounts BIS advises or sub-advises, including accounts where an insurer participates in investments directly and there is no separate
vehicle controlled by Blackstone (collectively, “BIS Clients”). BIS Clients may have investment objectives that overlap
with those of the Fund or portfolio companies, and such BIS Clients may invest alongside the Fund or such portfolio companies in
certain investments, which will reduce the investment opportunities otherwise available to the Fund or such portfolio companies.
BIS Clients will also participate in transactions related to the Fund and/or portfolio companies (e.g., as originators, co-originators,
counterparties or otherwise). Other transactions in which BIS Clients will participate include, without limitation, investments
in debt or other securities issued by portfolio companies or other forms of financing to portfolio companies (including special
purpose vehicles established by the Fund or such portfolio companies). When investing alongside the Fund or portfolio companies
or in other transactions related to the Fund or portfolio companies (to the extent permitted by the 1940 Act or exemptive relief
from the SEC), BIS Clients may or may not invest or divest at the same time or on the same terms as the Fund or the applicable
portfolio companies. BIS Clients will also from time to time acquire investments and portfolio companies directly or indirectly
from the Fund, including one or more royalty streams, which may be securitized along with other royalty streams. In circumstances
where GSO determines in good faith that the conflict of interest is mitigated in whole or in part through various measures that
Blackstone, GSO or GSO / Blackstone implements, GSO / Blackstone will not be required to seek approval of the Board or the shareholders.
In order to seek to mitigate any potential conflicts of interest with respect to such transactions (or other transactions involving
BIS Clients), Blackstone may, in its discretion, involve independent members of the board of a portfolio company or a third party
stakeholder in the transaction to negotiate price and terms on behalf of the BIS Clients or otherwise cause the BIS Clients to
“follow the vote” thereof, and/or cause an independent client representative or other third party to approve the investment
or otherwise represent the interests of one or more of the parties to the transaction. In addition, Blackstone or GSO / Blackstone
may limit the percentage interest of the BIS Clients participating in such transaction, or obtain appropriate price quotes or other
benchmarks, or, alternatively, a third-party price opinion or other document to support the reasonableness of the price and terms
of the transaction. BIS will also from time to time require the applicable BIS Clients participating in a transaction to consent
thereto (including in circumstances where GSO / Blackstone does not seek the consent of the Board or the shareholders). There can
be no assurance that any such measures or other measures that may be implemented by Blackstone will be effective at mitigating
any actual or potential conflicts of interest.
(a)(3) Portfolio Manager Compensation as
of September 30, 2019
The Adviser’s financial
arrangements with its portfolio managers, its competitive compensation and its career path emphasis at all levels reflect the value
senior management places on key resources. Compensation may include a variety of components and may vary from year to year based
on a number of factors. The principal components of compensation include a base salary and a discretionary bonus.
Base Compensation.
Generally, portfolio managers receive base compensation and employee benefits based on their individual seniority and/or their
position with the firm.
Discretionary Compensation.
In addition to base compensation, portfolio managers may receive discretionary compensation. Discretionary compensation is based
on individual seniority, contributions to the Adviser and performance of the client assets that the portfolio manager has primary
responsibility for. The discretionary compensation is not based on a precise formula, benchmark or other metric. These compensation
guidelines are structured to closely align the interests of employees with those of the Adviser and its clients.
(a)(4) Dollar Range of Securities Owned as of December 31, 2019.
Portfolio Managers
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Dollar Range of the Registrant’s Securities Owned by the Portfolio Managers
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Robert Zable
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$50,001 - $100,000
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Gordon McKemie
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$10,001 - $50,000
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Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
None
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the
procedures by which shareholders may recommend nominees to the registrant’s Board of Trustees, where those changes were implemented
after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K, or this
Item.