UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
FLOWSTONE OPPORTUNITY FUND
(Name of Subject Company (Issuer))
FLOWSTONE OPPORTUNITY FUND
(Name of Filing Person(s) (Issuer))
SHARES
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
Scott P. Conners
FlowStone Opportunity Fund
55 Nod Road, Ste 120
Avon, CT 06001
(312) 429-2419
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and
Communications on Behalf of the Filing Person(s))
With a copy to:
Joshua B. Deringer, Esq.
Faegre Drinker Biddle & Reath LLP
1177 Avenue of the Americas, 41st Floor
New York, NY 10036
(212) 248-3140
April 1, 2022
(Date Tender Offer First Published,
Sent or Given to Security Holders)
| [ ] | Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
Check the appropriate boxes below to designate any transactions to which the statement relates:
| [ ] | third-party tender offer subject to Rule 14d-1. |
| [X] | issuer tender offer subject to Rule 13e-4. |
| [ ] | going-private transaction subject to Rule 13e-3. |
| [ ] | amendment to Schedule 13D under Rule 13d-2. |
Check the following box if the filing is a final amendment reporting the results of the tender offer: [ ]
| Item 1. | SUMMARY TERM SHEET. |
Reference is made to Section 1 “Summary Term Sheet” of the Offer to Purchase (as defined below) that is attached as Exhibit (a)(1)(ii) and is hereby incorporated by reference.
| Item 2. | ISSUER INFORMATION. |
(a) The name of the issuer is “FlowStone Opportunity Fund.” The Fund is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a closed-end, non-diversified management investment company, and is organized as a Delaware statutory trust. The principal executive office of the Fund is located at 55 Nod Road, Ste 120, Avon, Connecticut, 06001 and its telephone number is (312) 429-2419.
(b) The title of the securities that are the subject of the offer to purchase and the related Letter of Transmittal (“Offer to Purchase” and the tender offer made thereby, the “Offer”) is “Shares” or portions thereof in the Fund. As of the close of business on December 31, 2021, there were approximately 18,856,900 Shares outstanding. Subject to the conditions set out in the Offer to Purchase, the Fund will purchase up to 943,108 Shares of the Fund that are tendered by holders of the Fund’s Shares (“Shareholders”) and not withdrawn by Shareholders as described in the Offer to Purchase, subject to any applicable extension of the Offer. Shares subject to the Offer represent approximately 5.00% of the Fund’s Shares outstanding as of December 31, 2021.
(c) There is no established trading market for the Shares and Shares are subject to substantial transfer restrictions and may not be transferred or resold except as permitted under the Fund’s registration statement dated as of July 29, 2021 (as it may be amended, modified or otherwise supplemented from time to time, the “Registration Statement”) and Amended and Restated Agreement and Declaration of Trust dated as of April 8, 2019 (as it may be amended, modified or otherwise supplemented from time to time, the “Agreement and Declaration of Trust”).
| Item 3. | IDENTITY AND BACKGROUND OF FILING PERSON. |
(a) The Fund is tendering for its own Shares. The information required by this Item is set forth in Item 2(a) above. The Fund’s principal executive office is located at 55 Nod Road, Ste 120, Avon, Connecticut, 06001 and its telephone number is (312) 429-2419. The investment manager of the Fund is FlowStone Partners, LLC (the “Adviser”). The principal executive office of the Adviser is located 55 Nod Road, Ste 120, Avon, Connecticut, 06001. The members of the Fund’s board of trustees (the “Board of Trustees”) are Scott P. Conners, Eric Becker, Michael H. Moskow, Marek Herchel and Jason Gull (each, a “Trustee”). The Trustees may be reached c/o Joshua Deringer, Faegre Drinker Biddle & Reath LLP at 1177 Avenue of the Americas, 41st Floor, New York, NY 10036.
| Item 4. | TERMS OF THE TENDER OFFER. |
(a) (1) (i) Subject to the conditions set out in the Offer to Purchase, the Fund will purchase Shares in an amount up to approximately 5.00% of the net assets of the Fund that are tendered by Shareholders by 11:59 p.m., Eastern Time, on April 29, 2022 (the “Initial Notice Due Date”) (or if the Offer is extended, by any later date that the Fund designates as the deadline for Shareholders to tender Shares for purchase ) and not withdrawn as described in Item 4(a)(1)(vi). The later of the Initial Notice Due Date or the latest time and date that the Fund designates as the deadline for Shareholders to tender Shares for purchase is called the “Notice Due Date” and is the date upon which the Offer expires.
(ii) The purchase price of a Share (or portion thereof) tendered will be its net asset value as of the close of business on June 30, 2022 or a later date determined by the Fund if the Offer is extended (in each case, the “Valuation Date”), upon the terms and conditions set forth in the Offer to Purchase. Reference is made to the Cover Page, Section 3 “Offer to Purchase and Price” and Section 7 “Purchases and Payment” of the Offer to Purchase, which are incorporated herein by reference.
Each Shareholder that tenders Shares that are accepted for purchase will be sent written notice (an “Acceptance Letter”) of the Fund’s election to purchase such Shares. Such Shareholder that tenders Shares that are accepted for purchase will be given a “Note,” a non-interest bearing, non-transferable promissory note, promptly after the Notice Due Date. The Note will entitle the Shareholder to be paid an amount equal to the value, determined as of the Valuation Date, of the Shares being repurchased (subject to adjustment upon completion of the next annual audit of the Fund’s financial statements). The forms of Acceptance Letters are attached as Exhibit (a)(1)(v) and incorporated herein by reference.
(iii) The Offer is scheduled to expire at 11:59 p.m., Eastern Time, on April 29, 2022, unless extended. Reference is made to the Cover Page, Section 1 “Summary Term Sheet,” Section 3 “Offer to Purchase and Purchase Price” and Section 6 “Withdrawal Rights” in the Offer to Purchase, which are incorporated herein by reference.
(iv) Not applicable.
(v) Reference is made to the Cover Page, Summary Term Sheet and Section 8 “Certain Conditions of the Offer” of the Offer to Purchase, which are incorporated herein by reference.
(vi) Reference is made to Section 6 “Withdrawal Rights” of the Offer to Purchase, which is incorporated herein by reference.
(vii) Reference is made to the Cover Page, Section 5 “Procedure for Tenders” and Section 6 “Withdrawal Rights” of the Offer to Purchase, which are incorporated herein by reference. All Shareholders tendering Shares should carefully review their Letter of Transmittal and follow the delivery instructions therein.
(viii) Reference is made to Section 5 “Procedure for Tenders” and Section 7 “Purchases and Payment” of the Offer to Purchase, which are incorporated herein by reference.
(ix) Reference is made to the Cover Page, Section 4 “Amount of Tender” and Section 7 “Purchases and Payments” of the Offer to Purchase, which are incorporated herein by reference.
(x) Reference is made to Section 3 “Offer to Purchase and Price,” which is incorporated herein by reference.
(xi) Not applicable.
(xii) Reference is made to Section 10 “Certain U.S. Federal Income Tax Consequences” of the Offer to Purchase, which is incorporated herein by reference.
| (2) | Not applicable. |
(b) Any Shares to be purchased from any officer, trustee or affiliate of the Fund will be on the same terms and conditions as any other purchase of Shares.
| Item 5. | PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. |
(a) – (d) Not applicable.
(e) The Fund’s Registration Statement provides that the Board of Trustees has the discretion to determine whether the Fund will repurchase Shares from Shareholders from time to time pursuant to written tenders, and that one of the factors the Board of Trustees may consider in making such determination is the recommendation of the Adviser. The Registration Statement also states that the Adviser anticipates recommending to the Board that, under normal market circumstances, the Fund conduct repurchase offers of no more than 5.00% of the Fund’s net assets on or about the first day of the calendar quarter immediately following the first anniversary of the Fund’s commencement of operations, and thereafter quarterly on or about each January 1, April 1, July 1 and October 1. The Fund commenced operations on August 30, 2019 and has not previously made an offer to purchase Shares from Shareholders.
The Fund is not aware of any contract, arrangement, understanding or relationship relating, directly or indirectly, to the Offer (whether or not legally enforceable) between: (i) the Fund, the Adviser, or the Board of Trustees, or any person controlling the Fund or the Adviser; and (ii) any other person, with respect to the Shares, as disclosed above.
| Item 6. | PURPOSES OF THIS TENDER OFFER AND PLANS OR PROPOSALS. |
(a) Reference is made to Section 2 “Background and Purpose of the Offer” of the Offer to Purchase, which is incorporated herein by reference.
(b) Reference is made to Section 2 “Background and Purpose of the Offer” of the Offer to Purchase, which is incorporated herein by reference.
(c) Reference is made to Section 9 “Certain Information About the Fund” of the Offer to Purchase, which is incorporated herein by reference. Because Shares are not traded in any market, Subsections (6), (7) and (8) of Regulation M-A ss. 229.1006(c) are not applicable to the Fund.
| Item 7. | SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. |
(a) Reference is made to Section 7 “Purchases and Payment” of the Offer to Purchase, which is incorporated herein by reference.
(b) Reference is made to Section 7 “Purchases and Payment” of the Offer to Purchase, which is incorporated herein by reference.
(c) Not applicable.
(d) Reference is made to Section 7 “Purchases and Payment” of the Offer to Purchase, which is incorporated herein by reference.
| Item 8. | INTEREST IN SECURITIES OF THE ISSUER. |
(a) Based on the number of Shares outstanding at December 31, 2021, the following Trustees of the Fund owned the number of Shares indicated in the table below.
| Person | Number of Shares | Percentage of Shares Outstanding |
| Scott P. Conners | 48,237 | 0.26% |
| Eric Becker | 103,513 | 0.55% |
| Michael H. Moskow | 1,483 | 0.01% |
| Marek Herchel | - | -% |
| Jason Gull | - | -% |
(b) Reference is made to Section 9 “Certain Information About the Fund” of the Offer to Purchase, which is incorporated herein by reference. Other than transactions conducted pursuant to the continuous offering of Shares, there have not been any transactions involving Shares effected by the Fund, the Adviser, or any Trustee or officer of the Fund, or any person controlling or under common control with the Fund or the Adviser, in the last 60 days.
| Item 9. | PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED. |
(a) No persons have been directly or indirectly employed or retained or are to be compensated by the Fund to make solicitations or recommendations in connection with the Offer.
| Item 10. | FINANCIAL STATEMENTS. |
(a) The audited financial statements of the Fund for the fiscal year ended March 31, 2021, and the schedule of investments dated March 31, 2021, both filed with the SEC on EDGAR on Form N-CSR on June 8, 2021, are hereby incorporated by reference. In addition, the financial statements of the Fund dated September 30, 2021, and the schedule of investments dated September 30, 2021, both filed with the SEC on EDGAR on Form N-CSR on December 8, 2021, are hereby incorporated by reference.
(b) Not applicable.
| Item 11. | ADDITIONAL INFORMATION. |
| (a) | (1) | None. |
| (2) | None. |
| (3) | Not applicable. |
| (4) | Not applicable. |
| (5) | None. |
| (b) | None. |
| Item 12. | EXHIBITS. |
Reference is hereby made to the following exhibits, which collectively constitute the Offer to Shareholders and are incorporated herein by reference:
| (a)(1) | (i) | Cover Letter to Offer to Purchase and Letter of Transmittal. |
| (ii) | Offer to Purchase. |
| (iii) | Form of Letter of Transmittal. |
| (iv) | Form of Notice of Withdrawal of Tender. |
| (v) | Forms of Letters from the Fund to Shareholders in connection with the Fund’s acceptance of tenders of Shares. |
| (a)(2)-(4) | Not applicable |
| (b) | None. |
| (d) | None. |
| (g) | Not applicable. |
| (h) | Not applicable. |
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set out in this statement is true, complete and correct.
| FLOWSTONE OPPORTUNITY FUND | |||
| By: | /s/ Trent Statczar | ||
| Name: Trent Statczar | |||
| Title: Principal Financial Officer | |||
| Dated: April 1, 2022 | |||
EXHIBIT INDEX
| EXHIBITS | |
| (a)(1)(i) | Cover Letter to Offer to Purchase and Letter of Transmittal. |
| (a)(1)(ii) | Offer to Purchase. |
| (a)(1)(iii) | Form of Letter of Transmittal. |
| (a)(1)(iv) | Form of Notice of Withdrawal of Tender. |
| (a)(1)(v) | Forms of Letters from the Fund to Shareholders in connection with the Fund’s acceptance of tenders of Shares. |
| (a)(1)(vi) | Filing Fees Calculation of the filing fee table |
EXHIBIT (a)(1)(i)
COVER LETTER TO OFFER TO PURCHASE AND LETTER OF TRANSMITTAL
IF YOU DO NOT WANT TO SELL YOUR SHARES AT THIS TIME, PLEASE DISREGARD THIS NOTICE. THIS IS SOLELY NOTIFICATION OF THE FUND’S TENDER OFFER.
April 1, 2022
Dear FlowStone Opportunity Fund Shareholder:
We are writing to inform you of important dates relating to a tender offer by FlowStone Opportunity (the “Fund”). If you are not interested in having the Fund repurchase shares of beneficial interest or a portion of your interests in the Fund (“Shares”) valued as of June 30, 2022, please disregard this notice and take no action.
The tender offer period will begin on April 1, 2022 and will end at 11:59 p.m., Eastern Time, on April 29, 2022, at which point the tender offer will expire. The purpose of the tender offer is to provide liquidity to Shareholders of the Fund that hold Shares. Shares may be presented to the Fund for repurchase only by tendering them during one of the Fund’s announced tender offers.
Should you wish to tender your Shares or a portion of your Shares for repurchase by the Fund during this tender offer period, please complete and return the enclosed Letter of Transmittal so that it is received by UMB Fund Services, Inc. no later than April 29, 2022. If you do not wish to have all or any portion of your Shares repurchased, simply disregard this notice. NO ACTION IS REQUIRED IF YOU DO NOT WISH TO HAVE ANY OF YOUR SHARES REPURCHASED.
If you would like to tender your Shares, you should complete, sign and either (i) mail or otherwise deliver the Letter of Transmittal to FlowStone Opportunity Fund, c/o UMB Fund Services, Inc., 235 W. Galena Street, Milwaukee, WI 53212; or (ii) fax it to UMB Fund Services, Inc. at (816) 860-3140, Attention: Tender Offer Administrator so that it is received before 11:59 p.m., Eastern Time, on April 29, 2022.
If you have any questions, please refer to the enclosed Offer to Purchase document, which contains additional important information about the tender offer, or call (888) 779-0799.
Sincerely,
FlowStone Opportunity Fund
EXHIBIT (a)(1)(ii)
OFFER TO PURCHASE
FLOWSTONE OPPORTUNITY FUND
55 Nod Road, Ste 120
Avon, Connecticut 06001
OFFER TO PURCHASE INTERESTS
DATED April 1, 2022
LETTERS OF TRANSMITTAL MUST BE
RECEIVED BY UMB FUND SERVICES, INC.
BY APRIL 29, 2022.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
11:59 P.M., EASTERN TIME, ON APRIL 29, 2022, UNLESS THE OFFER IS EXTENDED
To the Shareholders of
FlowStone Opportunity Fund:
FlowStone Opportunity Fund, a closed-end, non-diversified management investment company organized as a Delaware statutory trust (the “Fund”), is offering to purchase for cash on the terms and conditions set out in this offer to purchase (this “Offer to Purchase”) and the related Letter of Transmittal (which, together with this Offer to Purchase, constitutes the “Offer”) an amount of Shares (as defined below) or portions of Shares with an aggregate net asset value up to approximately 5.00% of the net assets of the Fund. The Offer is being made pursuant to tenders by shareholders of the Fund (“Shareholders”) at a price equal to the net asset value of the tendered Shares as of June 30, 2022 (or at a later date determined by the Fund if the Offer is extended) (in each case, the “Valuation Date”), less any Early Repurchase Fee (as defined below) due to the Fund in connection with the repurchase. As used in the Offer, the term “Share” or “Shares” refers to the shares of beneficial interest in the Fund or portions of interests in the Fund that constitute the class security that is subject to the Offer, and includes all or any portion of a Shareholder’s Shares as the context requires. Shareholders that desire to tender Shares for purchase must do so by 11:59 p.m., Eastern Time, on April 29, 2022 (the “Initial Notice Due Date”), subject to any extension of the Offer made in the absolute discretion of the Fund’s Board of Trustees. The later of the Initial Notice Due Date or the latest time and date that the Fund designates as the deadline for Shareholders to tender Shares for purchase is called the “Notice Due Date” and is the date upon which the Offer expires. If the Fund elects to extend the tender period, the net asset value of the Shares tendered for purchase will be determined at the close of business on a day determined by the Fund and notified to the Shareholders. The Offer is being made to all Shareholders and is not conditioned on any minimum amount of Shares being tendered, but is subject to certain conditions described below. Shares are not traded on any established trading market and are subject to strict restrictions on transferability pursuant to the Fund’s registration statement dated as of July 29, 2021 (as it may be amended, modified or otherwise supplemented from time to time, the “Registration Statement”) and Amended and Restated Agreement and Declaration of Trust dated as of April 8, 2019 (as it may be amended, modified or otherwise supplemented from time to time, the “Agreement and Declaration of Trust”).
(i)
Shareholders should be aware that the value of the Shares tendered in the Offer likely will change between December 31, 2021 (the last time net asset value was calculated) and the Valuation Date when the value of the Shares tendered to the Fund for purchase will be determined. Shareholders tendering their Shares should also note that they will remain Shareholders in the Fund, with respect to the Shares tendered and accepted for purchase by the Fund, through July 1, 2022, or a later date determined by the Fund if the Offer is extended (in each case, the “Repurchase Date”). Any tendering Shareholders that wish to obtain the estimated net asset value of their Shares should contact UMB Fund Services, Inc., the Fund’s administrator, at (888) 779-0799 or at FlowStone Opportunity Fund, c/o UMB Fund Services Inc., 235 W. Galena St. Milwaukee, WI 53212, Monday through Friday, except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m. (Eastern Time).
Shareholders desiring to tender all or any portion of their Shares in accordance with the terms of the Offer should complete and sign the enclosed Letter of Transmittal and send or deliver it to FlowStone Opportunity Fund c/o UMB Fund Services Inc. in the manner set out below.
Important
None of the Fund, FlowStone Partners, LLC (the “Adviser”), or the Fund’s Board of Trustees makes any recommendation to any Shareholder whether to tender or refrain from tendering Shares. Shareholders must make their own decisions whether to tender Shares, and, if they choose to do so, the portion of their Shares to tender.
Because each Shareholder’s investment decision is a personal one, based on financial circumstances, no person has been authorized to make any recommendation on behalf of the Fund as to whether Shareholders should tender Shares pursuant to the Offer. No person has been authorized to give any information or to make any representations in connection with the Offer other than those contained herein or in the Letter of Transmittal. If given or made, such recommendation and such information and representations must not be relied on as having been authorized by the Fund, the Adviser, or its Board of Trustees.
This transaction has not been approved or disapproved by the Securities and Exchange Commission nor has the Securities and Exchange Commission or any state securities commission passed on the fairness or merits of such transaction or on the accuracy or adequacy of the information contained in this document. Any representation to the contrary is unlawful.
Questions and requests for assistance and requests for additional copies of the Offer may be directed to:
Flowstone Opportunity Fund
c/o UMB Fund Services, Inc.
235 W. Galena Street Milwaukee, WI 53212
Attention: Tender Offer Administrator
Phone: (888) 779-0799
Fax: (816) 860-3140
(ii)
TABLE OF CONTENTS
| 1. SUMMARY TERM SHEET | 1 |
| 2. BACKGROUND AND PURPOSE OF THE OFFER | 3 |
| 3. OFFER TO PURCHASE AND PRICE | 4 |
| 4. AMOUNT OF TENDER | 4 |
| 5. PROCEDURE FOR TENDERS | 5 |
| 6. WITHDRAWAL RIGHTS | 5 |
| 7. PURCHASES AND PAYMENT | 5 |
| 8. CERTAIN CONDITIONS OF THE OFFER | 7 |
| 9. CERTAIN INFORMATION ABOUT THE FUND | 7 |
| 10. CERTAIN FEDERAL INCOME TAX CONSEQUENCES | 8 |
| 11. MISCELLANEOUS | 9 |
(iii)
1. SUMMARY TERM SHEET
This Summary Term Sheet highlights certain information concerning the Offer. To understand the Offer fully and for a more complete discussion of the terms and conditions of the Offer, please read carefully this entire Offer to Purchase and the related Letter of Transmittal. Section references are to this Offer to Purchase.
| ● | The Fund (referred to as “we”, “us” or the “Fund” in this Summary Term Sheet) is offering to purchase Shares in an amount up to approximately 5.00% of the net assets of the Fund (or approximately $16,108,286, or approximately 943,108 shares of the 18,856,900 shares outstanding as of December 31, 2021). We will purchase your Shares at their net asset value (that is, the value of the Fund’s total assets minus its total liabilities, including accrued fees and expenses, including any incentive fee, multiplied by the proportionate interest in the Fund you desire to tender, after giving effect to all allocations) calculated as of the Valuation Date, less any Early Repurchase Fee (defined below) due to the Fund in connection with the repurchase. The net asset value of Shares will be calculated for this purpose as of June 30, 2022 or, if the Offer is extended, as of any later Valuation Date. The Offer will remain open until 11:59 p.m., Eastern Time, on April 29, 2022 (or if the Offer is extended, until any later Notice Due Date), at which time the Offer is scheduled to expire. |
| ● | The Fund reserves the right to adjust the Valuation Date to correspond with any extension of the Offer. The Fund will review the net asset value calculation of the Shares during the Fund’s audit for the fiscal year ending on or after the Valuation Date, which the Fund expects will be completed within 60 days of the fiscal year-end, and that net asset value will be used to determine the final amount paid for tendered Shares. Because the Fund’s next fiscal year ending after the Valuation Date ends on March 31, 2023, the Fund expects that the audit will be completed by the end of May 2023. |
| ● | A Shareholder may tender all its Shares or a portion of its Shares. If a Shareholder tenders some of its Shares in an amount that would cause the Shareholder’s remaining Shares to have a net asset value of less than $25,000, the Board of Trustees reserves the right to reduce the amount to be repurchased from the Shareholder so that the required minimum capital account balance is maintained or to repurchase the remainder of the Shareholder’s Shares in the Fund. See Section 4. |
| ● | Partial tenders of Shares will be repurchased on a “first-in, first-out” basis (i.e., the portion of the Shares repurchased will be deemed to have been taken from the earliest capital contribution made by such Shareholder (adjusted for subsequent appreciation and depreciation) until that capital contribution is decreased to zero, and then from each subsequent capital contribution made by such Shareholder (as adjusted) until such capital contribution is decreased to zero). |
| ● | If you tender your Shares and we purchase those Shares, we will issue you a non-interest bearing, non-transferable promissory note (the “Note”) entitling you to an amount equal to the net asset value of the Shares tendered determined as of Valuation Date, less any Early Repurchase Fee due to the Fund in connection with the repurchase. |
| ● | The Note will entitle the tendering Shareholder to receive an initial payment in cash equal to at least 90% of the unaudited value of the Shares tendered by the Shareholder that are accepted for purchase by the Fund (the “Initial Payment”). The Fund may take up to 50 business days after the Repurchase Date to make the Initial Payment; provided that, if the Fund elects to liquidate Fund investments in order to finance the repurchase of Shares, the Fund is entitled to postpone the payment in respect of any Note delivered thereto until ten business days after the Fund has received at least 90% of the aggregate amount anticipated to be received through pending liquidations of Fund investments in order to finance repurchases of Shares. |
1
| ● | The Note will also entitle a tendering Shareholder to receive a contingent payment (the “Final Payment”) equal to the excess, if any, of (1) the aggregate value of the repurchased Shares, as of the Valuation Date in the manner specified above based upon the results of the annual audit of the financial statements of the Fund for the fiscal year in which the Valuation Date of such repurchase occurred, over (2) the Initial Payment. The Final Payment will be payable promptly after the completion of the Fund’s next annual audit. Final adjustments of payments in connection with the repurchased Shares generally will be made promptly after the completion of the annual audit of the Fund. Proceeds of the Initial Payment and the Final Payment, if applicable, will be wire-transferred directly to an account designated by the Shareholder. The Note will be held by UMB Fund Services, Inc. on the Shareholder’s behalf. Upon a written request by a Shareholder to UMB Fund Services, Inc., UMB Fund Services, Inc. will mail the Note to the Shareholder at the address of the Shareholder as maintained in the books and records of the Fund. See Section 7. |
| ● | If a Shareholder, after giving effect to the repurchase, would continue to hold at least 5.00% of the aggregate value of its Shares as of the Valuation Date, the Final Payment in respect of such repurchase shall be made on or before the 60th day after the Repurchase Date. Such payment shall be in an amount equal to the excess, if any, of (i) the aggregate value of the repurchased Shares, determined as of the Valuation Date in the manner specified above, based upon information known to the Fund as of the date of the Final Payment, over (ii) the Initial Payment. If, based upon the results of the annual audit of the financial statements of the Fund for the fiscal year in which the Valuation Date of such repurchase occurred, it is determined that the value at which the Shares were repurchased was incorrect, the Fund shall decrease such Shareholder’s account balance by the amount of any overpayment and redeem for no additional consideration a number of Shares having a value equal to such amount, or increase such Shareholder’s account balance by the amount of any underpayment and issue for no additional consideration a number of Shares having an aggregate value equal to such amount, as applicable, in each case as promptly as practicable following the completion of such audits. |
| ● | The Offer is being made to all Shareholders of the Fund and is not conditioned on any minimum amount of Shares being tendered. If we accept the tender of your Shares, we will pay you the proceeds from one or more of the following sources: cash on hand, proceeds from the sale of securities held by the Fund or borrowings. The purchase amount will be paid entirely in cash, less any Early Repurchase Fee due to the Fund in connection with the repurchase. See Section 7. |
| ● | If you desire to tender Shares for purchase, you must do so by 11:59 p.m., Eastern Time, on April 29, 2022 (or if the Offer is extended, by any later Notice Due Date), at which time the Offer is scheduled to expire. Until the Notice Due Date, you have the right to withdraw any tenders of your Shares. Shares withdrawn may be re-tendered, however, provided that such tenders are made before the Notice Due Date by following the tender procedures described herein. If the Fund has not yet accepted your tender of Shares on or prior to May 31, 2022 (i.e., the date 40 business days or more from the commencement of the Offer), you will also have the right to withdraw the tender of your Shares after such date. See Section 6. |
| ● | If you would like us to purchase your Shares, you should complete, sign and either (i) mail or otherwise deliver the Letter of Transmittal, enclosed with the Offer, Flowstone Opportunity Fund c/o UMB Fund Services, Inc., 235 W. Galena Street Milwaukee, WI; or (ii) fax it to UMB Fund Services, Inc. at (816) 860-3140 Attention: Tender Offer Administrator, so that it is received before 11:59 p.m., Eastern Time, |
2
on April 29, 2022. See Section 5. The value of your Shares may change between December 31, 2021 (the last time net asset value was calculated) and the Valuation Date when the value of the Shares being purchased will be determined. See Section 3.
| ● | As of December 31, 2021, the net asset value of the Fund was $322,165,710 and there were approximately 18,856,900 shares outstanding. The net asset value per share on December 31, 2021 was $17.08. If you would like to obtain the estimated net asset value of your Shares, which we calculate from time to time, you may contact UMB Fund Services, Inc. at (888) 779-0799 or at the address listed on the cover page of the Letter of Transmittal, Monday through Friday, except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m. (Eastern Time). See Section 3. |
Please note that just as each Shareholder has the right to withdraw its tender prior to the Notice Due Date, the Fund has the right to cancel, amend or postpone the Offer at any time before the Notice Due Date. Also understand that although the Offer is scheduled to expire on April 29, 2022, a Shareholder that tenders all its Shares will remain a Shareholder of the Fund through the Repurchase Date, notwithstanding the Fund’s acceptance of the Shareholder’s Shares for purchase.
2. BACKGROUND AND PURPOSE OF THE OFFER.
The purpose of the Offer is to provide liquidity to Shareholders. Because there is no market for Shares and transfers of Shares are prohibited without the prior approval of the Fund, the Board of Trustees has determined, after consideration of various factors including the recommendation of the Adviser, that the Offer is in the best interests of Shareholders to provide liquidity for Shares as contemplated by and in accordance with the procedures set out in the Fund’s Registration Statement and the Agreement and Declaration of Trust. The Adviser intends to recommend to the Board of Trustees that the Fund offer to repurchase Shares, or portions of them, on a quarterly basis each year and the Board of Trustees intends to consider the continued desirability of the Fund making quarterly offers to repurchase Shares; however, the Board of Trustees is under no obligation to follow such recommendations and the Fund is not required to make any such offer.
The purchase of Shares pursuant to the Offer will have the effect of increasing the proportionate interest in the Fund of Shareholders that do not tender Shares. Shareholders that retain their Shares may be subject to increased risks due to the reduction in the Fund’s aggregate assets resulting from payment for the Shares tendered. These risks include the potential for greater volatility due to decreased diversification. The Fund believes, however, that this result is unlikely given the nature of the Fund’s investment program. A reduction in the aggregate assets of the Fund may result in Shareholders that do not tender Shares bearing higher costs to the extent that certain expenses borne by the Fund are relatively fixed and may not decrease if assets decline. These effects may be reduced or eliminated to the extent that additional subscriptions for Shares are made by new and existing Shareholders from time to time. Payment for Shares purchased pursuant to the Offer may also require the Fund to liquidate portfolio holdings earlier than the Adviser would otherwise have caused these holdings to be liquidated, potentially resulting in losses or increased investment related expenses.
Shares that are tendered to the Fund in connection with the Offer if accepted for repurchase, will be repurchased, resulting in an increase in the expense ratios of the remaining Shares in the Fund (assuming no further issuance). The Fund currently expects that it will accept subscriptions for Shares as of the first business day of each calendar quarter, except that Shares may be offered more or less frequently as determined by the Board of Trustees. The Board of Trustees may also suspend or terminate offerings of Shares at any time.
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3. OFFER TO PURCHASE AND PRICE.
The Fund will, on the terms and subject to the conditions of the Offer, purchase an amount of Shares up to approximately 5.00% of the net assets of the Fund that are tendered by, and not withdrawn (as provided in Section 6 below) prior to, the Notice Due Date. The Fund reserves the right to extend, amend or cancel the Offer as described in Sections 4 and 8 below. The value of a Shares tendered for purchase will be its net asset value on the Valuation Date, payable as set out in Section 7. The determination of the value of Shares as of the Valuation Date is subject to adjustment based upon the results of the next annual audit of the Fund’s financial statements. The Fund reserves the right to adjust the Valuation Date to correspond with any extension of the offer.
As of December 31, 2021, there were approximately 18,856,900 Shares outstanding, with an estimated net asset value per Share of $17.08. Shareholders may obtain monthly estimated net asset value information until the Notice Due Date by contacting (888)779-0799, Monday through Friday, except holidays, during normal business hours of (8:30 a.m. to 5:00 p.m. (Eastern Time). The value of the Shares tendered by Shareholders is likely to change between the time that the most recent net asset value was calculated and communicated to you and the Valuation Date.
4. AMOUNT OF TENDER.
Subject to the limitations set out below, a Shareholder may tender all its Shares or a portion of its Shares. The Offer is being made to all Shareholders of the Fund and is not conditioned on any minimum amount of Shares being tendered.
If the amount of Shares that are properly tendered pursuant to the Offer and not withdrawn pursuant to Section 6 below is less than or equal to approximately 5.00% of the net assets of the Fund (or such greater amount as the Fund may elect to purchase pursuant to the Offer), the Fund will, on the terms and subject to the conditions of the Offer, purchase all of the Shares so tendered unless the Fund elects to cancel or amend the Offer, or postpone acceptance of tenders made pursuant to the Offer, as provided in Section 8 below. If Shares in excess of approximately 5.00% of the net assets of the Fund are duly tendered to the Fund prior to the Notice Due Date and not withdrawn prior to the Notice Due Date pursuant to Section 6 below, the Fund will in its sole discretion either (a) accept the additional Shares permitted to be accepted pursuant to Rule 13e-4(f)(3) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); (b) extend the Offer, if necessary, and increase the amount of Shares that the Fund is offering to purchase to an amount it believes sufficient to accommodate the excess Shares tendered as well as any Shares tendered during the extended Offer; or (c) accept Shares tendered prior to the Notice Due Date and not withdrawn prior to the Notice Due Date for payment on a pro rata basis based on the aggregate net asset value of tendered Shares. The Offer may be extended, amended or canceled in other circumstances described in Section 8 below.
If a Shareholder tenders some of its Shares in an amount that would cause the remaining Shares to have a net asset value of less than $25,000, the Board of Trustees reserves the right to reduce the amount to be repurchased from the Shareholder so that the required minimum account balance is maintained or to repurchase the remainder of the Shareholder’s Shares in the Fund.
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5. PROCEDURE FOR TENDERS.
Shareholders wishing to tender Shares pursuant to this Offer to Purchase should send or deliver by 11:59 p.m. (Eastern Time) on the Notice Due Date a completed and executed Letter of Transmittal to FlowStone Opportunity Fund, c/o UMB Fund Services, Inc., at the address set out on the first page of the Letter of Transmittal, or fax a completed and executed Letter of Transmittal to UMB Fund Services, Inc., at the fax number set out on the first page of the Letter of Transmittal.
The Fund recommends that all documents be submitted to the Fund, c/o UMB Fund Services, Inc. via certified mail, return receipt requested, or by facsimile transmission. Shareholders wishing to confirm receipt of a Letter of Transmittal may contact UMB Fund Services, Inc. at the address or telephone number set out on the first page of the Letter of Transmittal. The method of delivery of any documents is at the election and complete risk of the Shareholder tendering a Share, including, but not limited to, the failure of UMB Fund Services, Inc. to receive any Letter of Transmittal or other document submitted by facsimile transmission. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of tenders will be determined by the Fund, in its sole discretion, and such determination will be final and binding. The Fund reserves the absolute right to reject any or all tenders determined by it not to be in appropriate form or the acceptance of or payment for which would, in the opinion of counsel for the Fund, be unlawful. The Fund also reserves the absolute right to waive any of the conditions of the Offer or any defect in any tender with respect to any particular Share or any particular Shareholder, and the Fund’s interpretation of the terms and conditions of the Offer will be final and binding. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the Fund will determine. Tenders will not be deemed to have been made until the defects or irregularities have been cured or waived. None of the Fund, the Adviser or the Board of Trustees will be obligated to give notice of any defects or irregularities in tenders, nor will any of them incur any liability for failure to give such notice.
6. WITHDRAWAL RIGHTS.
Until the Notice Due Date, Shareholders have the right to withdraw any tenders of their Shares. Shares withdrawn may be re-tendered, however, provided that such tenders are made before the Notice Date by following the tender procedures described in Section 5. Pursuant to Rule 13e-4(f)(2)(ii) of the Exchange Act, if the Fund has not yet accepted a Shareholder’s tender of Shares on or prior to May 31, 2022 (i.e., the date 40 business days or more from the commencement of the Offer), a Shareholder will also have the right to withdraw its tender of Shares after such date. To be effective, any notice of withdrawal must be timely received by the Fund, c/o UMB Fund Services, Inc. at the address or fax number set out on the first page of the Letter of Transmittal. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Fund, in its sole discretion, and such determination will be final and binding. A tender of Shares properly withdrawn will not thereafter be deemed to be tendered for purposes of the Offer.
7. PURCHASES AND PAYMENT.
For purposes of the Offer, the Fund will be deemed to have accepted Shares that are tendered if and when it gives written notice to the tendering Shareholder of its election to purchase such Shares. As stated in Section 3 above, the amount offered for the Shares tendered by Shareholders will be the value thereof as of the Valuation Date. The value will be determined after all allocations to capital accounts of the Shareholders required to be made by the Registration Statement and Agreement and Declaration of Trust have been made, including any Early Repurchase Fee (defined below) due to the Fund in connection with the repurchase. The Fund will not pay interest on the purchase amount. A Shareholder who tenders Shares at any time prior to the
5
day immediately preceding the one-year anniversary of the Shareholder’s purchase of Shares may be subject to an “Early Repurchase Fee” payable to the Fund equal to 2.00% of the amount requested to be purchased, to be netted against withdrawal proceeds.
For Shareholders that tender Shares that are accepted for purchase, payment of the purchase amount will consist of the Note, a non-interest bearing, non-transferable promissory note. The Note will entitle the Shareholder to receive the Initial Payment in an amount equal to at least 90% of the unaudited net asset value of the Shares tendered and accepted for purchase by the Fund, determined as of the Valuation Date, less any Early Repurchase Fee due to the Fund in connection with the repurchase. The Fund may take up to 50 business days after the Repurchase Date to make the Initial Payment; provided that, if the Fund elects to liquidate Fund investments in order to finance the repurchase of Shares, the Fund is entitled to postpone the payment in respect of any Note delivered thereto until ten business days after the Fund has received at least 90% of the aggregate amount anticipated to be received through pending liquidations of Fund investments in order to finance repurchases of Shares. The Note will also entitle the tendering Shareholder to receive a contingent payment equal to the excess, if any, of (1) the aggregate value of the repurchased Shares, as of the Valuation Date in the manner specified above based upon the results of the annual audit of the financial statements of the Fund for the fiscal year in which the Valuation Date of such repurchase occurred, over (2) the Initial Payment. The Final Payment will be payable promptly after the completion of the Fund’s next annual audit. It is anticipated that the annual audit of the Fund’s financial statements will be completed no later than 60 days after the fiscal year-end of the Fund.
If a Shareholder, after giving effect to the repurchase, would continue to hold at least 5.00% of the aggregate value of its Shares as of the Valuation Date, the Final Payment in respect of such repurchase shall be made on or before the 60th day after the Repurchase Date. Such payment shall be in an amount equal to the excess, if any, of (i) the aggregate value of the repurchased Shares, determined as of the Valuation Date in the manner specified above, based upon information known to the Fund as of the date of the Final Payment, over (ii) the Initial Payment. If, based upon the results of the annual audit of the financial statements of the Fund for the fiscal year in which the Valuation Date of such repurchase occurred, it is determined that the value at which the Shares were repurchased was incorrect, the Fund shall decrease such Shareholder’s account balance by the amount of any overpayment and redeem for no additional consideration a number of Shares having a value equal to such amount, or increase such Shareholder’s account balance by the amount of any underpayment and issue for no additional consideration a number of Shares having an aggregate value equal to such amount, as applicable, in each case as promptly as practicable following the completion of such audits.
The Note pursuant to which a tendering Shareholder will receive the Initial Payment and, if applicable, Final Payment (together, the “Cash Payment”) will be held by UMB Fund Services, Inc. on behalf of the tendering Shareholder. Upon a written request by a Shareholder to UMB Fund Services, Inc., UMB Fund Services, Inc. will mail the Note to the Shareholder at the address of the Shareholder as maintained in the books and records of the Fund. Any Cash Payment due pursuant to the Note will be made by wire transfer directly to the tendering Shareholder to an account designated by the Shareholder in the Letter of Transmittal.
The Fund will make payment for Shares it purchases pursuant to the Offer from one or more of the following sources: cash on hand, proceeds from the sale of securities held by the Fund or borrowings. Upon its acceptance of tendered Shares for repurchase, the Fund will maintain daily, as an entry on its books, a segregated account consisting of cash, liquid securities or, to the extent applicable, interests in Portfolio Funds that the Fund (i) has requested be withdrawn or (ii) is in the process of liquidating (or any combination thereof), in an amount equal to the aggregate estimated unpaid dollar amount of the Promissory Notes issued to Shareholders tendering Shares. None of the Fund, the Board of Trustees, or the Adviser have determined at
6
this time to borrow funds to purchase Shares tendered in connection with the Offer. However, depending on the dollar amount of Shares tendered and prevailing general economic and market conditions, the Fund, in its sole discretion, may decide to fund any portion of the amount offered for the purchase of Shares, subject to compliance with applicable law, through borrowings. The Fund expects that the repayment of any amounts so borrowed will be financed from additional funds contributed to the Fund by existing and/or new Shareholders, or from the proceeds of the sale of securities held by the Fund.
The purchase amount will be paid entirely in cash.
8. CERTAIN CONDITIONS OF THE OFFER.
In the absolute discretion of the Board of Trustees, the Fund reserves the right, at any time and from time to time, to extend the period of time during which the Offer is pending by notifying Shareholders of such extension. In the event that the Fund elects to extend the tender period, the net asset value of the Shares tendered for purchase will be determined as of the later Valuation Date. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer. The Fund also reserves the right at any time and from time to time up to and including acceptance of tenders pursuant to the Offer: (a) to cancel the Offer in the circumstances set out in the following paragraph and in the event of such cancellation not to purchase or pay for any Shares tendered pursuant to the Offer; (b) to amend the Offer; and (c) to postpone the acceptance of Shares. If the Fund determines to amend the Offer or to postpone the acceptance of Shares tendered, it will, to the extent necessary, extend the period of time during which the Offer is open as provided above and will promptly notify Shareholders.
The Fund may cancel the Offer, amend the Offer or postpone the acceptance of tenders made pursuant to the Offer if: (a) the Fund would not be able to liquidate portfolio securities in a manner that is orderly and consistent with the Fund’s investment objectives and policies in order to purchase Shares tendered pursuant to the Offer; (b) there is, in the judgment of the Board of Managers, any (i) legal action or proceeding instituted or threatened challenging the Offer or otherwise materially adversely affecting the Fund, (ii) declaration of a banking moratorium by federal or state authorities or any suspension of payment by banks in the United States or New York State that is material to the Fund, (iii) limitation imposed by federal or state authorities on the extension of credit by lending institutions, (iv) suspension of trading on any organized exchange or over-the-counter market where the Fund has a material investment, (v) commencement of war, armed hostilities or other international or national calamity directly or indirectly involving the United States that is material to the Fund, (vi) material decrease in the net asset value of the Fund from the net asset value of the Fund as of the commencement of the Offer, or (vii) other event or condition that would have a material adverse effect on the Fund or its Shareholders if Shares tendered pursuant to the Offer were purchased; (c) the Board of Managers determines that it is not in the best interest of the Fund to purchase Shares pursuant to the Offer; or (d) for any other periods that the Securities and Exchange Commission (the “SEC”) permits by order for the protection of Shareholders.
9. CERTAIN INFORMATION ABOUT THE FUND.
The Fund is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a closed-end, non-diversified management investment company. It is organized as a Delaware statutory trust. The principal office of the Fund is located at 55 Nod Road, Ste 120, Avon, Connecticut, 06001 and its telephone number is (312) 429-2419. Shares are not traded on any established trading market and are subject to strict restrictions on transferability pursuant to the Registration Statement and the Agreement and Declaration of Trust.
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Based on the number of Shares outstanding at December 31, 2021, the following Trustees of the Fund owned the number of Shares indicated in the table below.
| Person | Number of Shares |
Percentage of Shares Outstanding |
||||||
| Scott P. Conners | 48,237 | 0.26 | % | |||||
| Eric Becker | 103,513 | 0.55 | % | |||||
| Michael H. Moskow | 1,483 | 0.01 | % | |||||
| Marek Herchel | — | — | % | |||||
| Jason Gull | — | — | % | |||||
None of the Fund, the Adviser or the Board of Trustees or any person controlling the Fund, the Adviser or Board of Trustees has any plans or proposals that relate to or would result in: (1) an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Fund; (2) any purchase, sale or transfer of a material amount of assets of the Fund; (3) any material change in the present distribution policy or indebtedness or capitalization of the Fund; (4) any change in any material term of the employment contract of any executive officer; (5) any other material change in the Fund’s corporate structure or business, including any plans or proposals to make any changes in its investment policies, for which a vote would be required by Section 13 of the 1940 Act; (6) the acquisition by any person of additional Shares (other than the Fund’s intention to accept subscriptions for Shares on the first business day of each calendar quarter and from time to time in the discretion of the Board of Trustees), or the disposition of Shares (other than through periodic repurchase offers, including the Offer); or (7) any changes in the Agreement and Declaration of Trust or other governing instruments or other actions that could impede the acquisition of control of the Fund. Because Shares are not traded in any market, Subsections (6), (7) and (8) of Regulation M-A ss. 229.1006(c) are not applicable to the Fund.
Other than transactions conducted pursuant to the continuous offering of Shares, there have not been any transactions involving shares in the last 60 days.
10. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following discussion is a general summary of the federal income tax consequences of the purchase of Shares by the Fund for cash pursuant to the Offer. Shareholders should consult their own tax advisors for a complete description of the tax consequences to them of a purchase of their Shares by the Fund pursuant to the Offer.
The repurchase of Shares is a taxable event on which a gain or loss may be recognized. The amount of gain or loss is based on the difference between your tax basis in the Shares and the amount you receive for them upon disposition, which will include the Initial Payment and the Final Payment. Generally, you will recognize long-term capital gain or loss if you have held your Shares for over twelve months at the time you dispose of them. Gains and losses on shares held for twelve months or less will generally constitute short-term capital gains, except that a loss on shares held six months or less will be recharacterized as a long-term capital loss to the extent of any capital gains distributions that you have received on the shares. A loss realized on a sale or exchange of Shares may be disallowed under the so-called “wash sale” rules to the extent the Shares disposed of are replaced with other Shares within a period of 61 days beginning 30 days before and ending 30 days after the Shares are disposed of, such as pursuant to a dividend reinvestment in shares of the Shares. If disallowed, the loss will be reflected in an adjustment to the basis of the Shares acquired.
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11. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from, Shareholders in any jurisdiction in which the Offer or its acceptance would not comply with the securities or other laws of such jurisdiction. The Fund is not aware of any jurisdiction in which the Offer or tenders pursuant thereto would not be in compliance with the laws of such jurisdiction. However, the Fund reserves the right to exclude Shareholders from the Offer in any jurisdiction in which it is asserted that the Offer cannot lawfully be made. The Fund believes such exclusion is permissible under applicable laws and regulations, provided the Fund makes a good faith effort to comply with any state law deemed applicable to the Offer.
The Fund has filed an Issuer Tender Offer Statement on Schedule TO with the SEC, which includes certain information relating to the Offer. A free copy of such statement may be obtained by contacting the Fund, c/o UMB Fund Services, Inc., at the address and telephone number set out on the first page of the Letter of Transmittal or from the SEC’s internet web site, http://www.sec.gov.
9
LETTER OF TRANSMITTAL
EXHIBIT (a)(1)(iii)
LETTER OF TRANSMITTAL
Regarding Shares in
FLOWSTONE OPPORTUNITY FUND
Tendered Pursuant to the Offer to Purchase
Dated April 1, 2022
THIS LETTER OF TRANSMITTAL MUST BE
RECEIVED BY UMB FUND SERVICES, INC.
BY APRIL 29, 2022.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 11:59 P.M., EASTERN TIME, ON APRIL 29, 2022,
UNLESS THE OFFER IS EXTENDED.
Complete This Letter Of Transmittal And Return To:
Flowstone Opportunity Fund
c/o UMB Fund Services, Inc.
235 W. Galena Street Milwaukee, WI 53212
Attention: Tender Offer Administrator
Phone: (888) 779-0799
Fax: (816) 860-3140
Letter of Transmittal Page 1 of 5
Ladies and Gentlemen:
The undersigned hereby tenders to FlowStone Opportunity Fund, a closed-end, non-diversified management investment company organized as a statutory trust under the laws of the State of Delaware (the “Fund”), the shares of beneficial interests in the Fund or portion thereof (the “Shares”) held by the undersigned, described and specified below, on the terms and conditions set out in the Offer to Purchase, dated June 30, 2022 (the “Offer”), receipt of which is hereby acknowledged, and in this Letter of Transmittal. THE OFFER AND THIS LETTER OF TRANSMITTAL ARE SUBJECT TO ALL THE TERMS AND CONDITIONS SET OUT IN THE OFFER, INCLUDING, BUT NOT LIMITED TO, THE ABSOLUTE RIGHT OF THE FUND TO REJECT ANY AND ALL TENDERS DETERMINED BY IT, IN ITS SOLE DISCRETION, NOT TO BE IN THE APPROPRIATE FORM.
The undersigned hereby sells to the Fund the Shares tendered pursuant to this Letter of Transmittal. The undersigned warrants that it has full authority to sell the Shares tendered hereby and that the Fund will acquire good title to the Shares, free and clear of all liens, charges, encumbrances, conditional sales agreements or other obligations relating to this sale, and not subject to any adverse claim, when and to the extent the Shares are purchased by the Fund. Upon request, the undersigned will execute and deliver any additional documents necessary to complete the sale in accordance with the terms of the Offer.
The undersigned recognizes that under certain circumstances set out in the Offer, the Fund may not be required to purchase the Shares tendered hereby. The undersigned further understands and agrees that if the undersigned tenders an amount that would cause the undersigned’s remaining Shares to have a NAV of less than $25,000, the Board of Trustees of the Fund may reduce the amount to be repurchased from the undersigned so that the required minimum account balance is maintained or repurchase the remainder of the undersigned’s Shares in the Fund.
A promissory note (the “Note”) for the value of the purchased Shares will be held by UMB Fund Services, Inc. on behalf of the undersigned. Upon written request by the undersigned to UMB Fund Services, Inc., UMB Fund Services, Inc. will mail the Note to the undersigned at the address of the undersigned as maintained in the books and records of the Fund. The initial payment of the purchase amount for the Shares tendered by the undersigned will be made by wire transfer of the funds to an account designated by the undersigned in this Letter of Transmittal.
The Note will also reflect the “Final Payment” portion of the purchase amount, if any, as described in Section 7 of the Offer. Any Final Payment of cash due pursuant to the Note will also be made by wire transfer of the funds to the undersigned’s account as provided herein. The undersigned recognizes that the amount of the initial payment of the purchase amount for Shares will be based on the unaudited value of the Fund as of June 30, 2022, subject to an extension of the Offer as described in Section 8 of the Offer. The Final Payment will be payable promptly after the completion of the Fund’s next annual audit. It is anticipated that the annual audit of the Fund’s financial statements will be completed no later than 60 days after the fiscal year-end of the Fund.
All authority conferred or agreed to be conferred in this Letter of Transmittal will survive the death or incapacity of the undersigned and the obligation of the undersigned hereunder will be binding on the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in Section 6 of the Offer, this tender is irrevocable.
PLEASE FAX OR MAIL TO: FLOWSTONE OPPORTUNITY FUND, C/O UMB FUND SERVICES, INC., 235 W. GALENA STREET, MILWAUKEE, WI 53212. FOR ADDITIONAL INFORMATION: PHONE: (888) 779-0799 OR FAX: (816) 860-3140.
Letter of Transmittal Page 2 of 5
LETTER OF TRANSMITTAL
Tender Date: July 1, 2022
Tender Expiration Date: 11:59 p.m. ET, April 29, 2022
PARTS 1, 2, 3, AND 4 MUST BE COMPLETED FOR TENDER
REQUEST
TO BE IN GOOD ORDER FOR PROCESSING
| PLEASE FAX OR MAIL TO: FLOWSTONE OPPORTUNITY FUND UMB Fund Services, Inc. 235 W. Galena St. Milwaukee, WI 53212 |
FOR ADDITIONAL INFORMATION: PHONE: (888) 799-0799 FAX: (816) 860-3140 |
PLEASE CONTACT YOUR FINANCIAL INTERMEDIARY
BEFORE SUBMITTING YOUR TENDER REQUEST.
PART 1 – NAME AND ADDRESS
| FlowStone Opportunity Fund Acct #: | |
| Full Account Registration Line 1: | |
| Full Account Registration Line 2: | |
| Telephone Number: | |
| Advisor Firm Name: | |
| Advisor Rep Name | |
| Advisor Telephone Number: |
FOR CUSTODIAL ACCOUNTS ONLY (IRA, 401k, ETC.)
| Custodial Account #: | |
| Custodian Name: | |
| Custodian Address: | |
| Custodian City, State, Zip: | |
| Custodian Telephone Number: |
PART 2 – AMOUNT OF SHARES IN THE FUND BEING TENDERED:
[ ] Entire amount of Shares
[ ] Portion of Shares $______________ or ______________ Number of Shares
Letter of Transmittal Page 3 of 5
LETTER OF TRANSMITTAL
PART 3 – PAYMENT
PAYMENT GUIDELINES: Proceeds from tax deferred and tax exempt registration types are required to be returned to the custodian on record.
If you invest in the Fund through a financial intermediary, that financial intermediary may require alternate payment and/or delivery instructions, notwithstanding your request herein. Please contact your financial intermediary before submitting your tender request.
Please Deliver All Proceeds via Federal Wire to the Following:
| Bank Name: | |
| ABA Routing Number: | |
| For Credit to: | |
| Name(s) on Bank Account: | |
| Bank Account Number: | |
| For Further Credit to: | |
| Name(s) on Investors Account: | |
| Investor Account Number at Broker: |
HOLDBACK PAYMENTS: Holdback payments will be delivered after the Fund’s audit is complete at the end of the Fiscal Year to the same wire instruction the tender proceeds are delivered to. If alternate payment instructions are needed for the holdback, please contact UMB Fund Services, Inc. (“UMBFS”) at the (888) 779-0799 for instructions.
PROMISSORY NOTE: The Note reflecting both the initial payment and the Final Payment portion of the purchase amount, as applicable, will be held by UMBFS on the undersigned’s behalf. Upon a written request by the undersigned to UMBFS, UMBFS will mail the Note to the undersigned at the address of the undersigned as maintained in the books and records of the Fund.
Letter of Transmittal Page 4 of 5
PART 4 - SIGNATURE(S)
| Signature | Print Name of Authorized Signatory (and Title if applicable) |
Date |
| Signature | Print Name of Authorized Signatory (and Title if applicable) |
Date |
| Signature | Print Name of Authorized Signatory (and Title if applicable) |
Date |
THIS DOCUMENT REQUIRES A MEDALLION SIGNATURE GUARANTEE BELOW ONLY WHEN AUTHORIZED SIGNER(S) INSTRUCT THE FUND TO SEND TENDER PROCEEDS TO AN ACCOUNT OTHER THAN THE BROKER/CUSTODIAN ACCOUNT OF RECORD.
PLEASE CONTACT YOUR FINANCIAL INTERMEDIARY
BEFORE SUBMITTING YOUR TENDER REQUEST.
Letter of Transmittal Page 5 of 5
TO CANCEL TENDER PREVIOUSLY SUBMITTED
ONLY COMPLETE THIS FORM IF YOU WISH TO CANCEL THE INSTRUCTIONS
YOU SUBMITTED ON YOUR LETTER OF TRANSMITTAL
EXHIBIT (a)(1)(iv)
ONLY COMPLETE THIS FORM IF YOU WISH TO CANCEL THE
INSTRUCTIONS YOU
SUBMITTED ON YOUR LETTER OF TRANSMITTAL
NOTICE OF WITHDRAWAL OF TENDER
Regarding Shares in
FLOWSTONE OPPORTUNITY FUND
Tendered Pursuant to the Offer to Purchase Dated April 1, 2022
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT,
AND THIS NOTICE OF WITHDRAWAL MUST BE RECEIVED
BY UMB FUND SERVICES, INC. BY,
11:59 P.M., EASTERN TIME, ON APRIL 29, 2022
UNLESS THE OFFER IS EXTENDED.
Complete This Notice of Withdrawal And Return To:
Flowstone Opportunity Fund
c/o UMB Fund Services, Inc.
235 W. Galena Street Milwaukee, WI 53212
Attention: Tender Offer Administrator
Phone: (888) 779-0799
Fax: (816) 860-3140
Cancel Tender Page 1 of 2
Ladies and Gentlemen:
The undersigned wishes to withdraw the tender of its shares of beneficial interest in FlowStone Opportunity Fund (the “Fund”), or the tender of a portion of such interests, for purchase by the Fund that previously was submitted by the undersigned in a Letter of Transmittal dated ____________.
Such tender was in the amount of:
| [ ] | All of the undersigned’s shares of beneficial interest. |
| [ ] | A portion of the undersigned’s shares of beneficial interest expressed as a number of shares. |
$_______________________(number of shares)
The undersigned recognizes that upon the submission on a timely basis of this Notice of Withdrawal of Tender, properly executed, the interests in the Fund (or portion of such interest) previously tendered will not be purchased by the Fund upon expiration of the tender offer described above.
SIGNATURE(S):
| FOR INDIVIDUAL INVESTORS AND JOINT TENANTS: |
FOR OTHER INVESTORS: | ||
| Signature (SIGNATURE OF OWNER(S) EXACTLY AS APPEARED ON SUBSCRIPTION AGREEMENT) |
Print Name of Investor | ||
| Print Name of Investor | Signature (SIGNATURE OF OWNER(S) EXACTLY AS APPEARED ON SUBSCRIPTION AGREEMENT) |
||
| Joint Tenant Signature if necessary (SIGNATURE OF OWNER(S) EXACTLY AS APPEARED ON SUBSCRIPTION AGREEMENT) |
Print Name of Signatory and Title | ||
| Print Name of Joint Tenant | Co-signatory if necessary (SIGNATURE OF OWNER(S) EXACTLY AS APPEARED ON SUBSCRIPTION AGREEMENT) |
||
| Print Name and Title of Co-signatory | |||
| Date: ______________ |
Cancel Tender Page 2 of 2
EXHIBIT (a)(1)(v)
FORMS OF LETTERS FROM THE FUND TO SHAREHOLDERS
IN CONNECTION WITH ACCEPTANCE OF OFFERS OF TENDER
[______ __, 20__]
Dear Shareholder:
FlowStone Opportunity Fund (the “Fund”) has received and accepted for purchase your tender of all or a part of your shares of beneficial interest in the Fund (your “Shares”).
Because you have tendered and the Fund has purchased all or a part of your Shares, you have been issued a note (the “Note”) entitling you to receive an initial payment in an amount equal to at least 90% of the value of the purchased Shares based on the unaudited value of the Fund as of June 30, 2022, in accordance with the terms of the tender offer. A cash payment in this amount will be wire transferred to the account designated by you in your Letter of Transmittal no later than 50 business days unless the repurchase date of the Shares in the Fund has changed; provided that, if you tendered only a portion of your Shares and the remaining portion of your Shares would be less than the required minimum account balance of $25,000, the Fund’s Board of Trustees reserves the right to reduce the amount to be repurchased from you so that the required minimum account balance is maintained or to repurchase the remainder of your Shares, in accordance with the terms of the tender offer. The Note will be held by UMB Fund Services, Inc. on your behalf. Upon a written request by you to UMB Fund Services, Inc., UMB Fund Services, Inc. will mail the Note to you at the address for you as maintained in the books and records of the Fund.
The terms of the Note provide that a post-audit payment representing the balance of the purchase amount, if any, will be paid to you promptly after the completion of the Fund’s next annual audit according to the terms of the tender offer. We expect that the annual audit of the Fund’s financial statements will be completed by the end of May 2023.
If you are tendering only a portion of your Shares, you remain a Shareholder of the Fund with respect to the portion of your Shares that you did not tender.
Should you have any questions, please feel free to contact UMB Fund Services, Inc. at (888) 779-0799.
Sincerely,
FlowStone Opportunity Fund
1
[______ __, 20__]
Dear Shareholder:
Enclosed is a statement showing the breakdown of your capital withdrawal resulting from the repurchase of your shares in FlowStone Opportunity Fund (the “Fund”).
Because you have tendered and the Fund has purchased all or a part of your shares in the Fund, you have been paid an amount equal to at least 90% of the value of the purchased shares in the Fund based on the unaudited value of the Fund as of June 30, 2022, in accordance with the terms of the tender offer. A cash payment in this amount has been wire transferred to the account designated by you in your Letter of Transmittal.
The balance of the purchase amount will be paid to you promptly after the completion of the Fund’s next annual audit according to the terms of the tender offer. We expect that the annual audit of the Fund’s financial statements will be completed by the end of May 2023.
Should you have any questions, please feel free to contact UMB Fund Services, Inc. (888) 779-0799.
Sincerely,
FlowStone Opportunity Fund
Enclosure
2
EXHIBIT (a)(1)(vi)
Calculation of Filing Fee Tables
SC
TO-I
(Form Type)
FlowStone
Opportunity Fund
(Exact Name of Registrant as Specified in its Charter)
Table 1: Transaction Valuation
| Transaction Valuation | Fee rate | Amount of Filing Fee | ||||||||||
| Fees to Be Paid | $ | 16,108,286 | $ | 92.70 | $ | 1,493.24 | ||||||
| Fees Previously Paid | - | - | ||||||||||
| Total Transaction Valuation | $ | 16,108,286 | ||||||||||
| Total Fees Due for Filing | $ | 1,493.24 | ||||||||||
| Total Fees Previously Paid | - | |||||||||||
| Total Fee Offsets | - | |||||||||||
| Net Fee Due | $ | 1,493.24 | ||||||||||