UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 814-01190
OWL ROCK CAPITAL CORPORATION
(Exact name of Registrant as specified in its Charter)
Maryland
47-5402460
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
399 Park Avenue, 38th Floor, New York, New York
10022
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (212) 419-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
ORCC
The New York Stock Exchange
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES NO
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Small reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO
As of May 4, 2022, the registrant had 394,580,939 shares of common stock, $0.01 par value per share, outstanding.
i
Table of Contents
Page
PART I
FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements
2
Consolidated Statements of Assets and Liabilities as of March 31, 2022 (Unaudited) and December 31, 2021
Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (Unaudited)
3
Consolidated Schedules of Investments as of March 31, 2022 (Unaudited) and December 31, 2021
4
Consolidated Statements of Changes in Net Assets for the Three Months Ended March 31, 2022 and 2021 (Unaudited)
51
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (Unaudited)
52
Notes to Consolidated Financial Statements (Unaudited)
54
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
104
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
160
Item 4.
Controls and Procedures
161
PART II
OTHER INFORMATION
Legal Proceedings
162
Item 1A.
Risk Factors
163
Unregistered Sales of Equity Securities and Use of Proceeds
164
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
165
Signatures
166
ii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that involve substantial risks and uncertainties. Such statements involve known and unknown risks, uncertainties and other factors and undue reliance should not be placed thereon. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about Owl Rock Capital Corporation (the “Company,” “we” or “our”), our current and prospective portfolio investments, our industry, our beliefs and opinions, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” “outlook,” “potential,” “predicts” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. These forward-looking statements apply only as of the date of this report. Moreover, we assume no duty and do not undertake to update the forward-looking statements. Because we are an investment company, the forward-looking statements and projections contained in this report are excluded from the safe harbor protection provided by Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”).
1
PART I. CONSOLIDATED FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Owl Rock Capital Corporation
Consolidated Statements of Assets and Liabilities
(Amounts in thousands, except share and per share amounts)
March 31, 2022 (Unaudited)
December 31, 2021
Assets
Investments at fair value
Non-controlled, non-affiliated investments (amortized cost of $12,056,205 and $12,073,126, respectively)
$
12,028,349
12,124,860
Controlled, affiliated investments (amortized cost of $698,379 and $575,427, respectively)
727,974
616,780
Total investments at fair value (amortized cost of $12,754,584 and $12,648,553, respectively)
12,756,323
12,741,640
Cash (restricted cash of $57,497 and $21,481, respectively)
326,378
431,442
Foreign cash (cost of $6,369 and $16,096, respectively)
6,387
15,703
Interest receivable
89,921
81,716
Receivable from a controlled affiliate
15,903
3,953
Prepaid expenses and other assets
8,785
23,716
Total Assets
13,203,697
13,298,170
Liabilities
Debt (net of unamortized debt issuance costs of $106,698 and $110,239, respectively)
7,034,218
7,079,326
Distribution payable
122,320
122,068
Management fee payable
47,413
46,770
Incentive fee payable
25,954
29,242
Payables to affiliates
2,843
5,802
Payables for investments purchased
867
—
Accrued expenses and other liabilities
98,588
77,085
Total Liabilities
7,332,203
7,360,293
Commitments and contingencies (Note 7)
Net Assets
Common shares $0.01 par value, 500,000,000 shares authorized; 394,580,939 and 393,766,855 shares issued and outstanding, respectively
3,946
3,938
Additional paid-in-capital
6,002,303
5,990,360
Total distributable earnings (losses)
(134,755
)
(56,421
Total Net Assets
5,871,494
5,937,877
Total Liabilities and Net Assets
Net Asset Value Per Share
14.88
15.08
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended March 31,
2022
2021
Investment Income
Investment income from non-controlled, non-affiliated investments:
Interest income
208,599
200,305
Payment-in-kind interest income
22,411
10,727
Dividend income
11,728
3,559
Other income
3,848
3,154
Total investment income from non-controlled, non-affiliated investments
246,586
217,745
Investment income from controlled, affiliated investments:
1,773
1,303
15,638
2,368
Other Income
157
Total investment income from controlled, affiliated investments
17,573
3,828
Total Investment Income
264,159
221,573
Expenses
Interest expense
61,378
48,076
Management fee
42,110
Performance based incentive fees
21,775
Professional fees
3,768
Directors' fees
290
244
Other general and administrative
2,132
1,818
Total Operating Expenses
140,995
117,791
Net Investment Income (Loss) Before Taxes
123,164
103,782
Income tax expense (benefit), including excise tax expense (benefit)
808
1,127
Net Investment Income (Loss) After Taxes
122,356
102,655
Net Realized and Change in Unrealized Gain (Loss)
Net change in unrealized gain (loss):
Non-controlled, non-affiliated investments
(69,948
57,079
Income tax (provision) benefit
(2,633
Controlled affiliated investments
(11,758
865
Translation of assets and liabilities in foreign currencies
(481
(2,432
Total Net Change in Unrealized Gain (Loss)
(82,187
52,879
Net realized gain (loss):
4,702
1,154
Foreign currency transactions
(885
1,157
Total Net Realized Gain (Loss)
3,817
2,311
Total Net Realized and Change in Unrealized Gain (Loss)
(78,370
55,190
Net Increase (Decrease) in Net Assets Resulting from Operations
43,986
157,845
Earnings Per Share - Basic and Diluted
0.11
0.40
Weighted Average Shares Outstanding - Basic and Diluted
394,309,578
391,114,767
Consolidated Schedule of Investments
As of March 31, 2022
(Amounts in thousands, except share amounts)
Company(1)(4)(8)
Investment
Interest
Maturity Date
Par / Units
Amortized Cost(2)(3)
Fair Value
Percentage of Net Assets
Non-controlled/non-affiliated portfolio company investments
Debt Investments
Advertising and media
Global Music Rights, LLC(10)(12)(27)
First lien senior secured loan
L + 5.75%
8/28/2028
7,481
7,342
7,332
0.1
%
Global Music Rights, LLC(10)(23)(24)(27)
First lien senior secured revolving loan
8/27/2027
(12
(13
7,330
7,319
Aerospace and defense
Aviation Solutions Midco, LLC (dba STS Aviation)(10)(12)(27)
L + 7.25%
1/3/2025
214,152
211,983
202,373
3.4
Peraton Corp.(6)(10)(11)(27)
Second lien senior secured loan
L + 7.75%
2/1/2029
46,113
45,489
45,666
0.8
Valence Surface Technologies LLC(10)(12)(27)
L + 6.75% (incl. 1.00% PIK)
6/28/2025
123,319
122,245
109,138
1.9
Valence Surface Technologies LLC(10)(12)(23)(27)
10,038
9,957
8,878
0.2
393,622
389,674
366,055
6.3
Buildings and real estate
Associations, Inc.(10)(12)(27)
L + 6.50% (incl. 2.50% PIK)
7/2/2027
431,100
427,318
425,711
7.3
Associations, Inc.(10)(23)(24)(27)
L + 6.50%
(288
(412
REALPAGE, INC.(6)(10)(11)(27)
4/23/2029
34,500
34,030
34,544
0.6
Reef Global Acquisition LLC (fka Cheese Acquisition, LLC)(10)(13)(27)
L + 6.00% (incl. 1.25% PIK)
11/28/2024
134,701
134,204
128,303
2.2
Imperial Parking Canada(10)(18)(27)
C + 6.00% (incl. 1.25% PIK)
28,283
26,748
26,940
0.5
Reef Global Acquisition LLC (fka Cheese Acquisition, LLC)(10)(11)(23)(27)
L + 4.75%
11/28/2023
10,052
10,069
9,275
638,636
632,081
624,361
10.8
Business services
Access CIG, LLC(10)(11)(27)
2/27/2026
58,760
58,364
58,172
1.0
CIBT Global, Inc.(10)(12)(27)(30)
L + 5.25% (incl. 4.25% PIK)
6/3/2024
856
629
514
CIBT Global, Inc.(10)(14)(27)(30)
L + 7.75% (incl. 6.75% PIK)
12/1/2025
63,678
26,745
13,054
Denali BuyerCo, LLC (dba Summit Companies)(10)(12)(27)
L + 6.00%
9/15/2028
43,668
43,040
43,013
0.7
Denali BuyerCo, LLC (dba Summit Companies)(10)(12)(23)(25)(27)
First lien senior secured delayed draw term loan
9/15/2023
1,685
1,634
1,618
Denali BuyerCo, LLC (dba Summit Companies)(10)(12)(23)(27)
9/15/2027
800
772
755
Diamondback Acquisition, Inc. (dba Sphera)(10)(12)(27)
L + 5.50%
9/13/2028
5,393
5,292
5,258
Diamondback Acquisition, Inc. (dba Sphera)(10)(23)(24)(25)(27)
9/13/2023
(10
(16
Entertainment Benefits Group, LLC(10)(12)(27)
9/30/2025
83,662
82,906
1.4
Entertainment Benefits Group, LLC(10)(23)(24)(27)
L + 8.25%
9/30/2024
(82
Gainsight, Inc.(10)(12)(27)
L + 6.75% PIK
7/30/2027
19,547
19,242
19,205
0.3
Gainsight, Inc.(10)(23)(24)(27)
(52
(59
Hercules Borrower, LLC (dba The Vincit Group)(10)(12)(27)
12/15/2026
178,243
176,048
3.0
Hercules Borrower, LLC (dba The Vincit Group)(10)(12)(23)(27)
2,231
1,985
Hercules Buyer, LLC (dba The Vincit Group)(22)(27)(33)
Unsecured notes
0.48% PIK
12/14/2029
5,135
KPSKY Acquisition, Inc. (dba BluSky)(10)(11)(27)
10/19/2028
4,465
4,380
4,353
KPSKY Acquisition, Inc. (dba BluSky)(10)(17)(23)(25)(27)
P + 4.50%
10/19/2023
255
248
245
468,378
426,276
415,383
6.9
5
Chemicals
Aruba Investments Holdings LLC (dba Angus Chemical Company)(10)(12)(27)
11/24/2028
10,000
9,871
9,975
Douglas Products and Packaging Company LLC(10)(12)(27)
10/19/2022
105,905
105,751
104,846
1.8
Douglas Products and Packaging Company LLC(10)(17)(23)(27)
P + 4.75%
4,487
4,421
4,280
Gaylord Chemical Company, L.L.C.(10)(12)(27)
3/30/2027
152,260
150,949
151,118
2.6
Gaylord Chemical Company, L.L.C.(10)(23)(24)(27)
3/30/2026
(105
(99
Velocity HoldCo III Inc. (dba VelocityEHS)(10)(12)(27)
4/22/2027
22,160
21,726
21,661
0.4
Velocity HoldCo III Inc. (dba VelocityEHS)(10)(23)(24)(27)
4/22/2026
(24
(30
294,812
292,589
291,751
5.1
Consumer products
Conair Holdings, LLC(10)(12)(27)
L + 7.50%
5/17/2029
187,500
186,208
186,094
3.2
Feradyne Outdoors, LLC(10)(11)(27)
L + 6.25%
5/25/2023
86,667
86,432
1.5
Foundation Consumer Brands, LLC(10)(12)(27)
2/12/2027
4,000
Lignetics Investment Corp.(10)(12)(27)
11/1/2027
31,294
30,925
30,590
Lignetics Investment Corp.(10)(23)(24)(25)(27)
11/1/2023
(46
(88
Lignetics Investment Corp.(10)(12)(23)(27)
11/2/2026
1,333
1,279
1,227
SWK BUYER, Inc. (dba Stonewall Kitchen)(10)(16)(27)
SR + 5.25%
3/12/2029
754
739
SWK BUYER, Inc. (dba Stonewall Kitchen)(10)(23)(24)(25)(27)
3/11/2024
(2
SWK BUYER, Inc. (dba Stonewall Kitchen)(10)(17)(23)(27)
P + 4.25%
7
6
WU Holdco, Inc. (dba Weiman Products, LLC)(10)(12)(27)
3/26/2026
204,436
201,542
203,413
3.5
WU Holdco, Inc. (dba Weiman Products, LLC)(10)(17)(23)(27)
3/26/2025
1,921
1,705
1,825
517,912
512,788
514,471
8.8
Containers and packaging
Ascend Buyer, LLC (dba PPC Flexible Packaging)(10)(12)(27)
10/2/2028
5,540
5,487
5,457
Ascend Buyer, LLC (dba PPC Flexible Packaging)(10)(11)(23)(27)
9/30/2027
94
89
86
Fortis Solutions Group, LLC(10)(12)(27)
10/13/2028
3,316
3,253
3,233
Fortis Solutions Group, LLC(10)(23)(24)(25)(27)
10/13/2023
(20
Fortis Solutions Group, LLC(10)(23)(24)(27)
10/15/2027
(9
Pregis Topco LLC(10)(11)(27)
L + 7.09%
8/1/2029
160,000
157,529
158,593
2.7
168,950
166,336
167,337
2.9
Distribution
ABB/Con-cise Optical Group LLC(10)(12)(27)
2/23/2028
67,925
66,919
66,906
1.1
ABB/Con-cise Optical Group LLC(10)(17)(23)(27)
P + 6.50%
2,618
2,514
2,512
Aramsco, Inc.(10)(11)(27)
L + 5.25%
8/28/2024
55,755
55,140
55,616
0.9
Aramsco, Inc.(10)(11)(23)(27)
5,683
5,599
5,662
Endries Acquisition, Inc.(10)(12)(27)
12/10/2025
199,649
197,606
Individual Foodservice Holdings, LLC(10)(13)(27)
11/21/2025
175,387
173,001
174,071
Individual Foodservice Holdings, LLC(10)(11)(23)(27)
11/22/2024
3,834
3,588
3,672
Offen, Inc.(10)(11)(27)
L + 5.00%
6/22/2026
18,734
18,615
529,585
522,982
526,822
8.9
Education
Learning Care Group (US) No. 2 Inc.(10)(12)(27)
3/13/2026
26,967
26,678
26,293
Pluralsight, LLC(10)(13)(27)
L + 8.00%
4/6/2027
99,450
98,550
98,207
1.7
Pluralsight, LLC(10)(23)(24)(27)
(78
126,417
125,176
124,422
2.1
Financial services
AxiomSL Group, Inc.(10)(12)(27)
12/3/2027
202,266
200,183
199,232
AxiomSL Group, Inc.(10)(23)(24)(25)(27)
7/21/2023
(37
(42
AxiomSL Group, Inc.(10)(23)(24)(27)
12/3/2025
(178
(273
Blackhawk Network Holdings, Inc.(10)(11)(27)
L + 7.00%
6/15/2026
106,400
105,793
105,868
Blend Labs, Inc.(10)(12)(27)
7/1/2026
67,500
66,058
66,319
Blend Labs, Inc.(10)(23)(24)(27)
(64
(131
Hg Genesis 8 Sumoco Limited(10)(21)(27)(29)
Unsecured facility
SA + 7.50% PIK
8/28/2025
45,890
46,131
45,775
Hg Genesis 9 SumoCo Limited(10)(19)(27)(29)
E + 7.00% PIK
3/10/2027
70,319
69,396
69,792
1.2
Hg Saturn Luchaco Limited(10)(13)(27)(29)
L + 7.50% PIK
135,317
140,769
133,626
2.3
Muine Gall, LLC(9)(10)(13)(27)(29)
L + 7.00% PIK
9/20/2024
239,896
240,518
239,296
4.1
NMI Acquisitionco, Inc. (dba Network Merchants)(10)(11)(27)
9/8/2025
25,247
25,103
24,931
NMI Acquisitionco, Inc. (dba Network Merchants)(10)(11)(23)(25)(27)
10/2/2023
4,965
4,872
4,883
NMI Acquisitionco, Inc. (dba Network Merchants)(10)(23)(24)(27)
(21
8
Smarsh Inc.(10)(12)(27)
2/19/2029
762
Smarsh Inc.(10)(23)(24)(25)(27)
SR + 6.50%
2/19/2024
(1
Smarsh Inc.(10)(23)(27)
898,562
899,281
890,007
15.2
Food and beverage
Balrog Acquisition, Inc. (dba Bakemark)(10)(12)(27)
9/3/2029
22,000
21,825
21,725
BP Veraison Buyer, LLC (dba Sun World)(10)(12)(27)
5/12/2027
69,207
68,454
68,169
BP Veraison Buyer, LLC (dba Sun World)(10)(23)(24)(25)(27)
5/12/2023
(31
(109
BP Veraison Buyer, LLC (dba Sun World)(10)(23)(24)(27)
(93
H-Food Holdings, LLC(10)(11)(27)
3/2/2026
121,800
120,017
118,146
2.0
Hometown Food Company(10)(11)(27)
8/31/2023
15,253
15,158
15,101
Hometown Food Company(10)(23)(24)(27)
Innovation Ventures HoldCo, LLC (dba 5 Hour Energy)(10)(16)(27)
SR + 6.00%
3/11/2027
75,000
73,886
73,875
1.3
Innovation Ventures HoldCo, LLC (dba 5 Hour Energy)(10)(23)(25)(27)
First lien senior secured delayed draw term loan A
5/14/2022
First lien senior secured delayed draw term loan B
9/30/2022
Nellson Nutraceutical, LLC(10)(12)(27)
12/23/2023
27,208
26,597
26,596
Nutraceutical International Corporation(10)(11)(27)
9/30/2026
210,466
207,980
204,678
13,578
13,436
13,205
Ole Smoky Distillery, LLC(10)(15)(27)
3/31/2028
884
866
Ole Smoky Distillery, LLC(10)(23)(24)(27)
9
Recipe Acquisition Corp. (dba Roland Corporation)(10)(12)
L + 9.00%
12/1/2022
32,000
31,910
30,400
Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)(10)(11)(27)
L + 4.50%
7/30/2025
43,748
43,296
41,123
Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)(10)(11)(23)(27)
7/30/2023
2,040
1,986
1,500
Shearer's Foods, LLC(10)(11)(27)
9/22/2028
120,000
119,001
119,399
Tall Tree Foods, Inc.(10)(11)
8/12/2022
39,534
39,489
40,521
Ultimate Baked Goods Midco, LLC(10)(12)(27)
8/13/2027
81,849
79,978
79,393
Ultimate Baked Goods Midco, LLC(10)(13)(23)(27)
6,216
5,994
5,918
880,783
869,723
860,331
14.8
Healthcare equipment and services
Confluent Medical Technologies, Inc.(10)(15)(27)
2/18/2030
1,000
981
980
CSC Mkg Topco LLC (dba Medical Knowledge Group)(10)(11)(27)
1,281
1,256
1,255
CSC Mkg Topco LLC (dba Medical Knowledge Group)(10)(23)(24)(27)
(3
Medline Borrower, LP(10)(23)(24)(27)
L + 3.25%
10/21/2026
(147
(216
Nelipak Holding Company(10)(12)(27)
L + 4.25%
7/2/2026
24,697
24,374
24,264
Nelipak Holding Company(10)(12)(23)(27)
7/2/2024
3,082
3,015
2,953
Nelipak Holding Company(10)(23)(24)(27)
(254
(129
67,006
66,265
66,001
Nelipak Holding Company(10)(19)(27)
E + 8.50%
66,871
66,524
65,533
Packaging Coordinators Midco, Inc.(10)(12)(27)
11/30/2028
196,044
192,575
191,142
3.3
10
Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.) (10)(11)(27)
L + 6.75%
1/31/2028
136,392
134,368
134,346
Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.) (10)(23)(24)(27)
1/29/2026
(215
(203
Rhea Parent, Inc.(10)(15)(27)
SR + 5.75%
774
759
758
497,147
489,498
486,681
8.3
Healthcare providers and services
Diagnostic Service Holdings, Inc. (dba Rayus Radiology)(10)(11)(27)
3/17/2025
Ex Vivo Parent Inc. (dba OB Hospitalist)(10)(12)(27)
L + 9.50% PIK
9/27/2028
57,810
56,713
56,509
KS Management Services, L.L.C.(10)(11)(27)
1/9/2026
122,187
121,170
National Dentex Labs LLC (fka Barracuda Dental LLC)(10)(12)(27)
10/3/2025
70,544
69,610
69,310
National Dentex Labs LLC (fka Barracuda Dental LLC)(10)(12)(23)(25)(27)
6/30/2022
35,492
35,105
34,851
National Dentex Labs LLC (fka Barracuda Dental LLC)(10)(12)(23)(27)
6,790
6,612
6,626
Natural Partners, LLC(10)(11)(27)(29)
11/29/2027
931
913
Natural Partners, LLC(10)(23)(24)(27)(29)
OB Hospitalist Group, Inc.(10)(11)(27)
9/27/2027
116,562
114,396
113,648
OB Hospitalist Group, Inc.(10)(23)(24)(27)
(277
(379
Phoenix Newco, Inc. (dba Parexel)(10)(11)(27)
11/15/2029
190,000
188,168
187,150
Premier Imaging, LLC (dba LucidHealth)(10)(11)(27)
1/2/2025
42,998
42,553
42,568
Quva Pharma, Inc.(10)(12)(27)
4/12/2028
39,800
38,739
38,506
Quva Pharma, Inc.(10)(13)(23)(27)
4/10/2026
1,120
1,023
990
11
TC Holdings, LLC (dba TrialCard)(10)(12)(27)
11/14/2023
72,892
72,439
TC Holdings, LLC (dba TrialCard)(10)(23)(24)(27)
11/14/2022
(19
Vermont Aus Pty Ltd(10)(15)(27)(29)
SR + 5.50%
3/22/2028
975
759,126
749,119
747,745
12.7
Healthcare technology
BCPE Osprey Buyer, Inc. (dba PartsSource)(10)(13)(27)
8/23/2028
113,767
112,078
111,491
BCPE Osprey Buyer, Inc. (dba PartsSource)(10)(23)(24)(25)(27)
8/23/2023
(260
(245
BCPE Osprey Buyer, Inc. (dba PartsSource)(10)(23)(24)(27)
8/21/2026
(180
(237
Bracket Intermediate Holding Corp.(6)(10)(12)(27)
9/5/2025
487
509
Bracket Intermediate Holding Corp.(10)(12)(27)
L + 8.13%
9/7/2026
26,250
25,911
25,988
GI Ranger Intermediate, LLC (dba Rectangle Health)(10)(15)(27)
10/30/2028
4,620
4,532
4,516
GI Ranger Intermediate, LLC (dba Rectangle Health)(10)(15)(23)(27)
10/29/2027
37
30
29
Inovalon Holdings, Inc.(10)(12)(27)
L + 6.25% (incl. 2.75% PIK)
178,976
174,710
174,054
Inovalon Holdings, Inc.(10)(23)(24)(25)(27)
5/24/2024
(225
(285
L + 10.50% PIK
11/24/2033
87,095
85,426
85,135
Intelerad Medical Systems Incorporated (fka 11849573 Canada Inc.)(10)(12)(27)(29)
115,395
114,282
114,818
Intelerad Medical Systems Incorporated (fka 11849573 Canada Inc.)(10)(12)(23)(27)(29)
2,983
2,946
2,960
Interoperability Bidco, Inc. (dba Lyniate)(10)(12)(27)
12/28/2026
66,956
66,528
66,535
Interoperability Bidco, Inc. (dba Lyniate)(10)(23)(24)(27)
(18
596,593
586,247
585,249
10.0
12
Household products
HGH Purchaser, Inc. (dba Horizon Services)(10)(12)(27)
11/3/2025
107,954
106,722
106,875
HGH Purchaser, Inc. (dba Horizon Services)(10)(12)(23)(25)(27)
2/10/2023
33,614
33,312
33,138
HGH Purchaser, Inc. (dba Horizon Services)(10)(12)(23)(27)
12,507
12,352
12,341
Walker Edison Furniture Company LLC(10)(12)(27)
L + 8.75% (incl. 3.00% PIK)
3/31/2027
84,681
84,680
77,058
238,756
237,066
229,412
3.9
Human resource support services
Cornerstone OnDemand, Inc.(10)(11)(27)
10/15/2029
115,833
114,169
113,517
IG Investments Holdings, LLC (dba Insight Global)(10)(12)(27)
50,771
49,818
49,755
IG Investments Holdings, LLC (dba Insight Global)(10)(17)(23)(27)
P + 5.00%
9/22/2027
795
722
715
167,399
164,709
163,987
Infrastructure and environmental services
FR Arsenal Holdings II Corp. (dba Applied-Cleveland Holdings, Inc.)(10)(13)
9/8/2022
117,341
102,674
LineStar Integrity Services LLC(10)(13)(27)
2/12/2024
80,346
80,185
71,508
Tamarack Intermediate, L.L.C. (dba Verisk 3E)(10)(15)(27)
3/13/2028
859
842
Tamarack Intermediate, L.L.C. (dba Verisk 3E)(10)(23)(24)(27)
198,546
198,815
175,021
Insurance
Alera Group, Inc.(10)(11)(27)
42,929
42,019
41,748
Alera Group, Inc.(10)(11)(23)(25)(27)
11,781
11,527
11,450
13
Ardonagh Midco 3 PLC(10)(13)(27)(29)
First lien senior secured USD term loan
7/14/2026
26,784
26,297
26,583
Ardonagh Midco 3 PLC(10)(20)(27)(29)
First lien senior secured EUR term loan
E + 7.00%
10,164
10,024
10,138
Ardonagh Midco 3 PLC(10)(21)(27)(29)
First lien senior secured GBP term loan
SA + 7.00%
114,099
106,832
Ardonagh Midco 3 PLC(10)(23)(25)(27)(29)
First lien senior secured GBP delayed draw term loan
8/19/2023
(80
Ardonagh Midco 2 PLC(22)(27)(29)
11.50%
1/15/2027
11,198
11,125
11,867
Brightway Holdings, LLC(10)(11)(27)
12/16/2027
26,842
26,520
26,439
Brightway Holdings, LLC(10)(23)(24)
(38
(47
Evolution BuyerCo, Inc. (dba SIAA)(10)(12)(27)
4/28/2028
142,791
140,959
140,649
2.4
Evolution BuyerCo, Inc. (dba SIAA)(10)(23)(24)(27)
4/30/2027
(161
Integrity Marketing Acquisition, LLC(10)(13)(27)
8/27/2025
218,318
216,048
3.7
Integrity Marketing Acquisition, LLC(10)(23)(24)(27)
(126
Norvax, LLC (dba GoHealth)(10)(12)(27)
9/15/2025
77,179
75,076
76,793
Norvax, LLC (dba GoHealth)(10)(11)(23)(27)
9/13/2024
9,511
9,421
9,450
Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(10)(12)(27)
11/1/2028
135,928
134,631
133,890
Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(10)(23)(24)(27)
(57
(92
PCF Midco II, LLC (dba PCF Insurance Services)(22)(27)
9.00% PIK
10/31/2031
123,185
112,186
109,942
TEMPO BUYER CORP. (dba Global Claims Services)(10)(12)(27)
1,086
1,066
1,059
TEMPO BUYER CORP. (dba Global Claims Services)(10)(23)(24)(25)(27)
8/26/2023
(5
TEMPO BUYER CORP. (dba Global Claims Services)(10)(17)(23)(27)
THG Acquisition, LLC (dba Hilb)(10)(12)(27)
12/2/2026
75,321
73,968
74,191
THG Acquisition, LLC (dba Hilb)(10)(23)(24)(27)
12/2/2025
(141
14
USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(10)(12)(27)
7/23/2027
38,989
38,280
38,014
USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(10)(12)(23)(24)(27)
71
(35
KUSRP Intermediate, Inc. (dba U.S. Retirement and Benefits Partners)(10)(12)(27)
7/24/2028
32,075
31,509
31,433
1,098,257
1,066,992
1,075,516
18.4
Internet software and services
3ES Innovation Inc. (dba Aucerna)(10)(12)(27)(29)
5/13/2025
61,103
60,599
60,187
3ES Innovation Inc. (dba Aucerna)(10)(23)(24)(27)(29)
(25
(58
Accela, Inc.(10)(11)
L + 7.50% (incl. 4.25% PIK)
24,187
24,040
24,127
Accela, Inc.(10)(11)(23)
1,493
Apptio, Inc.(10)(12)(27)
1/10/2025
50,916
50,233
Apptio, Inc.(10)(12)(23)(27)
1,112
Bayshore Intermediate #2, L.P. (dba Boomi)(10)(12)(27)
L + 7.75% PIK
84,823
83,055
82,702
Bayshore Intermediate #2, L.P. (dba Boomi)(10)(23)(24)(27)
10/1/2027
(143
(173
BCPE Nucleon (DE) SPV, LP(10)(13)(27)
9/24/2026
189,778
187,460
188,354
BCTO BSI Buyer, Inc. (dba Buildertrend)(10)(12)(27)
12/23/2026
44,643
44,274
44,308
BCTO BSI Buyer, Inc. (dba Buildertrend)(10)(12)(23)(27)
3,018
2,976
2,978
Centrify Corporation(10)(12)(27)
3/2/2028
66,734
65,267
65,233
Centrify Corporation(10)(23)(24)(27)
3/2/2027
(165
(153
CivicPlus, LLC(10)(12)(27)
8/24/2027
14,236
14,106
14,023
CivicPlus, LLC(10)(23)(25)(27)
8/24/2023
(33
CivicPlus, LLC(10)(23)(24)(27)
15
Delta TopCo, Inc. (dba Infoblox, Inc.)(10)(12)(27)
12/1/2028
15,000
14,935
14,925
EET Buyer, Inc. (dba e-Emphasys)(10)(13)(27)
11/8/2027
4,545
4,503
4,477
EET Buyer, Inc. (dba e-Emphasys)(10)(23)(24)(27)
(4
(7
Forescout Technologies, Inc.(10)(12)(27)
8/17/2026
56,112
55,449
Forescout Technologies, Inc.(10)(23)(24)(27)
L + 8.50%
8/18/2025
(63
Genesis Acquisition Co. (dba Procare Software)(10)(12)(27)
L + 4.00%
7/31/2024
18,082
17,930
17,539
2,637
2,617
2,558
GovBrands Intermediate, Inc.(10)(12)(27)
8/4/2027
10,631
10,390
10,259
GovBrands Intermediate, Inc.(10)(12)(23)(25)(27)
8/4/2023
2,392
2,325
2,283
GovBrands Intermediate, Inc.(10)(23)(24)(27)
(28
Granicus, Inc.(10)(12)(27)
1/29/2027
13,461
13,189
13,159
Granicus, Inc.(10)(12)(23)(25)(27)
1/30/2023
1,531
1,496
1,484
Granicus, Inc.(10)(23)(24)(27)
(23
(27
H&F Opportunities LUX III S.À R.L (dba Checkmarx)(10)(13)(27)(29)
4/16/2026
51,567
50,444
H&F Opportunities LUX III S.À R.L (dba Checkmarx)(10)(23)(24)(27)(29)
(328
Hyland Software, Inc.(10)(11)(27)
7/7/2025
15,482
15,469
15,327
IQN Holding Corp. (dba Beeline)(10)(13)(27)
8/20/2024
150,221
149,208
149,845
IQN Holding Corp. (dba Beeline)(10)(23)(24)(27)
8/21/2023
(94
Litera Bidco LLC(10)(11)(27)
L + 5.89%
5/29/2026
153,660
152,118
Litera Bidco LLC(10)(11)(23)(25)(27)
10/29/2022
1,993
1,941
Litera Bidco LLC(10)(23)(24)(27)
(41
16
MessageBird BidCo B.V.(10)(13)(27)(29)
4/29/2027
77,000
75,505
75,268
MINDBODY, Inc.(10)(13)(27)
L + 8.50% (incl. 1.50% PIK)
2/14/2025
67,379
66,991
MINDBODY, Inc.(10)(23)(24)(27)
(29
Ministry Brands Holdings, LLC(10)(12)(27)
12/29/2028
706
693
689
Ministry Brands Holdings, LLC(10)(23)(24)(25)(27)
12/27/2023
Ministry Brands Holdings, LLC(10)(23)(24)(27)
12/27/2027
Proofpoint, Inc.(6)(10)(12)(27)
8/31/2029
19,600
19,507
19,484
QAD, Inc.(10)(12)(27)
11/5/2027
26,571
26,070
25,906
QAD, Inc.(10)(23)(24)(27)
(86
Tahoe Finco, LLC(10)(12)(27)(29)
9/29/2028
123,256
122,093
121,406
Tahoe Finco, LLC(10)(23)(24)(27)(29)
(85
(139
Thunder Purchaser, Inc. (dba Vector Solutions)(10)(12)(27)
6/30/2028
64,639
64,048
63,831
Thunder Purchaser, Inc. (dba Vector Solutions)(10)(23)(25)(27)
8/17/2023
Thunder Purchaser, Inc. (dba Vector Solutions)(10)(12)(23)(27)
6/30/2027
827
794
779
When I Work, Inc.(10)(12)(27)
11/2/2027
4,932
4,886
4,858
When I Work, Inc.(10)(23)(24)(27)
(14
1,424,274
1,406,091
1,409,394
24.0
Leisure and entertainment
Troon Golf, L.L.C.(10)(12)(27)
8/5/2027
282,365
281,079
280,952
4.8
Troon Golf, L.L.C.(10)(11)(23)(27)
8/5/2026
4,054
3,960
286,419
285,039
284,898
4.9
17
Manufacturing
Gloves Buyer, Inc. (dba Protective Industrial Products)(10)(11)(27)
29,250
28,601
28,811
Ideal Tridon Holdings, Inc.(10)(12)(27)
52,701
52,318
52,569
Ideal Tridon Holdings, Inc.(10)(23)(24)(27)
7/31/2023
MHE Intermediate Holdings, LLC (dba OnPoint Group)(10)(13)(27)
7/21/2027
159,919
158,474
157,120
MHE Intermediate Holdings, LLC (dba OnPoint Group)(10)(12)(23)(25)(27)
13,387
13,263
13,079
MHE Intermediate Holdings, LLC (dba OnPoint Group)(10)(11)(23)(27)
621
484
350
PHM Netherlands Midco B.V. (dba Loparex)(10)(11)(27)
7/31/2026
784
760
L + 8.75%
112,000
106,124
108,920
Safety Products/JHC Acquisition Corp. (dba Justrite Safety Group)(10)(11)(27)
6/28/2026
13,887
13,799
12,846
Sonny's Enterprises LLC(10)(11)(27)
231,670
228,196
Sonny's Enterprises LLC(10)(23)(24)(27)
8/5/2025
(241
614,219
601,745
606,111
10.3
Oil and gas
Black Mountain Sand Eagle Ford LLC(10)(12)(27)
8/17/2022
3,739
3,741
Project Power Buyer, LLC (dba PEC-Veriforce)(10)(12)(27)
5/14/2026
44,976
44,571
Project Power Buyer, LLC (dba PEC-Veriforce)(10)(23)(24)(27)
5/14/2025
Zenith Energy U.S. Logistics Holdings, LLC(10)(12)(27)
12/20/2024
64,476
63,783
113,191
112,074
18
Professional services
AmSpec Group, Inc. (fka AmSpec Services Inc.)(10)(12)(27)
109,980
109,103
109,155
AmSpec Group, Inc. (fka AmSpec Services Inc.)(10)(23)(24)(27)
L + 3.75%
(95
(108
Apex Group Treasury, LLC(10)(12)(27)(29)
7/27/2029
19,000
18,822
18,715
Apex Group Treasury, LLC(10)(23)(25)(27)(29)
Second lien senior secured delayed draw term loan
Aptive Environmental, LLC(22)(27)
12.00% (incl. 6.00% PIK)
1/23/2026
10,110
8,300
8,209
Gerson Lehrman Group, Inc.(10)(12)(27)
12/12/2024
136,609
135,942
136,199
Gerson Lehrman Group, Inc.(10)(23)(24)(27)
(97
(65
Guidehouse Inc.(10)(11)(27)
10/16/2028
4,638
4,594
4,568
Relativity ODA LLC(10)(11)(27)
78,435
77,464
77,257
Relativity ODA LLC(10)(23)(24)(27)
(110
358,772
353,939
353,820
6.0
Specialty retail
Galls, LLC(10)(12)(27)
L + 6.75% (incl. 0.50% PIK)
1/31/2025
104,614
103,912
97,291
Galls, LLC(10)(12)(23)(27)
1/31/2024
17,941
17,653
15,672
Milan Laser Holdings LLC(10)(12)(27)
4/27/2027
24,238
24,028
23,996
Milan Laser Holdings LLC(10)(23)(24)(27)
4/27/2026
(17
Notorious Topco, LLC (dba Beauty Industry Group)(10)(13)(27)
11/22/2027
110,184
108,610
108,256
Notorious Topco, LLC (dba Beauty Industry Group)(10)(23)(24)(25)(27)
11/23/2023
Notorious Topco, LLC (dba Beauty Industry Group)(10)(12)(23)(27)
5/24/2027
2,554
2,420
2,386
19
The Shade Store, LLC(10)(12)(27)
10/13/2027
9,068
8,962
8,909
The Shade Store, LLC(10)(13)(23)(27)
10/13/2026
455
444
439
269,054
265,918
256,848
4.4
Transportation
Lazer Spot G B Holdings, Inc.(10)(13)(27)
12/9/2025
143,698
142,050
Lazer Spot G B Holdings, Inc.(10)(17)(23)(27)
1,610
1,325
Lytx, Inc.(10)(11)(27)
2/28/2026
71,551
70,706
70,836
Motus Group, LLC(10)(12)(27)
12/10/2029
10,810
10,705
10,675
227,669
224,786
226,819
3.8
Total non-controlled/non-affiliated portfolio company debt investments
11,774,560
11,586,274
11,502,951
196.2
Equity Investments
Space Exploration Technologies Corp.(27)(28)(31)
Class A Common Stock
N/A
3,232
1,557
1,810
Class C Common Stock
936
446
524
2,003
2,334
Automotive
CD&R Value Building Partners I, L.P. (dba Belron)(27)(28)(29)(31)
LP Interest
33,000
33,108
Metis HoldCo, Inc. (dba Mavis Tire Express Services)(22)(27)(28)
Series A Convertible Preferred Stock
7.00% PIK
159,413
154,770
156,225
187,878
189,225
20
Dodge Contruction Network Holdings, L.P.(22)(28)
Series A Preferred Units
8.25% PIK
0
45
Dodge Contruction Network Holdings, LP(28)(31)
Class A-2 Common Units
2,181,629
1,859
1,855
1,904
1,900
Denali Holding, LP (dba Summit Companies)(27)(28)(31)
Class A Units
313,580
3,136
Hercules Buyer, LLC (dba The Vincit Group)(27)(28)(31)(33)
Common Units
2,190,000
2,192
5,328
Consumer Products
ASP Conair Holdings LP(27)(28)(31)
60,714
6,071
Blend Labs, Inc.(5)(27)(31)
Common Stock
72,317
412
Blend Labs, Inc.(27)(28)(31)
Warrants
179,529
232
1,975
644
H-Food Holdings, LLC(27)(28)(31)
LLC Interest
10,875
12,263
KPCI Holdings, L.P.(27)(28)(31)
32,285
34,745
Maia Aggregator, LP(27)(28)(31)
Class A-2 Units
168,539
169
21
Patriot Holdings SCSp (dba Corza Health, Inc.)(22)(27)(28)
8.00% PIK
7,787
Patriot Holdings SCSp (dba Corza Health, Inc.)(27)(28)(31)
Class B Units
1,109
Rhea Acquisition Holdings, LP(27)(28)(31)
Series A-2 Units
119,048
119
40,378
43,929
KOBHG Holdings, L.P. (dba OB Hospitalist)(27)(28)(31)
Class A Interests
6,670
Minerva Holdco, Inc.(22)(27)(28)
Series A Preferred Stock
10.75% PIK
7,094
6,956
6,953
Sunshine Software Holdings, Inc. (dba Cornerstone OnDemand, Inc.)(22)(27)(28)
10.50% PIK
39,364
38,437
37,789
Evolution Parent, LP (dba SIAA)(27)(28)(31)
42,838
4,284
GrowthCurve Capital Sunrise Co-Invest LP (dba Brightway)(27)(28)(31)
632
633
Norvax, LLC (dba GoHealth)(5)(27)(31)
1,021,885
5,232
1,206
PCF Holdco, LLC (dba PCF Insurance Services)(27)(28)(31)
11,028
27,968
34,284
Class A Warrants
3,744
9,496
11,650
47,613
52,056
22
Internet and software services
BCTO WIW Holdings, Inc. (dba When I Work)(27)(28)(31)
1,300
Brooklyn Lender Co-Invest 2, L.P. (dba Boomi)(27)(28)(31)
7,503,843
7,504
MessageBird Holding B.V.(27)(28)(29)(31)
Extended Series C Warrants
122,890
753
Thunder Topco L.P. (dba Vector Solutions)(27)(28)(31)
3,829,614
3,830
4,081
VEPF Torreys Aggregator, LLC (dba MINDBODY, Inc.)(22)(27)(28)
6.00% PIK
21,250
21,571
34,958
34,619
Gloves Holdings, LP (dba Protective Industrial Products)(27)(28)(31)
3,250
3,640
Windows Entities(27)(28)(29)(31)(32)
LLC Units
31,826
56,944
103,561
60,194
107,201
Evology LLC(27)(28)(31)
351
1,680
WMC Bidco, Inc. (dba West Monroe)(22)(27)(28)
Senior Preferred Stock
11.25% PIK
17,433
17,011
16,736
18,691
18,416
Total non-controlled/non-affiliated portfolio company equity investments
469,931
525,398
Total non-controlled/non-affiliated portfolio company investments
12,056,205
205.1
23
Controlled/affiliated portfolio company investments
Swipe Acquisition Corporation (dba PLI)(10)(11)(26)(27)
6/29/2024
50,045
49,383
49,419
Swipe Acquisition Corporation (dba PLI)(10)(11)(23)(25)(26)(27)
12/30/2022
14,902
14,638
Swipe Acquisition Corporation (dba PLI)(10)(23)(26)(27)
Letter of Credit
64,947
64,287
64,057
PS Operating Company LLC (fka QC Supply, LLC)(10)(12)(26)
12/31/2024
13,241
12,976
12,910
PS Operating Company LLC (fka QC Supply, LLC)(10)(12)(23)(26)
2,317
2,182
2,193
15,558
15,103
Total controlled/affiliated portfolio company debt investments
80,505
79,445
79,160
New PLI Holdings, LLC (dba PLI)(26)(27)(28)(31)
Class A Common Units
86,745
48,007
PS Op Holdings LLC (fka QC Supply, LLC)(26)(28)(31)
248,271
4,300
24
Wingspire Capital Holdings LLC(9)(23)(26)(28)(31)
272,288
308,418
5.3
Investment funds and vehicles
ORCC Senior Loan Fund LLC (fka Sebago Lake LLC)(7)(9)(26)(28)(29)(31)
294,339
288,089
Total controlled/affiliated portfolio company equity investments
618,934
648,814
11.1
Total controlled/affiliated portfolio company investments
698,379
12.3
Total Investments
12,754,584
217.4
Interest Rate Swaps as of March 31, 2022
Company Receives
Company Pays
Notional Amount
Hedged Instrument
Footnote Reference
Interest rate swap
5.25%
L + 2.937%
4/10/2024
400,000
2024 Notes
Note 6
2.63%
L + 1.655%
500,000
2027 Notes
Total
900,000
________________
25
($ in thousands)
Fair value as of December 31, 2021
Gross Additions(a)
Gross Reductions(b)
Change in Unrealized Gains (Losses)
Fair value as of March 31, 2022
Interest Income
Dividend Income
Controlled Affiliates
ORCC Senior Loan Fund LLC (fka Sebago Lake LLC)(c)
247,061
44,625
(3,597
6,138
PS Operating Company LLC (fka QC Supply, LLC)
19,495
343
(335
(100
19,403
285
Swipe Acquisition Corporation (dba PLI)
108,061
4,069
(66
112,064
1,488
159
Wingspire Capital Holdings LLC
242,163
74,250
(7,995
9,500
Total Controlled Affiliates
123,287
26
Portfolio Company
Acquisition Date
ASP Conair Holdings LP
May 17, 2021
BCTO WIW Holdings, Inc. (dba When I Work)
November 2, 2021
Blend Labs, Inc.
July 2, 2021
Brooklyn Lender Co-Invest 2, L.P. (dba Boomi)
October 1, 2021
CD&R Value Building Partners I, L.P. (dba Belron)
December 2, 2021
Denali Holding, LP (dba Summit Companies)
September 15, 2021
Dodge Contruction Network Holdings, L.P.
February 23, 2022
Dodge Contruction Network Holdings, LP
Evology LLC
January 24, 2022
Evolution Parent, LP (dba SIAA)
April 30, 2021
Gloves Holdings, LP (dba Protective Industrial Products)
December 29, 2020
GrowthCurve Capital Sunrise Co-Invest LP (dba Brightway)
December 16, 2021
Hercules Buyer, LLC (dba The Vincit Group)
December 15, 2020
H-Food Holdings, LLC
November 23, 2018
KOBHG Holdings, L.P. (dba OB Hospitalist)
September 27, 2021
KPCI Holdings, L.P.
November 30, 2020
Maia Aggregator, LP
February 1, 2022
MessageBird Holding B.V.
May 5, 2021
Metis HoldCo, Inc. (dba Mavis Tire Express Services)
May 4, 2021
Minerva Holdco, Inc.
February 15, 2022
New PLI Holdings, LLC (dba PLI)
December 23, 2020
ORCC Senior Loan Fund LLC (fka Sebago Lake LLC)*
June 20, 2017
Patriot Holdings SCSp (dba Corza Health, Inc.)
January 29, 2021
PCF Holdco, LLC (dba PCF Insurance Services)
November 1, 2021
October 29, 2021
PS Op Holdings LLC (fka QC Supply, LLC)
December 21, 2021
Rhea Acquisition Holdings, LP
February 18, 2022
Space Exploration Technologies Corp.
March 25, 2021
Sunshine Software Holdings, Inc. (dba Cornerstone OnDemand, Inc.)
October 14, 2021
Thunder Topco L.P. (dba Vector Solutions)
June 30, 2021
VEPF Torreys Aggregator, LLC (dba MINDBODY, Inc.)
October 15, 2021
Windows Entities
January 16, 2020
Wingspire Capital Holdings LLC**
September 24, 2019
WMC Bidco, Inc. (dba West Monroe)
November 9, 2021
* Refer to Note 4 “Investments – ORCC Senior Loan Fund LLC,” for further information.
** Refer to Note 3 “Agreements and Related Party Transactions – Controlled/Affiliated Portfolio Companies”.
27
As of December 31, 2021
Company(1)(4)(7)
Global Music Rights, LLC(9)(12)(25)
7,500
7,356
7,350
Global Music Rights, LLC(9)(21)(22)(25)
7,343
7,337
Aviation Solutions Midco, LLC (dba STS Aviation)(9)(12)(25)
214,643
212,314
202,838
Peraton Corp.(9)(10)(25)
47,500
46,840
47,263
Valence Surface Technologies LLC(9)(13)(25)
121,823
120,674
110,249
Valence Surface Technologies LLC(9)(12)(21)(25)
9,984
9,897
9,031
393,950
389,725
369,381
Associations, Inc.(9)(12)(25)
452,630
448,461
448,102
7.5
Associations, Inc.(9)(21)(22)(25)
(302
(329
Dodge Data & Analytics LLC(9)(12)(25)
4/14/2026
32,561
31,987
33,538
Dodge Data & Analytics LLC(9)(21)(22)(25)
(32
-
REALPAGE, INC.(9)(10)(25)
34,017
34,897
Reef Global Acquisition LLC (fka Cheese Acquisition, LLC)(9)(13)(25)
134,585
133,921
128,528
Imperial Parking Canada(9)(16)(25)
27,966
26,705
26,707
Reef Global Acquisition LLC (fka Cheese Acquisition, LLC)(9)(10)(21)(25)
10,987
10,982
10,251
693,229
685,739
681,694
11.5
28
Access CIG, LLC(9)(10)(25)
58,343
58,466
CIBT Global, Inc.(9)(12)(25)(28)
531
CIBT Global, Inc.(9)(14)(25)(28)
15,919
Denali BuyerCo, LLC (dba Summit Companies)(9)(12)(25)
51,393
50,665
50,879
Denali BuyerCo, LLC (dba Summit Companies)(9)(12)(21)(23)(25)
1,927
1,983
Denali BuyerCo, LLC (dba Summit Companies)(9)(21)(22)(25)
(34
(36
Diamondback Acquisition, Inc. (dba Sphera)(9)(10)(25)
5,407
5,302
5,298
Diamondback Acquisition, Inc. (dba Sphera)(9)(21)(22)(23)(25)
(11
Entertainment Benefits Group, LLC(9)(11)(25)
L + 8.25% (incl. 2.50% PIK)
83,600
82,795
79,838
Entertainment Benefits Group, LLC(9)(21)(22)(25)
(91
(504
Gainsight, Inc.(9)(12)(25)
19,231
19,254
Gainsight, Inc.(9)(21)(22)(25)
(55
(50
Hercules Borrower, LLC (dba The Vincit Group)(9)(12)(25)
178,693
176,397
Hercules Borrower, LLC (dba The Vincit Group)(9)(21)(22)(25)
(259
Hercules Buyer, LLC (dba The Vincit Group)(20)(25)(31)
KPSKY Acquisition, Inc. (dba BluSky)(9)(10)(25)
4,476
4,389
4,386
KPSKY Acquisition, Inc. (dba BluSky)(9)(15)(21)(23)(25)
256
473,804
431,357
420,029
7.1
Aruba Investments Holdings LLC (dba Angus Chemical Company)(9)(13)(25)
9,867
Douglas Products and Packaging Company LLC(9)(12)(25)
106,179
105,952
105,117
Douglas Products and Packaging Company LLC(9)(15)(21)(25)
5,147
5,056
Gaylord Chemical Company, L.L.C.(9)(12)(25)
152,645
151,277
151,882
Gaylord Chemical Company, L.L.C.(9)(21)(22)(25)
(112
Velocity HoldCo III Inc. (dba VelocityEHS)(9)(12)(25)
22,215
21,763
21,771
Velocity HoldCo III Inc. (dba VelocityEHS)(9)(21)(22)(25)
(26
296,186
293,856
293,733
ConAir Holdings LLC(9)(12)(25)
186,174
Feradyne Outdoors, LLC(9)(12)(25)
86,956
86,671
Lignetics Investment Corp.(9)(12)(25)
31,373
30,989
30,980
Lignetics Investment Corp.(9)(21)(22)(23)(25)
(48
(49
Lignetics Investment Corp.(9)(12)(21)(25)
727
725
WU Holdco, Inc. (dba Weiman Products, LLC)(9)(12)(25)
190,078
187,304
WU Holdco, Inc. (dba Weiman Products, LLC)(9)(21)(22)(23)(25)
5/21/2022
WU Holdco, Inc. (dba Weiman Products, LLC)(9)(12)(21)(25)
5,762
5,529
502,453
497,217
501,952
8.5
Ascend Buyer, LLC (dba PPC Flexible Packaging)(9)(12)(25)
5,554
5,500
5,498
Ascend Buyer, LLC (dba PPC Flexible Packaging)(9)(12)(21)(25)
88
Fortis Solutions Group, LLC(9)(12)(25)
3,324
3,259
3,257
Fortis Solutions Group, LLC(9)(21)(22)(23)(25)
Fortis Solutions Group, LLC(9)(21)(22)(25)
Pregis Topco LLC(9)(12)(25)
L + 6.95%
157,467
168,972
166,293
168,821
ABB/Con-cise Optical Group LLC(9)(10)
6/15/2023
74,831
74,484
74,456
6/17/2024
25,000
24,705
24,875
Aramsco, Inc.(9)(10)(25)
55,899
55,224
Aramsco, Inc.(9)(21)(22)(25)
Endries Acquisition, Inc.(9)(12)(25)
200,163
197,994
Individual Foodservice Holdings, LLC(9)(12)(25)
140,861
138,813
140,156
Individual Foodservice Holdings, LLC(9)(13)(21)(23)(25)
28,084
27,594
27,909
Individual Foodservice Holdings, LLC(9)(10)(21)(25)
959
690
851
Offen, Inc.(9)(10)(25)
19,582
19,450
545,379
538,861
543,891
9.2
31
Learning Care Group (US) No. 2 Inc.(9)(12)(25)
26,663
Pluralsight, LLC(9)(13)(25)
98,526
98,455
Pluralsight, LLC(9)(21)(22)(25)
(62
125,134
124,686
AxiomSL Group, Inc.(9)(12)(25)
202,775
200,614
201,254
AxiomSL Group, Inc.(9)(21)(22)(23)(25)
(39
AxiomSL Group, Inc.(9)(21)(22)(25)
(190
(137
Blackhawk Network Holdings, Inc.(9)(10)(25)
105,763
Blend Labs, Inc.(9)(12)(25)
65,988
66,150
Blend Labs, Inc.(9)(21)(22)(25)
(67
(150
Hg Genesis 8 Sumoco Limited(9)(19)(25)(27)
S + 7.50% PIK
47,207
46,102
Hg Saturn Luchaco Limited(9)(19)(25)(27)
133,862
135,510
132,523
Muine Gall, LLC(8)(9)(13)(25)(27)
240,229
4.0
NMI Acquisitionco, Inc. (dba Network Merchants)(9)(10)(25)
25,313
25,158
25,148
NMI Acquisitionco, Inc. (dba Network Merchants)(9)(10)(21)(23)(25)
4,978
4,877
4,945
NMI Acquisitionco, Inc. (dba Network Merchants)(9)(21)(22)(25)
827,931
823,927
823,225
13.8
32
Balrog Acquisition, Inc. (dba BakeMark)(9)(13)(25)
21,821
21,815
BP Veraison Buyer, LLC (dba Sun World)(9)(11)(25)
69,381
68,596
68,687
BP Veraison Buyer, LLC (dba Sun World)(9)(21)(22)(23)(25)
BP Veraison Buyer, LLC (dba Sun World)(9)(21)(22)(25)
(87
H-Food Holdings, LLC(9)(10)(25)
119,919
Hometown Food Company(9)(10)(25)
15,947
15,830
15,787
Hometown Food Company(9)(21)(22)(25)
Nellson Nutraceutical, LLC(9)(12)(25)
27,280
26,586
26,735
Nutraceutical International Corporation(9)(10)(25)
211,824
209,206
207,587
13,426
13,307
Recipe Acquisition Corp. (dba Roland Corporation)(9)(12)
31,881
30,080
Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)(9)(10)(25)
43,860
43,377
41,668
Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)(9)(15)(21)(22)(25)
P + 3.50%
300
236
Shearer's Foods, LLC(9)(10)(25)
118,973
Tall Tree Foods, Inc.(9)(10)
39,684
39,609
40,477
Ultimate Baked Goods Midco, LLC(9)(11)(25)
82,053
80,108
80,003
Ultimate Baked Goods Midco, LLC(9)(13)(21)(25)
5,222
4,989
4,973
804,929
794,400
792,640
13.5
33
Medline Intermediate, LP(9)(21)(22)(25)
(155
(162
Nelipak Holding Company(9)(12)(25)
24,760
24,419
24,450
Nelipak Holding Company(9)(12)(21)(25)
3,008
2,990
Nelipak Holding Company(9)(21)(22)(25)
E + 4.50%
(261
66,237
66,336
Nelipak Holding Company(9)(17)(25)
68,346
66,496
67,321
Packaging Coordinators Midco, Inc.(9)(12)(25)
192,494
192,123
Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.) (9)(12)(25)
136,736
134,627
135,027
Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.) (9)(21)(22)(25)
(229
(169
495,974
486,636
487,822
8.2
KS Management Services, L.L.C.(9)(13)(25)
122,500
121,420
National Dentex Labs LLC (fka Barracuda Dental LLC)(9)(12)(25)
70,723
69,731
70,192
National Dentex Labs LLC (fka Barracuda Dental LLC)(9)(12)(21)(23)(25)
3/31/2022
35,582
35,166
35,315
National Dentex Labs LLC (fka Barracuda Dental LLC)(9)(12)(21)(25)
3,044
2,853
2,974
OB Hospitalist Group, Inc.(9)(12)(25)
116,855
114,603
114,518
OB Hospitalist Group, Inc.(9)(10)(21)(25)
1,616
1,326
1,313
Ex Vivo Parent Inc. (dba OB Hospitalist)(9)(12)(25)
56,685
56,654
Phoenix Newco, Inc. (dba Parexel)(9)(10)(25)
188,123
188,100
Premier Imaging, LLC (dba LucidHealth)(9)(10)(25)
42,517
42,675
Quva Pharma, Inc.(9)(12)(25)
39,900
38,802
38,803
Quva Pharma, Inc.(9)(21)(22)(25)
(103
34
Refresh Parent Holdings, Inc.(9)(12)(25)
12/9/2026
88,973
87,832
88,306
Refresh Parent Holdings, Inc.(9)(12)(21)(23)(25)
6/9/2022
28,463
28,098
28,243
Refresh Parent Holdings, Inc.(9)(12)(21)(25)
3,879
3,746
3,799
TC Holdings, LLC (dba TrialCard)(9)(12)(25)
73,081
72,560
TC Holdings, LLC (dba TrialCard)(9)(21)(22)(25)
875,424
863,332
866,363
BCPE Osprey Buyer, Inc. (dba PartsSource)(9)(13)(25)
114,052
112,307
112,227
BCPE Osprey Buyer, Inc. (dba PartsSource)(9)(21)(22)(23)(25)
(269
(133
BCPE Osprey Buyer, Inc. (dba PartsSource)(9)(21)(22)(25)
Bracket Intermediate Holding Corp.(9)(12)(25)
516
25,896
26,119
GI Ranger Intermediate, LLC (dba Rectangle Health)(9)(12)(25)
4,017
3,937
GI Ranger Intermediate, LLC (dba Rectangle Health)(9)(21)(22)(23)(25)
10/30/2023
(6
GI Ranger Intermediate, LLC (dba Rectangle Health)(9)(21)(22)(25)
Inovalon Holdings, Inc.(9)(12)(25)
177,727
173,336
173,283
Inovalon Holdings, Inc.(9)(21)(22)(23)(25)
(234
84,661
82,975
82,967
Intelerad Medical Systems Incorporated (fka 11849573 Canada Inc.)(9)(12)(25)(27)
115,684
114,517
Intelerad Medical Systems Incorporated (fka 11849573 Canada Inc.)(9)(12)(21)(25)(27)
2,944
2,972
35
Interoperability Bidco, Inc.(9)(13)(25)
6/25/2026
75,270
74,616
Interoperability Bidco, Inc.(9)(21)(22)(25)
6/25/2024
601,160
590,285
592,111
HGH Purchaser, Inc. (dba Horizon Services)(9)(12)(25)
108,230
106,916
107,418
HGH Purchaser, Inc. (dba Horizon Services)(9)(11)(21)(23)(25)
33,699
33,376
33,429
HGH Purchaser, Inc. (dba Horizon Services)(9)(12)(21)(25)
2,689
2,596
2,616
Walker Edison Furniture Company LLC(9)(12)(25)
84,258
80,047
228,876
227,146
223,510
Cornerstone OnDemand, Inc.(9)(13)(25)
114,128
114,096
IG Investments Holdings, LLC (dba Insight Global)(9)(12)(25)
50,898
49,915
50,008
IG Investments Holdings, LLC (dba Insight Global)(9)(12)(21)(25)
1,987
1,911
1,917
168,718
165,954
166,021
FR Arsenal Holdings II Corp. (dba Applied-Cleveland Holdings, Inc.)(9)(13)
118,253
118,545
112,932
LineStar Integrity Services LLC(9)(13)(25)
82,714
82,413
72,788
200,967
200,958
185,720
3.1
36
Alera Group, Inc.(9)(10)(25)
43,036
42,097
42,068
Alera Group, Inc.(9)(10)(21)(23)(25)
11,825
11,560
11,554
Ardonagh Midco 3 PLC(9)(13)(25)(27)
First lien senior secured USD delayed draw term loan
26,269
Ardonagh Midco 3 PLC(9)(18)(25)(27)
E + 6.75%
10,388
10,013
Ardonagh Midco 3 PLC(9)(19)(25)(27)
S + 6.75%
117,374
106,703
Ardonagh Midco 3 PLC(9)(21)(23)(25)(27)
Ardonagh Midco 2 PLC(20)(25)(27)
12.75% PIK
10,527
10,451
11,620
Brightway Holdings, LLC(9)(12)(25)
26,509
26,507
Brightway Holdings, LLC(9)(21)(22)
Evolution BuyerCo, Inc. (dba SIAA)(9)(12)(25)
143,150
141,253
141,360
Evolution BuyerCo, Inc. (dba SIAA)(9)(21)(22)(25)
(135
(134
Integrity Marketing Acquisition, LLC(9)(13)(25)
218,876
216,446
Integrity Marketing Acquisition, LLC(9)(21)(22)(25)
Norvax, LLC (dba GoHealth)(9)(12)(25)
77,376
75,139
77,763
Norvax, LLC (dba GoHealth)(9)(10)(21)(25)
9,412
Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(9)(12)(25)
108,430
107,368
107,347
Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(9)(13)(21)(23)(25)
5/1/2023
19,143
18,953
18,952
Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)(9)(21)(22)(25)
(60
PCF Midco II, LLC (dba PCF Insurance Services)(20)(25)
118,693
107,530
TEMPO BUYER CORP. (dba Global Claims Services)(9)(12)(25)
1,089
1,068
1,067
TEMPO BUYER CORP. (dba Global Claims Services)(9)(21)(22)(23)(25)
TEMPO BUYER CORP. (dba Global Claims Services)(9)(21)(22)(25)
THG Acquisition, LLC (dba Hilb)(9)(12)(25)
75,513
74,093
74,569
THG Acquisition, LLC (dba Hilb)(9)(21)(22)(25)
(151
(107
USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(9)(12)(25)
39,087
38,349
38,306
USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)(9)(12)(21)(22)(25)
(8
KUSRP Intermediate, Inc. (dba U.S. Retirement and Benefits Partners)(9)(12)(25)
9.50% PIK
31,237
30,655
30,612
1,088,952
1,053,334
1,071,714
18.1
3ES Innovation Inc. (dba Aucerna)(9)(12)(25)(27)
61,259
60,718
60,340
3ES Innovation Inc. (dba Aucerna)(9)(21)(22)(25)(27)
Accela, Inc.(9)(10)
23,990
23,818
Accela, Inc.(9)(21)
Apptio, Inc.(9)(13)(25)
50,179
Apptio, Inc.(9)(12)(21)(25)
1,084
Bayshore Intermediate #2, L.P. (dba Boomi)(9)(12)(25)
82,962
81,145
81,095
Bayshore Intermediate #2, L.P. (dba Boomi)(9)(21)(22)(25)
(149
(156
BCPE Nucleon (DE) SPV, LP(9)(13)(25)
187,355
188,829
BCTO BSI Buyer, Inc. (dba Buildertrend)(9)(12)(25)
44,258
44,420
BCTO BSI Buyer, Inc. (dba Buildertrend)(9)(12)(21)(25)
2,973
2,991
Centrify Corporation(9)(12)(25)
66,903
65,383
65,564
Centrify Corporation(9)(21)(22)(25)
(136
38
CivicPlus, LLC(9)(12)(25)
14,101
14,094
CivicPlus, LLC(9)(21)(23)(25)
CivicPlus, LLC(9)(21)(22)(25)
Delta TopCo, Inc. (dba Infoblox, Inc.)(9)(12)(25)
14,934
EET Buyer, Inc. (dba e-Emphasys)(9)(12)(25)
4,501
4,500
EET Buyer, Inc. (dba e-Emphasys)(9)(21)(22)(25)
Forescout Technologies, Inc.(9)(12)(25)
54,811
54,119
Forescout Technologies, Inc.(9)(21)(22)(25)
(68
Genesis Acquisition Co. (dba Procare Software)(9)(12)(25)
18,129
17,961
17,630
2,614
2,564
GovBrands Intermediate, Inc.(9)(12)(25)
10,658
10,407
10,392
GovBrands Intermediate, Inc.(9)(10)(21)(23)(25)
2,404
2,333
2,330
GovBrands Intermediate, Inc.(9)(21)(22)(25)
Granicus, Inc.(9)(12)(25)
13,495
13,211
13,259
Granicus, Inc.(9)(12)(21)(23)(25)
1,535
1,498
1,501
Granicus, Inc.(9)(21)(22)(25)
H&F Opportunities LUX III S.À R.L (dba Checkmarx)(9)(13)(25)(27)
50,388
H&F Opportunities LUX III S.À R.L (dba Checkmarx)(9)(21)(22)(25)(27)
(348
Hyland Software, Inc.(9)(10)(25)
15,468
15,579
39
IQN Holding Corp. (dba Beeline)(9)(13)(25)
150,639
149,528
2.5
IQN Holding Corp. (dba Beeline)(9)(21)(22)(25)
(111
Litera Bidco LLC(9)(10)(25)
L + 5.87%
154,049
152,423
Litera Bidco LLC(9)(10)(21)(23)(25)
1,998
1,943
Litera Bidco LLC(9)(21)(22)(25)
(44
MessageBird BidCo B.V.(9)(12)(25)(27)
75,447
75,460
MINDBODY, Inc.(9)(13)(25)
67,127
66,713
MINDBODY, Inc.(9)(21)(22)(25)
Ministry Brands Holdings, LLC(9)(12)(25)
692
Ministry Brands Holdings, LLC(9)(21)(22)(23)(25)
Ministry Brands Holdings, LLC(9)(21)(22)(25)
Proofpoint, Inc.(9)(12)(25)
19,505
19,502
QAD, Inc.(9)(11)(25)
26,051
26,040
QAD, Inc.(9)(21)(22)(25)
(69
Tahoe Finco, LLC(9)(12)(25)(27)
123,255
122,057
121,777
Tahoe Finco, LLC(9)(21)(22)(25)(27)
(89
Thunder Purchaser, Inc. (dba Vector Solutions)(9)(12)(25)
64,802
64,189
64,357
Thunder Purchaser, Inc. (dba Vector Solutions)(9)(21)(22)(23)(25)
Thunder Purchaser, Inc. (dba Vector Solutions)(9)(21)(22)(25)
40
When I Work, Inc.(9)(12)(25)
4,884
When I Work, Inc.(9)(21)(22)(25)
1,419,759
1,400,666
1,408,337
23.7
Troon Golf, L.L.C.(9)(12)(25)
283,073
281,736
281,659
4.7
Troon Golf, L.L.C.(9)(21)(22)(25)
281,637
281,551
Gloves Buyer, Inc. (dba Protective Industrial Products)(9)(10)(25)
28,584
28,884
Ideal Tridon Holdings, Inc.(9)(12)(25)
53,209
52,784
Ideal Tridon Holdings, Inc.(9)(10)(21)(25)
1,800
1,782
MHE Intermediate Holdings, LLC (dba OnPoint Group)(9)(12)(25)
160,321
158,816
158,718
MHE Intermediate Holdings, LLC (dba OnPoint Group)(9)(12)(21)(23)(25)
13,420
13,291
13,286
MHE Intermediate Holdings, LLC (dba OnPoint Group)(9)(21)(22)(25)
(144
PHM Netherlands Midco B.V. (dba Loparex)(9)(12)(25)
786
738
782
PHM Netherlands Midco B.V. (dba Loparex)(9)(10)(25)
105,916
110,600
Safety Products/JHC Acquisition Corp. (dba Justrite Safety Group)(9)(10)(25)
13,923
13,829
12,948
Sonny's Enterprises LLC(9)(10)(25)
232,258
228,600
Sonny's Enterprises LLC(9)(10)(21)(25)
2,567
2,309
619,534
606,505
614,897
41
Black Mountain Sand Eagle Ford LLC(9)(12)(25)
4,808
Project Power Buyer, LLC (dba PEC-Veriforce)(9)(12)(25)
45,091
44,664
Project Power Buyer, LLC (dba PEC-Veriforce)(9)(21)(22)(25)
(22
Zenith Energy U.S. Logistics Holdings, LLC(9)(12)(25)
63,728
114,375
113,178
AmSpec Group, Inc. (fka AmSpec Services Inc.)(9)(12)(25)
110,265
109,296
109,713
AmSpec Group, Inc. (fka AmSpec Services Inc.)(9)(15)(21)(25)
P + 3.75%
3,796
3,691
3,724
Apex Group Treasury, LLC(9)(12)(25)(27)
18,817
18,810
Apex Group Treasury, LLC(9)(21)(23)(25)(27)
Gerson Lehrman Group, Inc.(9)(13)(25)
151,895
151,062
Gerson Lehrman Group, Inc.(9)(21)(22)(25)
Guidehouse Inc.(9)(10)(25)
4,649
4,604
4,603
Guidehouse Inc.(9)(21)(25)
Relativity ODA LLC(9)(10)(25)
77,263
76,255
76,297
Relativity ODA LLC(9)(21)(22)(25)
(98
366,868
363,522
364,946
6.2
Galls, LLC(9)(12)(25)
104,742
103,983
98,458
Galls, LLC(9)(12)(21)(25)
11,943
11,624
9,999
42
Milan Laser Holdings LLC(9)(12)(25)
24,299
24,080
24,117
Milan Laser Holdings LLC(9)(21)(22)(25)
Notorious Topco, LLC (dba Beauty Industry Group)(9)(12)(25)
110,460
108,827
108,803
Notorious Topco, LLC (dba Beauty Industry Group)(9)(21)(22)(23)(25)
(40
Notorious Topco, LLC (dba Beauty Industry Group)(9)(12)(21)(25)
1,596
1,455
1,453
The Shade Store, LLC(9)(12)(25)
9,091
8,981
8,977
The Shade Store, LLC(9)(21)(22)(25)
262,131
258,823
251,740
4.3
Lazer Spot G B Holdings, Inc.(9)(12)(25)
144,064
142,314
Lazer Spot G B Holdings, Inc.(9)(21)(22)(25)
(304
Lytx, Inc.(9)(10)(25)
71,733
70,839
71,195
Motus Group, LLC(9)(12)(25)
10,702
226,607
223,551
225,961
11,793,168
11,589,379
11,582,457
195.7
43
Space Exploration Technologies Corp.(25)(26)(29)
CD&R Value Building Partners I, L.P.(25)(26)(27)(29)
33,065
Metis HoldCo, Inc. (dba Mavis Tire Express Services)(20)(25)(26)
149,692
151,894
155,888
184,959
188,888
Skyline Holdco B, Inc. (dba Dodge Data & Analytics)(25)(26)(29)
3,272
3,612
Denali Holding LP (dba Summit Companies)(25)(26)(29)
313,850
Hercules Buyer, LLC (dba The Vincit Group)(25)(26)(29)(31)
ASP Conair Holdings LP(25)(26)(29)
Blend Labs, Inc.(25)(26)(29)
515
380
895
44
H-Food Holdings, LLC(25)(26)(29)
13,633
KPCI Holdings, LP(25)(26)(29)
30,425
37,331
Patriot Holdings SCSp (dba Corza Health, Inc.)(20)(25)(26)
7,104
7,633
Patriot Holdings SCSp (dba Corza Health, Inc.)(25)(26)(29)
97,833
39,936
46,073
KOBHG Holdings, L.P. (dba OB Hospitalist)(25)(26)(29)
Restore OMH Intermediate Holdings, Inc.(20)(25)(26)
13.00% PIK
25,566
25,506
32,236
32,176
Sunshine Software Holdings, Inc. (dba Cornerstone OnDemand, Inc.)(20)(25)(26)
38,500
38,401
38,380
Evolution Parent, LP (dba SIAA)(25)(26)(29)
GrowthCurve Capital Sunrise Co-Invest LP(25)(26)(29)
Norvax, LLC (dba GoHealth)(5)(25)(29)
3,873
PCF Holdco, LLC (dba PCF Insurance Services)(25)(26)(29)
46,253
BCTO WIW Holdings, Inc. (dba When I Work)(25)(26)(29)
Brooklyn Lender Co-Invest 2, L.P.(25)(26)(29)
MessageBird Holding B.V.(25)(26)(27)(29)
Thunder Topco L.P. (dba Vector Solutions)(25)(26)(29)
4,519
VEPF Torreys Aggregator, LLC (dba MINDBODY, Inc.)(20)(25)(26)
21,500
34,637
35,326
Gloves Holdings, LP (dba Protective Industrial Products)(25)(26)(29)
Windows Entities(25)(26)(27)(29)(30)
WMC Bidco, Inc.(20)(25)(26)
16,692
16,247
16,233
483,747
542,403
9.1
12,073,126
204.8
46
Swipe Acquisition Corporation (dba PLI)(9)(12)(24)(25)
50,044
49,316
Swipe Acquisition Corporation (dba PLI)(9)(12)(21)(23)(24)(25)
10,899
10,635
Swipe Acquisition Corporation (dba PLI)(9)(21)(24)(25)
60,943
60,218
60,054
PS Operating Company LLC (fka QC Supply, LLC)(9)(12)(24)
12,979
PS Operating Company LLC (fka QC Supply, LLC)(9)(12)(21)(24)
2,319
2,171
2,219
15,560
15,150
15,195
76,503
75,368
75,249
New PLI Holdings, LLC(24)(25)(26)(29)
PS Op Holdings LLC(24)(26)(29)
47
Wingspire Capital Holdings LLC(8)(21)(24)(26)
198,038
ORCC Senior Loan Fund LLC (fka Sebago Lake LLC)(6)(8)(24)(26)(27)
249,714
4.2
500,059
541,531
575,427
10.4
12,648,553
215.2
Interest Rate Swaps as of December 31, 2021
48
Fair value as of December 31, 2020
105,546
168,001
(26,125
(362
14,394
20,440
(994
49
99,297
8,495
269
5,497
643
67,538
277,500
(147,000
44,125
6,000
272,381
474,436
(174,119
44,081
5,531
20,394
February 24, 2021
Brooklyn Lender Co-Invest 2, L.P.
CD&R Value Building Partners I, L.P.
Denali Holding LP (dba Summit Companies)
GrowthCurve Capital Sunrise Co-Invest LP
KPCI Holdings, LP
New PLI Holdings, LLC
ORCC Senior Loan Fund LLC (fka Sebago Lake LLC)
PS Op Holdings LLC
Restore OMH Intermediate Holdings, Inc.
December 9, 2020
Skyline Holdco B, Inc. (dba Dodge Data & Analytics)
April 14, 2021
WMC Bidco, Inc.
50
Consolidated Statements of Changes in Net Assets
(Amounts in thousands)
Increase (Decrease) in Net Assets Resulting from Operations
Net investment income (loss)
Net change in unrealized gain (loss)
Net realized gain (loss)
Distributions
Distributions declared from earnings(1)
(122,320
(121,335
Net Decrease in Net Assets Resulting from Shareholders' Distributions
Capital Share Transactions
Reinvestment of distributions
11,951
19,144
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions
Total Increase (Decrease) in Net Assets
(66,383
55,654
Net Assets, at beginning of period
5,746,434
Net Assets, at end of period
5,802,088
Consolidated Statements of Cash Flows
Cash Flows from Operating Activities
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:
Purchases of investments, net
(675,361
(952,642
Proceeds from investments and investment repayments, net
615,851
637,837
Net amortization of discount on investments
(12,244
(12,343
Payment-in-kind interest and dividends
(29,570
(15,686
Net change in unrealized (gain) loss on investments
81,706
(57,944
Net change in unrealized (gains) losses on translation of assets and liabilities in foreign currencies
894
2,149
Net realized (gain) loss on investments
(4,702
(1,154
Net realized (gain) loss on foreign currency transactions relating to investments
(43
Amortization of debt issuance costs
6,125
4,946
Changes in operating assets and liabilities:
(Increase) decrease in receivable for investments sold
1,961
(Increase) decrease in interest receivable
(8,205
1,254
(Increase) decrease in receivable from a controlled affiliate
(11,950
(Increase) decrease in prepaid expenses and other assets
14,933
8,674
Increase (decrease) in management fee payable
6,171
Increase (decrease) in incentive fee payable
(3,288
2,706
Increase (decrease) in payables to affiliate
(2,959
(3,940
Increase (decrease) in payables for investments purchased
Increase (decrease) in fair value of interest rate swap attributed to unsecured notes
(51,758
(5,693
Increase (decrease) in accrued expenses and other liabilities
21,503
877
Net cash used in operating activities
(13,534
(225,045
Cash Flows from Financing Activities
Borrowings on debt
811,855
637,364
Payments on debt
(800,000
(380,000
Debt issuance costs
(2,584
(2,022
Cash distributions paid to shareholders
(110,117
(132,943
Net cash provided by financing activities
(100,846
122,399
Net increase (decrease) in cash and restricted cash, including foreign cash (restricted cash of $36,016 and $(1,142), respectively)
(114,380
(102,646
Cash and restricted cash, including foreign cash, beginning of period (restricted cash of $21,481 and $8,841, respectively)
447,145
357,911
Cash and restricted cash, including foreign cash, end of period (restricted cash of $57,497 and $7,699, respectively)
332,765
255,265
Consolidated Statements of Cash Flows – Continued
Supplemental and Non-Cash Information
Interest paid during the period
65,477
43,279
Distributions declared during the period
121,335
Reinvestment of distributions during the period
Distributions Payable
Receivable for investments sold
4,355
Taxes, including excise tax, paid during the period
53
Note 1. Organization
Owl Rock Capital Corporation (the “Company”) is a Maryland corporation formed on October 15, 2015. The Company was formed primarily to originate and make loans to, and make debt and equity investments in, U.S. middle market companies. The Company invests in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity. The Company’s investment objective is to generate current income and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.
The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes, the Company is treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Because the Company has elected to be regulated as a BDC and qualifies as a RIC under the Code, the Company’s portfolio is subject to diversification and other requirements.
On April 27, 2016, the Company formed a wholly-owned subsidiary, OR Lending LLC, a Delaware limited liability company, which holds a California finance lenders license. OR Lending LLC makes loans to borrowers headquartered in California. From time to time the Company may form wholly-owned subsidiaries to facilitate the normal course of business.
Certain of the Company’s consolidated subsidiaries are subject to U.S. federal and state corporate-level income taxes.
Owl Rock Capital Advisors LLC (the “Adviser”) serves as the Company’s investment adviser. The Adviser is registered with the Securities and Exchange Commission (“SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), an indirect subsidiary of Blue Owl Capital Inc. ("Blue Owl") (NYSE: OWL) and part of Owl Rock, a division of Blue Owl focused on direct lending. Blue Owl consists of three divisions: (1) Owl Rock, which focuses on direct lending, (2) Dyal, which focuses on providing capital to institutional alternative asset managers and (3) Oak Street, which focuses on real estate strategies. Subject to the overall supervision of the Company’s board of directors (the “Board”), the Adviser manages the day-to-day operations of, and provides investment advisory and management services to, the Company. As of April 1, 2022, the Owl Rock division of Blue Owl also includes a CLO business ("Wellfleet"), which was acquired from affiliates of Littlejohn & Co., LLC.
On July 22, 2019, the Company closed its initial public offering (“IPO”), issuing 10 million shares of its common stock at a public offering price of $15.30 per share, and on August 2, 2019, the underwriters exercised their option to purchase an additional 1.5 million shares of common stock at a purchase price of $15.30 per share. Net of underwriting fees and offering costs, the Company received total cash proceeds of $164.0 million. The Company’s common stock began trading on the New York Stock Exchange (“NYSE”) under the symbol “ORCC” on July 18, 2019 ("Listing Date").
Notes to Consolidated Financial Statements (Unaudited) - Continued
Note 2. Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company is an investment company and, therefore, applies the specialized accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. In the opinion of management, all adjustments considered necessary for the fair presentation of the consolidated financial statements have been included. The Company was initially capitalized on March 1, 2016 and commenced operations on March 3, 2016. The Company’s fiscal year ends on December 31.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual amounts could differ from those estimates and such differences could be material.
Cash
Cash consists of deposits held at a custodian bank and restricted cash pledged as collateral. Cash is carried at cost, which approximates fair value. The Company deposits its cash with highly-rated banking corporations and, at times, may exceed the insured limits under applicable law.
Investments at Fair Value
Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period. Investments for which market quotations are readily available are typically valued at the bid price of those market quotations. To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of the Company’s investments, are valued at fair value as determined in good faith by the Board, based on, among other things, the input of the Adviser, the Company’s audit committee and independent third-party valuation firm(s) engaged at the direction of the Board.
As part of the valuation process, the Board takes into account relevant factors in determining the fair value of the Company’s investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase or sale transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.
The Board undertakes a multi-step valuation process, which includes, among other procedures, the following:
The Company conducts this valuation process on a quarterly basis.
The Company applies Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and
55
required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Company considers its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:
Transfers between levels, if any, are recognized at the beginning of the period in which the transfer occurs. In addition to using the above inputs in investment valuations, the Company applies the valuation policy approved by its Board that is consistent with ASC 820. Consistent with the valuation policy, the Company evaluates the source of the inputs, including any markets in which its investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When an investment is valued based on prices provided by reputable dealers or pricing services (such as broker quotes), the Company subjects those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, the Company, or the independent valuation firm(s), reviews pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.
In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected herein.
Rule 2a-5 under the 1940 Act was recently adopted by the SEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act. The Company is evaluating the impact of adopting Rule 2a-5 on the consolidated financial statements and intends to comply with the new rule’s requirements on or before the compliance date in September 2022.
Financial and Derivative Instruments
Pursuant to ASC 815 Derivatives and Hedging, all derivative instruments entered into by the Company are designated as hedging instruments. For all derivative instruments designated as a hedge, the entire change in the fair value of the hedging instrument shall be recorded in the same line item of the Consolidated Statements of Operations as the hedged item. The Company’s derivative instruments are used to hedge the Company’s fixed rate debt, and therefore both the periodic payment and the change in fair value for the effective hedge, if applicable, will be recognized as components of interest expense in the Consolidated Statements of Operations. Fair value is estimated by discounting remaining payments using applicable current market rates, or market quotes, if available.
Foreign Currency
Foreign currency amounts are translated into U.S. dollars on the following basis:
The Company includes net changes in fair values on investments held resulting from foreign exchange rate fluctuations with the change in unrealized gains (losses) on translation of assets and liabilities in foreign currencies on the Consolidated Statements of Operations. The Company’s current approach to hedging the foreign currency exposure in its non-U.S. dollar denominated investments is primarily to borrow the par amount in local currency under the Company’s Revolving Credit Facility to fund these investments. Fluctuations arising from the translation of foreign currency borrowings are included with the net change in unrealized gains (losses) on translation of assets and liabilities in foreign currencies on the Consolidated Statements of Operations.
56
Investments denominated in foreign currencies and foreign currency transactions may involve certain considerations and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the U.S. dollar.
Interest and Dividend Income Recognition
Interest income is recorded on the accrual basis and includes amortization of discounts or premiums. Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK interest and dividends represent accrued interest or dividends that are added to the principal amount or liquidation amount of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or at the occurrence of a liquidation event. For the three months ended March 31, 2022, PIK interest and PIK dividend income earned was $27.5 million, representing 10.4% of investment income. For the three months ended March 31, 2021, PIK interest and PIK dividend income earned was $11.6 million, representing 5.2% of investment income. Discounts to par value on securities purchased are amortized into interest income over the contractual life of the respective security using the effective yield method. Premiums to par value on securities purchased are amortized to first call date. The amortized cost of investments represents the original cost adjusted for the amortization of discounts or premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.
Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. If at any point the Company believes PIK interest or dividends are not expected to be realized, the investment generating PIK interest or dividends will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest income. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.
Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly-traded portfolio companies.
From time to time, the Company may receive fees for services provided to portfolio companies. These fees are generally only available to the Company as a result of closing investments, are generally paid at the closing of the investments, are generally non-recurring and are recognized as revenue when earned upon closing of the investment. The services that the Adviser provides vary by investment, but can include closing, work, diligence or other similar fees and fees for providing managerial assistance to our portfolio companies.
Offering Expenses
Costs associated with the private placement offering of common shares of the Company were capitalized as deferred offering expenses and included in prepaid expenses and other assets in the Consolidated Statements of Assets and Liabilities and were amortized over a twelve-month period from incurrence. The Company records expenses related to public equity offerings as a reduction of capital upon completion of an offering of registered securities. The costs associated with renewals of the Company’s shelf registration statement will be expensed as incurred.
Debt Issuance Costs
The Company records origination and other expenses related to its debt obligations as deferred financing costs. These expenses are deferred and amortized utilizing the effective yield method, over the life of the related debt instrument. Debt issuance costs are presented on the Consolidated Statements of Assets and Liabilities as a direct deduction from the debt liability. In circumstances in which there is not an associated debt liability amount recorded in the consolidated financial statements when the debt issuance costs are incurred, such debt issuance costs will be reported on the Consolidated Statements of Assets and Liabilities as an asset until the debt liability is recorded.
Reimbursement of Transaction-Related Expenses
The Company may receive reimbursement for certain transaction-related expenses in pursuing investments. Transaction-related expenses, which are generally expected to be reimbursed by the Company’s portfolio companies, are typically deferred until the transaction is consummated and are recorded in prepaid expenses and other assets on the date incurred. The costs of successfully completed investments not otherwise reimbursed are borne by the Company and are included as a component of the investment’s cost basis.
57
Cash advances received in respect of transaction-related expenses are recorded as cash with an offset to accrued expenses and other liabilities. Accrued expenses and other liabilities are relieved as reimbursable expenses are incurred.
Income Taxes
The Company has elected to be treated as a BDC under the 1940 Act. The Company has elected to be treated as a RIC under the Code beginning with its taxable year ending December 31, 2016 and intends to continue to qualify as a RIC. So long as the Company maintains its tax treatment as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its shareholders as dividends. Instead, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s investors and will not be reflected in the consolidated financial statements of the Company.
To qualify as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its shareholders, for each taxable year, at least 90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income.
The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. There were no material uncertain tax positions through December 31, 2021. The 2018 through 2020 tax years remain subject to examination by the IRS, and generally years 2017 through 2020 remain subject to examination by state and local tax authorities.
Distributions to Common Shareholders
Distributions to common shareholders are recorded on the record date. The amount to be distributed is determined by the Board and is generally based upon the earnings estimated by the Adviser. Net realized long-term capital gains, if any, would generally be distributed at least annually, although the Company may decide to retain such capital gains for investment.
The Company has adopted a dividend reinvestment plan that provides for reinvestment of any cash distributions on behalf of shareholders, unless a shareholder elects to receive cash. As a result, if the Board authorizes and declares a cash distribution, then the shareholders who have not “opted out” of the dividend reinvestment plan will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. The Company expects to use newly issued shares to implement the dividend reinvestment plan.
Consolidation
As provided under Regulation S-X and ASC Topic 946 – Financial Services – Investment Companies, the Company will generally not consolidate its investment in a company other than a wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company’s wholly-owned subsidiaries that meet the aforementioned criteria in its consolidated financial statements. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company does not consolidate its equity interest in ORCC Senior Loan Fund LLC (fka Sebago Lake LLC) ("ORCC SLF") or Wingspire Capital Holdings LLC (“Wingspire”). For further description of the Company’s investment in ORCC SLF, see Note 4 “Investments”. For further description of the Company’s investment in Wingspire, see Note 3 “Agreements and Related Party Transactions – Controlled/Affiliated Portfolio Companies”.
New Accounting Pronouncements
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848),” which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference London Interbank
58
Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, “Reference Rate Reform (Topic 848),” which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. ASU 2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022. ASU No. 2021-01 provides increased clarity as the Company continues to evaluate the transition of reference rates and is currently evaluating the impact of adopting ASU No. 2020-04 and 2021-01 on the consolidated financial statements.
Other than the aforementioned guidance, the Company’s management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying consolidated financial statements.
Note 3. Agreements and Related Party Transactions
Administration Agreement
The Company has entered into an amended and restated Administration Agreement (the “Administration Agreement”) with the Adviser. The Administration Agreement became effective on May 18, 2021 upon consummation of the transaction (the "Transaction") pursuant to which Owl Rock Capital Group, the parent of the Adviser (and a subsidiary of Owl Rock Capital Partners LP), and Dyal Capital Partners merged to form Blue Owl. The terms of the Administration Agreement are identical to the terms of the prior administration agreement. Under the terms of the Administration Agreement, the Adviser performs, or oversees, the performance of, required administrative services, which includes providing office space, equipment and office services, maintaining financial records, preparing reports to shareholders and reports filed with the SEC, and managing the payment of expenses and the performance of administrative and professional services rendered by others.
The Administration Agreement also provides that the Company reimburses the Adviser for certain offering costs.
The Company reimburses the Adviser for services performed for it pursuant to the terms of the Administration Agreement. In addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the Administration Agreement to an affiliate or to a third party and the Company will reimburse the Adviser for any services performed for it by such affiliate or third party.
Unless earlier terminated as described below, the Administration Agreement will remain in effect for two years from the date it first became effective, and will remain in effect from year to year thereafter if approved annually by (1) the vote of the Board, or by the vote of a majority of its outstanding voting securities, and (2) the vote of a majority of the Company’s directors who are not “interested persons” of the Company, of the Adviser or of any of their respective affiliates, as defined in the 1940 Act. On May 3, 2022, the Board approved the continuation of the Administration Agreement. The Administration Agreement may be terminated at any time, without the payment of any penalty, on 60 days’ written notice, by the vote of a majority of the outstanding voting securities of the Company, or by the vote of the Board or by the Adviser.
No person who is an officer, director, or employee of the Adviser or its affiliates and who serves as a director of the Company receives any compensation from the Company for his or her services as a director. However, the Company reimburses the Adviser (or its affiliates) for an allocable portion of the compensation paid by the Adviser or its affiliates to the Company’s Chief Compliance Officer, Chief Financial Officer and their respective staffs (based on the percentage of time those individuals devote, on an estimated basis, to the business and affairs of the Company). Directors who are not affiliated with the Adviser receive compensation for their services and reimbursement of expenses incurred to attend meetings.
For the three months ended March 31, 2022, the Company incurred expenses of approximately $1.5 million for costs and expenses reimbursable to the Adviser under the terms of the Administration Agreement. For the three months ended March 31, 2021, the Company incurred expenses of approximately $1.2 million for costs and expenses reimbursable to the Adviser under the terms of the Administration Agreement.
Investment Advisory Agreement
The Company has entered into an amended and restated Investment Advisory Agreement (the “Investment Advisory Agreement”) with the Adviser. The Investment Advisory Agreement became effective on May 18, 2021 upon consummation of the Transaction. The terms of the Investment Advisory Agreement are identical to the terms of the prior investment advisory agreement.
Under the terms of the Investment Advisory Agreement, the Adviser is responsible for managing the Company’s business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring its investments, and monitoring its portfolio companies on an ongoing basis through a team of investment professionals.
The Adviser’s services under the Investment Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to the Company are not impaired.
Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect for two years from the date it first became effective, and will remain in effect from year-to-year thereafter if approved annually by a majority of the Board or by the
59
holders of a majority of our outstanding voting securities and, in each case, by a majority of independent directors. On May 3, 2022, the Board approved the continuation of the Investment Advisory Agreement.
The Investment Advisory Agreement will automatically terminate within the meaning of the 1940 Act and related SEC guidance and interpretations in the event of its assignment. In accordance with the 1940 Act, without payment of any penalty, the Company may terminate the Investment Advisory Agreement with the Adviser upon 60 days’ written notice. The decision to terminate the agreement may be made by a majority of the Board or the shareholders holding a majority (as defined under the 1940 Act) of the outstanding shares of the Company’s common stock or the Adviser. In addition, without payment of any penalty, the Adviser may generally terminate the Investment Advisory Agreement upon 60 days’ written notice and, in certain circumstances, the Adviser may only be able to terminate the Investment Advisory Agreement upon 120 days’ written notice.
From time to time, the Adviser may pay amounts owed by the Company to third-party providers of goods or services, including the Board, and the Company will subsequently reimburse the Adviser for such amounts paid on its behalf. Amounts payable to the Adviser are settled in the normal course of business without formal payment terms.
Under the terms of the Investment Advisory Agreement, the Company will pay the Adviser a base management fee and may also pay to it certain incentive fees. The cost of both the management fee and the incentive fee will ultimately be borne by the Company’s shareholders.
The management fee is currently payable quarterly in arrears. The management fee is payable at an annual rate of (x) 1.50% of the Company’s average gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) that is above an asset coverage ratio of 200% calculated in accordance with Sections 18 and 61 of the 1940 Act and (y) 1.00% of the Company’s average gross assets (excluding cash and cash equivalents, but including assets purchased with borrowed amounts) that is below an asset coverage ratio of 200% calculated in accordance with Section 18 and 61 of the 1940 Act, in each case, at the end of the two most recently completed calendar quarters. The management fee for any partial month or quarter, as the case may be, will be appropriately prorated and adjusted for any share issuances or repurchases during the relevant calendar months or quarters, as the case may be.
For the three months ended March 31, 2022, management fees were $47.4 million. For the three months ended March 31, 2021, management fees were $42.1 million.
The incentive fee consists of two components that are independent of each other, with the result that one component may be payable even if the other is not. A portion of the incentive fee is based on the Company’s pre-incentive fee net investment income and a portion is based on the Company’s capital gains. The portion of the incentive fee based on pre-incentive fee net investment income is determined and paid quarterly in arrears commencing with the first calendar quarter following the Listing Date, and equals 100% of the pre-incentive fee net investment income in excess of a 1.5% quarterly “hurdle rate,” until the Adviser has received 17.5% of the total pre-incentive fee net investment income for that calendar quarter and, for pre-incentive fee net investment income in excess of 1.82% quarterly, 17.5% of all remaining pre-incentive fee net investment income for that calendar quarter.
The second component of the incentive fee, the capital gains incentive fee, payable at the end of each calendar year in arrears, equals 17.5% of cumulative realized capital gains from the Listing Date to the end of each calendar year, less cumulative realized capital losses and unrealized capital depreciation from the Listing Date to the end of each calendar year, less the aggregate amount of any previously paid capital gains incentive fee for prior periods. In no event will the capital gains incentive fee payable pursuant to the Investment Advisory Agreement be in excess of the amount permitted by the Advisers Act of 1940, as amended, including Section 205 thereof.
While the Investment Advisory Agreement neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, as required by U.S. GAAP, the Company accrues capital gains incentive fees on unrealized gains. This accrual reflects the incentive fees that would be payable to the Adviser if the Company’s entire investment portfolio was liquidated at its fair value as of the balance sheet date even though the Adviser is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.
For the three months ended March 31, 2022, the Company incurred $26.0 million of performance based incentive fees based on net investment income. For the three months ended March 31, 2021, the Company incurred $21.8 million of performance based incentive fees based on net investment income.
For the three months ended March 31, 2022 and 2021, the Company did not accrue capital gains based incentive fees (net of waivers).
Affiliated Transactions
The Company may be prohibited under the 1940 Act from participating in certain transactions with its affiliates without prior approval of the directors who are not interested persons, and in some cases, the prior approval of the SEC. The Company, the Adviser and certain of their affiliates have been granted exemptive relief by the SEC for the Company to co-invest with other funds managed by
60
the Adviser or its affiliates in a manner consistent with the Company’s investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. Pursuant to such exemptive relief, the Company generally is permitted to co-invest with certain of its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Board make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to the Company and its shareholders and do not involve overreaching of the Company or its shareholders on the part of any person concerned, (2) the transaction is consistent with the interests of the Company’s shareholders and is consistent with its investment objective and strategies, (3) the investment by its affiliates would not disadvantage the Company, and the Company’s participation would not be on a basis different from or less advantageous than that on which its affiliates are investing and (4) the proposed investment by the Company would not benefit the Adviser or its affiliates or any affiliated person of any of them (other than the parties to the transaction), except to the extent permitted by the exemptive relief and applicable law, including the limitations set forth in Section 57(k) of the 1940 Act. The Adviser is affiliated with Owl Rock Technology Advisors LLC (“ORTA”), Owl Rock Technology Advisors II LLC ("ORTA II"), Owl Rock Capital Private Fund Advisors LLC (“ORPFA”) and Owl Rock Diversified Advisors LLC (“ORDA” together with ORTA, ORTA II, ORPFA and the Adviser, the "Owl Rock Advisers"), which are also investment advisers. The Owl Rock Advisers are indirect affiliates of Blue Owl and comprise part of "Owl Rock," a division of Blue Owl focused on direct lending. The Owl Rock Advisers’ allocation policy seeks to ensure equitable allocation of investment opportunities over time between the Company and other funds managed by the Adviser or its affiliates. As a result of exemptive relief, there could be significant overlap in the Company’s investment portfolio and the investment portfolio of other funds managed by the Adviser or its affiliates that could avail themselves of the exemptive relief and that have an investment objective similar to the Company's.
License Agreement
The Company has entered into a license agreement (the “License Agreement”), pursuant to which an affiliate of Blue Owl has granted the Company a non-exclusive license to use the name “Owl Rock.” Under the License Agreement, the Company has a right to use the Owl Rock name for so long as the Adviser or one of its affiliates remains the Company’s investment adviser. Other than with respect to this limited license, the Company will have no legal right to the “Owl Rock” name or logo.
Controlled/Affiliated Portfolio Companies
Under the 1940 Act, the Company is required to separately identify non-controlled investments where it owns 5% or more of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “affiliated” companies. In addition, under the 1940 Act, the Company is required to separately identify investments where it owns more than 25% of a portfolio company’s outstanding voting securities and/or has the power to exercise control over the management or policies of such portfolio company as investments in “controlled” companies. Under the 1940 Act, “non-affiliated investments” are defined as investments that are neither controlled investments nor affiliated investments. Detailed information with respect to the Company’s non-controlled, non-affiliated; non-controlled, affiliated; and controlled affiliated investments is contained in the accompanying consolidated financial statements, including the consolidated schedule of investments.
The Company has made investments in controlled/affiliated companies, including ORCC SLF and Wingspire. For further description of ORCC SLF, see “Note 4. Investments”. Wingspire conducts its business through an indirectly owned subsidiary, Wingspire Capital LLC. Wingspire is an independent diversified direct lender focused on providing asset-based commercial finance loans and related senior secured loans to U.S.-based middle market borrowers. Wingspire offers a wide variety of asset-based financing solutions to businesses in an array of industries, including revolving credit facilities, machinery and equipment term loans, real estate term loans, first-in/last-out tranches, cash flow term loans, and opportunistic / bridge financings. The addition of Wingspire to the portfolio allows ORCC to participate in an asset class that offers differentiated yield with full collateral packages and covenants. Wingspire is led by a seasoned team of commercial finance veterans. The Company committed $50 million to Wingspire on September 24, 2019, and subsequently increased its commitment to $100 million on March 25, 2020, to $150 million on July 31, 2020, to $200 million on March 8, 2021, to $250 million on August 19, 2021 and again to $350 million on February 28, 2022. The Company does not consolidate its equity interest in Wingspire.
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Note 4. Investments
The information in the tables below is presented on an aggregate portfolio basis, without regard to whether they are non-controlled non-affiliated, non-controlled affiliated or controlled affiliated investments.
Investments at fair value and amortized cost consisted of the following as of March 31, 2022 and December 31, 2021:
March 31, 2022
Amortized Cost
First-lien senior secured debt investments
9,495,521
9,435,684
9,548,096
9,539,774
Second-lien senior secured debt investments
1,897,642
1,880,232
1,919,453
1,921,447
Unsecured debt investments
272,556
266,195
197,198
196,485
Preferred equity investments
238,790
238,998
256,630
260,869
Common equity investments(1)
555,736
647,125
477,462
576,004
Investment funds and vehicles(2)
The industry composition of investments based on fair value as of March 31, 2022 and December 31, 2021 was as follows:
5.4
Financial services(1)
9.4
8.4
6.8
5.9
4.6
1.6
11.3
5.6
5.7
2.8
100.0
62
The geographic composition of investments based on fair value as of March 31, 2022 and December 31, 2021 was as follows:
United States:
Midwest
17.5
17.0
Northeast
19.7
South
36.9
38.2
West
18.9
18.6
International
7.0
6.5
ORCC Senior Loan Fund (fka Sebago Lake LLC)
ORCC Senior Loan Fund LLC (fka Sebago Lake LLC), a Delaware limited liability company, was formed as a joint venture between the Company and The Regents of the University of California (“Regents”) and commenced operations on June 20, 2017. ORCC SLF’s principal purpose is to make investments, primarily in senior secured loans that are made to middle-market companies or in broadly syndicated loans. Through June 30, 2021, both the Company and Regents (the “Initial Members”) had a 50% economic ownership in ORCC SLF. Each of the Initial Members initially agreed to contribute up to $100 million to ORCC SLF. On July 26, 2018, each of the Initial Members increased their contribution to ORCC SLF up to an aggregate of $125 million. Effective as of June 30, 2021, capital commitments to ORCC SLF were increased to an aggregate of $371.5 million. In connection with this change, the Company increased its economic ownership interest to 87.5% from 50.0% and Regents transferred its remaining economic interest of 12.5% to Nationwide Life Insurance Company (“Nationwide” and together with the Company, the “Members” and each a “Member”). ORCC SLF is managed by the Members, each of which have equal voting rights. Investment decisions must be approved by each of the Members. Except under certain circumstances, contributions to ORCC SLF cannot be redeemed.
The Company has determined that ORCC SLF is an investment company under ASC 946; however, in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a wholly owned investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Other than for purposes of the 1940 Act, the Company does not believe that it has control over this portfolio company. Accordingly, the Company does not consolidate its non-controlling interest in ORCC SLF.
As of March 31, 2022 and December 31, 2021, ORCC SLF had total investments in senior secured debt at fair value of $869.0 million and $790.3 million, respectively. The determination of fair value is in accordance with ASC 820; however, such fair value is not included in the Board’s valuation process described herein. The following table is a summary of ORCC SLF’s portfolio as well as a listing of the portfolio investments in ORCC SLF’s portfolio as of March 31, 2022 and December 31, 2021:
Total senior secured debt investments(1)
882,005
798,420
Weighted average spread over LIBOR(1)
4.09
4.14
Number of portfolio companies
Largest funded investment to a single borrower(1)
40,588
40,693
63
ORCC Senior Loan Fund's Portfolio as of March 31, 2022($ in thousands)(Unaudited)
Company(1)(2)(4)(5)
Amortized Cost(3)
Percentage of Members' Equity
Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(7)
12/21/2023
34,380
34,159
33,544
10.2
Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(7)(14)
12/21/2022
3,000
2,992
2,927
Bleriot US Bidco Inc.(7)(10)
10/30/2026
25,562
25,462
25,386
7.7
Dynasty Acquisition Co., Inc. (dba StandardAero Limited)(7)
L + 3.50%
4/6/2026
39,000
38,883
36,877
11.2
101,942
101,496
98,734
30.0
Holley, Inc.(7)(10)
11/17/2028
21,331
21,186
21,028
6.4
Holley, Inc.(7)(11)(13)
5/18/2022
1,052
1,028
PAI Holdco, Inc.(7)(10)
10/28/2027
9,962
9,826
9,851
32,360
32,064
31,907
9.7
Buildings and Real estate
Wrench Group, LLC.(7)
4/30/2026
32,258
32,123
32,016
Business Services
CoolSys, Inc.(7)
8/11/2028
14,037
13,908
13,827
CoolSys, Inc.(11)(12)(13)(14)
8/11/2023
ConnectWise, LLC(6)(10)
16,958
16,878
16,822
LABL, Inc.(6)
10/29/2028
7,980
7,868
7,856
64
Packers Holdings, LLC(7)(10)
3/9/2028
21,224
20,787
20,880
Vistage International, Inc.(7)
2/10/2025
29,842
29,735
29,841
90,041
89,154
89,190
27.1
Aruba Investments Holdings LLC (dba Angus Chemical Company)(7)
11/24/2027
995
Olaplex, Inc.(6)
2/23/2029
14,963
14,948
4.5
Containers and Packaging
BW Holding, Inc.(6)
12/14/2028
3,944
3,906
3,885
BW Holding, Inc.(6)(11)(13)(14)
12/17/2023
99
84
Ring Container Technologies Group, LLC (dba Ring Container Technologies)(7)(10)
8/12/2028
24,938
24,880
24,516
7.4
Valcour Packaging, LLC(8)
10/4/2028
7,000
6,977
6,947
35,981
35,857
35,432
10.7
Dealer Tire, LLC(6)(10)
12/12/2025
36,167
36,030
35,943
10.9
SRS Distribution, Inc.(8)(10)
6/2/2028
9,950
9,883
9,818
46,117
45,913
45,761
13.9
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)(7)
33,775
33,721
33,234
10.1
65
Balrog Acquisition, Inc. (dba Bakemark)(7)
9/5/2028
24,696
24,376
Dessert Holdings(7)
6/9/2028
22,104
21,959
21,994
6.7
Dessert Holdings(11)(13)
6/9/2023
Sovos Brands Intermediate, Inc.(8)(10)
6/8/2028
20,724
20,678
20,473
Naked Juice LLC (dba Tropicana)(7)(10)
1/24/2029
2,000
1,995
1,964
69,766
69,328
68,807
20.9
Cadence, Inc.(8)
5/21/2025
26,645
26,318
25,793
7.8
Cadence, Inc.(8)(11)(14)
5/21/2024
3,083
3,037
2,848
Confluent Medical Technologies, Inc.(7)
2/16/2029
5,000
4,975
Packaging Coordinators Midco, Inc.(7)(10)
11/30/2027
4,963
4,943
Medline Intermediate, LP(6)(10)
10/23/2028
24,886
24,738
64,703
64,179
63,297
19.2
Confluent Health, LLC(6)
20,575
20,476
20,369
Confluent Health, LLC(9)(11)(13)(14)
P+ 3.00%
11/30/2023
288
265
243
Phoenix Newco, Inc. (dba Parexel)(6)(10)
11/15/2028
27,500
27,369
27,275
Physician Partners, LLC(6)
12/23/2028
9,902
9,900
Unified Women's Healthcare, LP(6)(10)
12/20/2027
19,900
19,811
19,774
78,263
77,823
77,561
23.6
66
Athenahealth, Inc.(6)(10)
2/15/2029
17,101
17,018
16,893
Athenahealth, Inc.(10)(11)(12)(13)(14)
8/15/2023
Help/Systems Holdings, Inc.(6)(10)
11/19/2026
14,962
14,889
14,749
PointClickCare Technologies Inc.(8)
12/29/2027
9,850
42,063
41,758
41,471
12.6
CHA Holding, Inc.(7)
4/10/2025
40,382
39,945
12.1
AmeriLife Holdings LLC(6)(10)
3/18/2027
11,949
11,872
11,786
3.6
Integro Parent Inc.(7)
10/31/2022
29,615
29,593
28,923
Integro Parent Inc.(7)(11)(14)
4/30/2022
5,857
47,564
47,465
46,566
14.2
DCert Buyer, Inc. (dba DigiCert)(6)(10)
10/16/2026
22,162
22,082
21,974
Trader Interactive, LLC (fka Dominion Web Solutions, LLC)(6)
7/28/2028
23,659
23,554
23,422
45,821
45,636
45,396
Engineered Machinery Holdings (dba Duravant)(7)(10)
5/19/2028
34,913
34,752
34,378
67
Pro Mach Group, Inc.(7)(10)
8/31/2028
23,335
23,226
23,207
Pro Mach Group, Inc.(10)(11)(12)(13)(14)
Gloves Buyer, Inc. (dba Protective Industrial Products)(6)
7,445
7,406
65,729
65,423
64,990
19.6
Professional Services
Apex Group Treasury, LLC(7)
7/27/2028
19,852
19,701
Sovos Compliance, LLC(6)(10)
19,139
19,054
19,079
5.8
Sovos Compliance, LLC(10)(11)(12)(13)
8/12/2023
39,039
38,899
38,778
11.8
Total Debt Investments
877,179
869,023
263.8
68
ORCC Senior Loan Fund's Portfolio as of December 31, 2021($ in thousands)
Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(8)
34,470
34,219
33,961
12.0
Applied Composites Holdings, LLC (fka AC&A Enterprises Holdings, LLC)(8)(14)
2,989
2,956
Bleriot US Bidco Inc.(8)(10)
24,627
24,522
24,585
8.7
Dynasty Acquisition Co., Inc. (dba StandardAero Limited)(8)
39,100
38,976
36,796
13.0
101,197
100,706
98,298
34.7
Holley, Inc.(8)(10)
17,100
17,016
17,032
Holley, Inc.(8)(10)(11)(13)
855
844
PAI Holdco, Inc.(8)(10)(14)
4,987
22,942
22,846
22,851
Wrench Group, LLC.(8)
32,341
32,198
32,179
11.4
CoolSys, Inc.(8)
16,955
16,793
16,785
ConnectWise, LLC(8)
17,000
16,918
16,879
LABL, Inc.(8)
8,000
7,883
7,879
Packers Holdings, LLC(9)(10)
9,951
9,808
9,879
69
Vistage International, Inc.(8)
29,922
29,807
29,919
10.6
81,828
81,180
81,311
28.8
Aruba Investments Holdings LLC (dba Angus Chemical Company)(9)(14)
998
BW Holding, Inc.(8)(14)
3,954
3,914
BW Holding, Inc.(11)(12)(13)(14)
Ring Container Technologies Group, LLC (dba Ring Container Technologies)(6)(10)
24,940
25,025
Valcour Packaging, LLC(7)
6,976
6,965
35,954
35,825
35,899
12.8
36,260
36,114
36,206
SRS Distribution, Inc.(9)(10)
9,906
9,943
46,235
46,020
46,149
16.3
Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)(8)
33,862
33,805
33,003
11.7
Balrog Acquisition, Inc. (dba Bakemark)(9)
24,749
Dessert Holdings(8)
20,160
20,019
20,001
Dessert Holdings(11)(12)(13)
70
20,676
20,693
65,884
65,444
65,630
23.2
Cadence, Inc.(6)
26,714
26,363
26,195
9.3
Cadence, Inc.(6)(11)(14)
2,055
2,004
1,912
Medline Borrower, LP(6)(10)
24,882
24,990
Packaging Coordinators Midco, Inc.(8)(10)(14)
4,983
58,756
58,224
58,080
20.7
20,472
Confluent Health, LLC(11)(12)(13)(14)
Phoenix Newco, Inc. (dba Parexel)(6)(10)(14)
27,363
27,489
Unified Women's Healthcare, LP(6)
19,950
19,857
19,863
68,025
67,671
67,802
VVC Holdings Corp. (dba Athenahealth, Inc.)(8)(10)
2/11/2026
17,179
16,961
17,162
6.1
CHA Holding, Inc.(8)
40,471
40,171
AmeriLife Holdings LLC(6)(10)(14)
7,940
7,946
Integro Parent Inc.(9)
29,584
28,422
Integro Parent Inc.(8)(11)(14)
5,764
43,595
43,524
42,132
14.9
22,219
22,135
22,161
Trader Interactive, LLC (fka Dominion Web Solutions, LLC)(9)(14)
47,219
47,021
47,036
16.6
Engineered Machinery Holdings (dba Duravant)(8)(10)
35,000
34,834
34,864
Pro Mach Group, Inc.(8)(10)
22,207
22,100
22,262
7.9
Pro Mach Group, Inc.(10)(11)(13)(14)
Gloves Buyer, Inc. (dba Protective Industrial Products)(6)(14)
7,463
64,707
64,397
64,589
22.8
Apex Group Treasury, LLC(8)
17,055
17,087
Sovos Compliance, LLC(10)(11)(13)
37,005
36,911
36,987
13.1
794,202
790,277
279.9
72
Below is selected balance sheet information for ORCC SLF as of March 31, 2022 and December 31, 2021:
March 31, 2022(Unaudited)
Investments at fair value (amortized cost of $877,179 and $794,202, respectively)
26,928
60,723
2,490
1,319
436
111
898,877
852,430
Debt (net of unamortized debt issuance costs of $6,763 and $5,368, respectively)
513,120
469,514
Distributions payable
7,015
4,518
Payable for investments purchased
47,034
91,986
2,464
4,056
569,633
570,074
Members' Equity
329,244
282,356
Total Liabilities and Members' Equity
Below is selected statement of operations information for ORCC SLF for the three months ended March 31, 2022 and 2021:
10,014
7,366
212
148
10,226
7,514
2,730
2,503
278
189
Total Expenses
2,692
Net Investment Income Before Taxes
7,218
4,822
Taxes
102
207
Net Investment Income After Taxes
7,116
4,615
Net Realized and Change in Unrealized (Loss) Gain on Investments
Net change in unrealized (loss) gain on investments
(4,232
1,123
Net realized gain on investments
137
Total Net Realized and Change in Unrealized (Loss) Gain on Investments
(4,213
1,260
Net Increase in Members' Equity Resulting from Operations
2,903
5,875
73
Note 5. Fair Value of Investments
Investments
The following tables present the fair value hierarchy of investments as of March 31, 2022 and December 31, 2021:
Fair Value Hierarchy as of March 31, 2022
Level 1
Level 2
Level 3
9,435,175
99,694
1,780,538
645,507
Subtotal
100,203
12,366,413
12,468,234
Investments measured at NAV(2)
Total Investments at fair value
Fair Value Hierarchy as of December 31, 2021
571,616
12,490,191
12,494,579
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The following tables present changes in the fair value of investments for which Level 3 inputs were used to determine the fair value as of and for the three months ended March 31, 2022 and 2021:
As of and for the Three Months Ended March 31, 2022
Common equity investments
Fair value, beginning of period
1,298,502
107,017
69,391
6,997
181,098
1,663,005
Payment-in-kind
17,535
2,434
5,862
3,586
153
29,570
Proceeds from investments, net
(1,379,025
(131,036
(33,693
(102,978
(1,646,732
(51,505
(18,772
(5,649
(4,032
(4,382
(84,340
Net realized gains (losses)
225
4,482
4,707
10,183
106
789
12,187
Transfers into (out of) Level 3(1)
(514
(101,661
(102,175
Fair value, end of period
As of and for the Three Months Ended March 31, 2021
Preferred equity investments(2)
Common equity investments(2)
8,389,486
1,949,703
59,562
22,157
230,307
10,651,215
677,162
34,773
130,137
107,568
950,640
12,377
2,292
924
95
15,688
(388,111
(185,921
(574,032
41,585
5,641
(813
10,301
56,666
445
85
530
9,040
3,240
12,336
847
8,742,831
1,807,521
191,211
24,054
348,273
11,113,890
75
The following tables present information with respect to net change in unrealized gains on investments for which Level 3 inputs were used in determining the fair value that are still held by the Company for the three months ended March 31, 2022 and 2021:
Net change in unrealized gain (loss) for the Three Months Ended March 31, 2022 on Investments Held at March 31, 2022
Net change in unrealized gain (loss) for the Three Months Ended March 31, 2021 on Investments Held at March 31, 2021(1)
(50,741
45,046
(19,221
6,586
(3,773
(9,656
(89,040
61,072
76
The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of March 31, 2022 and December 31, 2021. The weighted average range of unobservable inputs is based on fair value of investments. The tables are not intended to be all-inclusive but instead capture the significant unobservable inputs relevant to the Company’s determination of fair value.
Valuation Technique
Unobservable Input
Range (Weighted Average)
Impact to Valuation from an Increase in Input
9,068,928
Yield Analysis
Market Yield
(6.2% - 21.3%) 10.1%
Decrease
366,247
Recent Transaction
Transaction Price
(81.2% - 100.0%) 98.7%
Increase
1,766,504
(9.7% - 16.1%) 11.6%
Collateral Analysis
Recovery Rate
(20.5% - 20.5%) 20.5%
(98.0% - 98.0%) 98.0%
Unsecured debt investments(1)
179,401
(8.1% - 10.5%) 9.9%
(99.3% - 99.3%) 99.3%
Market Approach
EBITDA Multiple
(14.8x - 14.8x) 14.8x
232,000
(10.8% - 13.0%) 12.0%
6,998
(98.0% - 100.0%) 98.0%
638,866
(1.1x - 23.8x) 6.0x
3,823
(100.0% - 100.0%) 100.0%
($561 - $823) $692
Gross Profit Multiple
(22.0x - 22.0x) 22.0x
77
8,670,821
(5.3% - 20.0%) 8.7%
868,953
(90.5% - 99.4%) 97.4%
Second-lien senior secured debt investments(1)
1,459,187
(7.8% - 15.0%) 9.6%
395,865
(98.0% - 99.0%) 98.6%
(25.0% - 25.0%) 25.0%
Unsecured debt investments(2)
179,730
(7.2% - 9.4%) 8.8%
181,394
(11.4% - 14.6%) 11.9%
75,863
(97.3% - 100.0%) 98.1%
(9.3x - 9.3x) 9.3x
488,629
(1.2x - 24.0x) 5.0x
79,900
($560.00-$560.00)$560.00
(27.0x - 27.0x) 27.0x
The Company typically determines the fair value of its performing Level 3 debt investments utilizing a yield analysis. In a yield analysis, a price is ascribed for each investment based upon an assessment of current and expected market yields for similar investments and risk profiles. Additional consideration is given to the expected life, portfolio company performance since close, and other terms and risks associated with an investment. Among other factors, a determinant of risk is the amount of leverage used by the portfolio company relative to its total enterprise value, and the rights and remedies of the Company’s investment within the portfolio company’s capital structure.
Significant unobservable quantitative inputs typically used in the fair value measurement of the Company’s Level 3 debt investments primarily include current market yields, including relevant market indices, but may also include quotes from brokers, dealers, and pricing services as indicated by comparable investments. For the Company’s Level 3 equity investments, a market approach, based on comparable publicly-traded company and comparable market transaction multiples of revenues, earnings before income taxes, depreciation and amortization (“EBITDA”) or some combination thereof and comparable market transactions typically would be used.
78
Debt Not Carried at Fair Value
Fair value is estimated by discounting remaining payments using applicable current market rates, which take into account changes in the Company’s marketplace credit ratings, or market quotes, if available. The following table presents the carrying and fair values of the Company’s debt obligations as of March 31, 2022 and December 31, 2021.
Net CarryingValue(1)
Net CarryingValue(2)
Revolving Credit Facility
428,848
879,943
SPV Asset Facility II
344,567
95,668
SPV Asset Facility III
394,083
188,979
SPV Asset Facility IV
152,218
152,727
CLO I
387,075
386,989
CLO II
256,958
256,942
CLO III
257,981
257,937
CLO IV
287,451
287,342
CLO V
194,175
194,167
CLO VI
258,131
258,093
393,983
409,000
406,481
427,000
2025 Notes
420,058
418,625
419,674
443,063
July 2025 Notes
494,050
485,000
493,637
518,750
2026 Notes
491,596
488,750
491,085
526,250
July 2026 Notes
979,631
942,500
978,537
1,017,500
459,241
450,000
497,537
2028 Notes
834,172
743,750
833,588
837,250
Total Debt
6,899,112
7,217,350
The following table presents fair value measurements of the Company’s debt obligations as of March 31, 2022 and December 31, 2021:
3,937,625
4,258,563
2,961,487
2,958,787
Financial Instruments Not Carried at Fair Value
As of March 31, 2022 and December 31, 2021, the carrying amounts of the Company’s assets and liabilities, other than investments at fair value and debt, approximate fair value due to their short maturities.
79
Note 6. Debt
In accordance with the 1940 Act, with certain limitations, the Company is allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 150%. As of March 31, 2022 and December 31, 2021, the Company’s asset coverage was 182% and 182%, respectively.
Debt obligations consisted of the following as of March 31, 2022 and December 31, 2021:
Aggregate Principal Committed
Outstanding Principal
Amount Available(1)
Net Carrying Value(2)
Revolving Credit Facility(3)(5)
1,655,000
440,422
1,160,987
350,000
395,000
105,000
250,000
155,000
95,000
390,000
260,000
292,500
196,000
2024 Notes(4)
425,000
1,000,000
2027 Notes(4)
850,000
8,588,500
7,173,922
1,360,987
80
892,313
707,370
100,000
310,000
7,170,813
1,362,370
For the three months ended March 31, 2022 and 2021, the components of interest expense were as follows:
52,631
43,138
Net change in unrealized gain (loss) on effective interest rate swaps and hedged items(1)
2,622
Total Interest Expense
Average interest rate
Average daily borrowings
7,152,041
5,330,364
81
Credit Facilities
Our credit facilities contain customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events, and customary events of default (with customary cure and notice provisions).
Description of Facilities
On February 1, 2017, the Company entered into a senior secured revolving credit agreement (and as amended by that certain First Amendment to Senior Secured Revolving Credit Agreement, dated as of July 17, 2017, the First Omnibus Amendment to Senior Secured Revolving Credit Agreement and Guarantee and Security Agreement, dated as of March 29, 2018, the Third Amendment to Senior Secured Revolving Credit Agreement, dated as of June 21, 2018, the Fourth Amendment to Senior Secured Revolving Credit Agreement, dated as of April 2, 2019, the Fifth Amendment to Senior Secured Revolving Credit Agreement, dated as of May 7, 2020, the Sixth Amendment to Senior Secured Revolving Credit Agreement, dated as of September 3, 2020 and the Seventh Amendment to Senior Secured Revolving Credit Agreement, dated as of September 22, 2021, the “Revolving Credit Facility”). The parties to the Revolving Credit Facility include the Company, as Borrower, the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”), the parties in their capacity as issuers of letters of credit (referred to as "Issuing Banks"), and Truist Securities, Inc. and ING Capital LLC as Joint Lead Arrangers and Joint Book Runners, Truist Bank as Administrative Agent and ING Capital LLC as Syndication Agent.
The Revolving Credit Facility is guaranteed by OR Lending LLC, a subsidiary of the Company, and will be guaranteed by certain domestic subsidiaries of the Company that are formed or acquired by the Company in the future (collectively, the “Guarantors”). Proceeds of the Revolving Credit Facility may be used for general corporate purposes, including the funding of portfolio investments.
The maximum principal amount of the Revolving Credit Facility is $1.655 billion, subject to availability under the borrowing base, which is based on the Company’s portfolio investments and other outstanding indebtedness. As amended on September 22, 2021, maximum capacity under the Revolving Credit Facility may be increased to $2.2 billion through the Company’s exercise of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility includes a $50 million limit for swingline loans and is secured by a perfected first-priority interest in substantially all of the portfolio investments held by the Company and each Guarantor, subject to certain exceptions.
The availability period under the Revolving Credit Facility will terminate on March 31, 2023, with respect to $60 million of commitments, September 3, 2024, with respect to $15 million of commitments (together, the "Non-Extending Commitments"), and on September 22, 2025, with respect to the remaining commitments (such remaining commitments, the "Extending Commitments") (together, the “Revolving Credit Facility Commitment Termination Date”). The Revolving Credit Facility will mature on April 2, 2024 with respect to $60 million of commitments, September 3, 2025, with respect to $15 million of commitments, and on September 22, 2026, with respect to the remaining commitments (together, the “Revolving Credit Facility Maturity Date”). During the period from the earliest Revolving Credit Facility Commitment Termination Date to the final Revolving Credit Facility Maturity Date, the Company will be obligated to make mandatory prepayments under the Revolving Credit Facility out of the proceeds of certain asset sales and other recovery events and equity and debt issuances.
The Company may borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn under the Revolving Credit Facility with respect to the Extending Commitments will bear interest at either (i) LIBOR plus margin of either 1.875% per annum or, if the borrowing base is greater than or equal to the product of 1.60 and the combined debt amount, 1.75% per annum, (ii) an alternative base rate plus margin of either 0.875% per annum or, if the borrowing base is greater than or equal to the product of 1.60 and the combined debt amount, 0.75% per annum, or (iii) for amounts drawn under the Revolving Credit Facility in Sterling or Swiss Francs, either the Sterling Overnight Interbank Average Rate ("SONIA") or the Swiss Average Rate Overnight ("SARON"), as applicable, plus margin of either 1.875% per annum or, if the borrowing base is greater than or equal to the product of 1.60 and the combined debt amount, 1.75% per annum plus an applicable credit adjustment spread. Amounts drawn under the Revolving Credit Facility with respect to the Non-Extended Commitments will bear interest at either (i) LIBOR plus 2.00% per annum, (ii) an alternative base rate plus 1.00% per annum or (iii) SONIA or SARON, as applicable, plus 2.00% per annum plus an applicable credit adjustment spread. Further, the Revolving Credit Facility builds in a hardwired approach for the replacement of LIBOR loans in U.S. dollars. For LIBOR loans in other permitted currencies, the Revolving Credit Facility includes customary fallback mechanics for the Company and the Administrative Agent to select an alternative benchmark, subject to the negative consent of required Lenders. The Company may elect the currency and rate at the time of drawdown, and loans may be converted from one rate to another at any time at the Company’s option, subject to certain conditions. The Company predominantly borrows utilizing LIBOR rate loans, generally electing one-month upon borrowing, to the extent applicable. The Company also pays a fee of 0.375% on undrawn amounts under the Revolving Credit Facility.
82
The Revolving Credit Facility includes customary covenants, including certain limitations on the incurrence by the Company of additional indebtedness and on the Company’s ability to make distributions to the Company’s shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events and certain financial covenants related to asset coverage and liquidity and other maintenance covenants, as well as customary events of default. The agreement requires a minimum asset coverage ratio of 100% with respect to the Company’s consolidated assets and its subsidiaries, measured at the last day of any fiscal quarter and a minimum asset coverage ratio of no less than 2.00 to 1.00 with respect to its consolidated assets and its subsidiary guarantors (including certain limitations on the contribution of equity in financing subsidiaries as specified therein) to its secured debt and its subsidiary guarantors (the “Obligor Asset Coverage Ratio”), measured at the last day of each fiscal quarter. The agreement also includes concentration limits in connection with the calculation of the borrowing base, based upon the Obligor Asset Coverage Ratio.
SPV Asset Facilities
SPV Asset Facility I
On December 21, 2017 (the “SPV Asset Facility I Closing Date”), ORCC Financing LLC (“ORCC Financing”), a Delaware limited liability company and subsidiary of the Company, entered into a Loan and Servicing Agreement (as amended, the “SPV Asset Facility I”), with ORCC Financing as Borrower, the Company as Transferor and Servicer, the lenders from time to time parties thereto (the “SPV Lenders”), Morgan Stanley Asset Funding Inc. as Administrative Agent, State Street Bank and Trust Company as Collateral Agent and Cortland Capital Market Services LLC as Collateral Custodian.
From time to time, the Company sold and contributed certain investments to ORCC Financing pursuant to a Sale and Contribution Agreement by and between the Company and ORCC Financing. No gain or loss was recognized as a result of the contribution. Proceeds from the SPV Asset Facility I were used to finance the origination and acquisition of eligible assets by ORCC Financing, including the purchase of such assets from the Company. The Company retained a residual interest in assets contributed to or acquired by ORCC Financing through its ownership of ORCC Financing. The maximum principal amount of the SPV Asset Facility I was $400 million; the availability of this amount was subject to a borrowing base test, which was based on the value of ORCC Financing’s assets from time to time, and satisfaction of certain conditions, including certain concentration limits.
The SPV Asset Facility I provided for the ability to draw and redraw amounts under the SPV Asset Facility I for a period of up to three years after the SPV Asset Facility I Closing Date (the “SPV Asset Facility I Commitment Termination Date”). The SPV Asset Facility I was terminated on June 2, 2020 (the “SPV Asset Facility I Termination Date”). Prior to the SPV Asset Facility I Termination Date, proceeds received by ORCC Financing from principal and interest, dividends, or fees on assets were required to be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to the Company, subject to certain conditions. On the SPV Asset Facility I Termination Date, ORCC Financing repaid in full all outstanding fees and expenses and all principal and interest on outstanding borrowings.
Amounts drawn bore interest at LIBOR plus a spread of 2.25% until the six-month anniversary of the SPV Asset Facility I Closing Date, increasing to 2.50% thereafter, until the SPV Asset Facility I Commitment Termination Date. The Company predominantly borrowed utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. After a ramp-up period, there was an unused fee of 0.75% per annum on the amount, if any, by which the undrawn amount under the SPV Asset Facility I exceeded 25% of the maximum principal amount of the SPV Asset Facility I. The SPV Asset Facility I contained customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility I was secured by a perfected first priority security interest in the assets of ORCC Financing and on any payments received by ORCC Financing in respect of those assets. Assets pledged to the SPV Lenders were not available to pay the debts of the Company.
On May 22, 2018, ORCC Financing II LLC (“ORCC Financing II”), a Delaware limited liability company and subsidiary of the Company, entered into a Credit Agreement (as amended, the “SPV Asset Facility II”), with ORCC Financing II, as Borrower, the lenders from time to time parties thereto (the “SPV Asset Facility II Lenders”), Natixis, New York Branch, as Administrative Agent, State Street Bank and Trust Company, as Collateral Agent, and Cortland Capital Market Services LLC as Document Custodian. The parties to the SPV Asset Facility II have entered into various amendments, including to admit new lenders, increase or decrease the maximum principal amount available under the facility, extend the availability period and maturity date, change the interest rate and make various other changes. The following describes the terms of SPV Asset Facility II amended through March 25, 2022 (the “SPV Asset Facility II Seventh Amendment Date”).
From time to time, the Company sells and contributes certain investments to ORCC Financing II pursuant to a sale and contribution agreement by and between the Company and ORCC Financing II. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility II will be used to finance the origination and acquisition of eligible assets by ORCC Financing II, including the purchase of such assets from the Company. The Company retains a residual interest in assets contributed to or acquired by
83
ORCC Financing II through the Company’s ownership of ORCC Financing II. The maximum principal amount of the SPV Asset Facility II as of the SPV Asset Facility II Seventh Amendment Date is $350 million (which includes terms loans of $100 million and revolving commitments of $250 million). The availability of this amount is subject to an overcollateralization ratio test, which is based on the value of ORCC Financing II’s assets from time to time, and satisfaction of certain conditions, including an interest coverage ratio test, certain concentration limits and collateral quality tests.
The SPV Asset Facility II provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility II through April 22, 2023, unless the revolving commitments are terminated or converted to term loans sooner as provided in the SPV Asset Facility II (the “SPV Asset Facility II Commitment Termination Date”). Unless otherwise terminated, the SPV Asset Facility II will mature on December 22, 2029 (the “SPV Asset Facility II Stated Maturity”). Prior to the SPV Asset Facility II Stated Maturity, proceeds received by ORCC Financing II from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to the Company, subject to certain conditions. On the SPV Asset Facility II Stated Maturity, ORCC Financing II must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to the Company.
With respect to revolving loans, amounts drawn bear interest at Term SOFR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and Term SOFR plus 0.40%) plus a spread that steps up from 2.30% to 2.55% during the period March 25, 2022 to the Reinvestment Period End Date. With respect to term loans, amounts drawn bear interest at Term SOFR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and Term SOFR plus 0.40%) plus a spread that steps up from 2.30% to 2.55% during the same period. From March 25, 2022 to the SPV Asset Facility II Commitment Termination Date, there is a commitment fee ranging from 0.50% to 0.625% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility II. The SPV Asset Facility II contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing II, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility II is secured by a perfected first priority security interest in the assets of ORCC Financing II and on any payments received by ORCC Financing II in respect of those assets. Assets pledged to the SPV Asset Facility II Lenders will not be available to pay the debts of the Company.
On December 14, 2018 (the “SPV Asset Facility III Closing Date”), ORCC Financing III LLC (“ORCC Financing III”), a Delaware limited liability company and newly formed subsidiary of the Company, entered into a Loan Financing and Servicing Agreement (the “SPV Asset Facility III”), with ORCC Financing III, as borrower, the Company, as equity holder and services provider, the lenders from time to time parties thereto (the “SPV Lenders III”), Deutsche Bank AG, New York Branch, as Facility Agent, State Street Bank and Trust Company, as Collateral Agent and Cortland Capital Market Services LLC, as Collateral Custodian. The parties to the SPV Asset Facility III have entered into various amendments, including those relating to the undrawn fee and make-whole fee and definition of “Change of Control.” The following describes the terms of SPV Asset Facility III as amended through December 13, 2021.
From time to time, the Company expects to sell and contribute certain loan assets to ORCC Financing III pursuant to a Sale and Contribution Agreement by and between the Company and ORCC Financing III. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility III will be used to finance the origination and acquisition of eligible assets by ORCC Financing III, including the purchase of such assets from the Company. The Company retains a residual interest in assets contributed to or acquired by ORCC Financing III through its ownership of ORCC Financing III. The maximum principal amount of the SPV Asset Facility III is $500 million; the availability of this amount is subject to a borrowing base test, which is based on the value of ORCC Financing III’s assets from time to time, and satisfaction of certain conditions, including interest spread and weighted average coupon tests, certain concentration limits and collateral quality tests.
The SPV Asset Facility III provides for the ability to borrow, reborrow, repay and prepay advances under the SPV Asset Facility III until June 14, 2022 unless such period is extended or accelerated under the terms of the SPV Asset Facility III (the “SPV Asset Facility III Revolving Period”). Unless otherwise extended, accelerated or terminated under the terms of the SPV Asset Facility III, the SPV Asset Facility III will mature on the date that is two years after the last day of the SPV Asset Facility III Revolving Period (the “SPV Asset Facility III Stated Maturity”). Prior to the SPV Asset Facility III Stated Maturity, proceeds received by ORCC Financing III from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding advances, and the excess may be returned to the Company, subject to certain conditions. On the SPV Asset Facility III Stated Maturity, ORCC Financing III must pay in full all outstanding fees and expenses and all principal and interest on outstanding advances, and the excess may be returned to the Company.
Amounts drawn bear interest at LIBOR (or, in the case of certain SPV Lenders III that are commercial paper conduits, the lower of (a) their cost of funds and (b) LIBOR, such LIBOR not to be lower than zero) plus a spread equal to 2.20% per annum, which spread will increase (a) on and after the end of the SPV Asset Facility III Revolving Period by 0.15% per annum if no event of default has occurred and (b) by 2.00% per annum upon the occurrence of an event of default (such spread, the “Applicable Margin”). LIBOR may be replaced as a base rate under certain circumstances. The Company predominantly borrows utilizing LIBOR rate loans, generally electing
one-month LIBOR upon borrowing. During the Revolving Period, ORCC Financing III will pay an undrawn fee ranging from 0.25% to 0.50% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility III. During the Revolving Period, if the undrawn commitments are in excess of a certain portion (initially 20% and increasing in stages to 75%) of the total commitments under the SPV Asset Facility III, ORCC Financing III will also pay a make-whole fee equal to the Applicable Margin multiplied by such excess undrawn commitment amount, reduced by the undrawn fee payable on such excess. The SPV Asset Facility III contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing III, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility III is secured by a perfected first priority security interest in the assets of ORCC Financing III and on any payments received by ORCC Financing III in respect of those assets. Assets pledged to the SPV Asset Facility III Lenders will not be available to pay the debts of the Company.
On August 2, 2019 (the “SPV Asset Facility IV Closing Date”), ORCC Financing IV LLC (“ORCC Financing IV”), a Delaware limited liability company and newly formed subsidiary of the Company entered into a Credit Agreement (the “SPV Asset Facility IV”), with ORCC Financing IV, as borrower, Société Générale, as initial Lender and as Administrative Agent, State Street Bank and Trust Company, as Collateral Agent, Collateral Administrator and Custodian, and Cortland Capital Market Services LLC as Document Custodian and the lenders from time to time party thereto pursuant to Assignment and Assumption Agreements.
On March 11, 2022, (the “SPV Asset Facility IV Amendment Date”), the parties to the SPV Asset Facility IV amended the SPV Asset Facility IV to extend the reinvestment period from April 1, 2022 until October 3, 2022 and the stated maturity from April 1, 2030 to October 1, 2030. The amendment also changed the applicable interest rate from LIBOR plus an applicable margin of 2.15% during the reinvestment period and LIBOR plus an applicable margin of 2.40% after the reinvestment period to term SOFR plus an applicable margin of 2.30% during the reinvestment period and term SOFR plus an applicable margin of 2.55% after the reinvestment period.
From time to time, the Company expects to sell and contribute certain investments to ORCC Financing IV pursuant to a Sale and Contribution Agreement by and between the Company and ORCC Financing IV. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility IV will be used to finance the origination and acquisition of eligible assets by ORCC Financing IV, including the purchase of such assets from the Company. The Company retains a residual interest in assets contributed to or acquired by ORCC Financing IV through its ownership of ORCC Financing IV. The maximum principal amount of the Credit Facility is $250 million; the availability of this amount is subject to an overcollateralization ratio test, which is based on the value of ORCC Financing IV’s assets from time to time, and satisfaction of certain conditions, including an interest coverage ratio test, certain concentration limits and collateral quality tests.
The SPV Asset Facility IV provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility IV until the last day of the reinvestment period unless the revolving commitments are terminated or converted to term loans sooner as provided in the SPV Asset Facility IV (the “Commitment Termination Date”). Unless otherwise terminated, the SPV Asset Facility IV will mature on October 1, 2030 (the “SPV Asset Facility IV Stated Maturity”). Prior to the SPV Asset Facility IV Stated Maturity, proceeds received by ORCC Financing IV from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to the Company, subject to certain conditions. On the SPV Asset Facility IV Stated Maturity, ORCC Financing IV must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to the Company.
From the Closing Date to the Commitment Termination Date, there is a commitment fee ranging from 0.50% to 0.75% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility IV. The SPV Asset Facility IV contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing IV, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility IV is secured by a perfected first priority security interest in the assets of ORCC Financing IV and on any payments received by ORCC Financing IV in respect of those assets. Assets pledged to the Lenders will not be available to pay the debts of the Company.
CLOs
On May 28, 2019 (the “CLO I Closing Date”), the Company completed a $596 million term debt securitization transaction (the “CLO I Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company. The secured notes and preferred shares issued in the CLO I Transaction and the secured loan borrowed in the CLO I Transaction were issued and incurred, as applicable, by the Company’s consolidated subsidiaries Owl Rock CLO I, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO I Issuer”), and Owl Rock CLO I, LLC, a Delaware limited liability company (the “CLO I Co-Issuer” and together with the CLO I Issuer, the “CLO I Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO I Issuer.
In the CLO I Transaction the CLO I Issuers (A) issued the following notes pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO I Indenture”), by and among the CLO I Issuers and State Street Bank and Trust Company: (i) $242 million of AAA(sf) Class A Notes, which bear interest at three-month LIBOR plus 1.80%, (ii) $30 million of AAA(sf) Class A-F Notes, which bear interest at a fixed rate of 4.165%, and (iii) $68 million of AA(sf) Class B Notes, which bear interest at three-month LIBOR plus 2.70% (together, the “CLO I Notes”) and (B) borrowed $50 million under floating rate loans (the “Class A Loans” and together with the CLO I Notes, the “CLO I Debt”), which bear interest at three-month LIBOR plus 1.80%, under a credit agreement (the “CLO I Credit Agreement”), dated as of the CLO I Closing Date, by and among the CLO I Issuers, as borrowers, various financial institutions, as lenders, and State Street Bank and Trust Company, as collateral trustee and loan agent. The Class A Loans may be exchanged by the lenders for Class A Notes at any time, subject to certain conditions under the CLO I Credit Agreement and the CLO I Indenture. The CLO I Debt is scheduled to mature on May 20, 2031. The CLO I Notes were privately placed by Natixis Securities Americas, LLC and SG Americas Securities, LLC.
Concurrently with the issuance of the CLO I Notes and the borrowing under the Class A Loans, the CLO I Issuer issued approximately $206.1 million of subordinated securities in the form of 206,106 preferred shares at an issue price of U.S.$1,000 per share (the “CLO I Preferred Shares”). The CLO I Preferred Shares were issued by the CLO I Issuer as part of its issued share capital and are not secured by the collateral securing the CLO I Debt. The Company owns all of the CLO I Preferred Shares, and as such, these securities are eliminated in consolidation. The Company acts as retention holder in connection with the CLO I Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO I Preferred Shares.
The Adviser serves as collateral manager for the CLO I Issuer under a collateral management agreement dated as of the CLO I Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO I Issuers’ equity or notes owned by the Company.
The CLO I Debt is secured by all of the assets of the CLO I Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO I Transaction, ORCC Financing II LLC and the Company sold and contributed approximately $575 million par amount of middle market loans to the CLO I Issuer on the CLO I Closing Date. Such loans constituted the initial portfolio assets securing the CLO I Debt. The Company and ORCC Financing II LLC each made customary representations, warranties, and covenants to the CLO I Issuer regarding such sales and contributions under a loan sale agreement.
Through May 20, 2023, a portion of the proceeds received by the CLO I Issuer from the loans securing the CLO I Debt may be used by the CLO I Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager for the CLO I Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.
The CLO I Debt is the secured obligation of the CLO I Issuers, and the CLO I Indenture and the CLO I Credit Agreement include customary covenants and events of default. Assets pledged to holders of the CLO I Debt and the other secured parties under the CLO I Indenture will not be available to pay the debts of the Company.
The CLO I Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The CLO I Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable.
On December 12, 2019 (the “CLO II Closing Date”), the Company completed a $396.6 million term debt securitization transaction (the “CLO II Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company. The secured notes and preferred shares issued in the CLO II Transaction were issued by the Company’s consolidated subsidiaries Owl Rock CLO II, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO II Issuer”), and Owl Rock CLO II, LLC, a Delaware limited liability company (the “CLO II Co-Issuer” and together with the CLO II Issuer, the “CLO II Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO II Issuer.
The CLO II Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the CLO II Closing Date (the “CLO II Indenture”), by and among the CLO II Issuers and State Street Bank and Trust Company: (i) $157 million of AAA(sf) Class A-1L Notes, which bear interest at three-month LIBOR plus 1.75%, (ii) $40 million of AAA(sf) Class A-1F Notes, which bear interest at a fixed rate of 3.44%, (iii) $20 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.20%, (iv) $40 million of AA(sf) Class B-L Notes, which bear interest at three-month LIBOR
plus 2.75% and (v) $3 million of AA(sf) Class B-F Notes, which bear interest at a fixed rate of 4.46% (together, the “CLO II Debt”). The CLO II Debt was scheduled to mature on January 20, 2031. The CLO II Debt was privately placed by Deutsche Bank Securities Inc.
The CLO II Debt was redeemed in the CLO II Refinancing, described below.
Concurrently with the issuance of the CLO II Debt, the CLO II Issuer issued approximately $136.6 million of subordinated securities in the form of 136,600 preferred shares at an issue price of U.S.$1,000 per share (the “CLO II Preferred Shares”). The CLO II Preferred Shares were issued by the CLO II Issuer as part of its issued share capital and are not secured by the collateral securing the CLO II Debt. The Company owns all of the CLO II Preferred Shares, and as such, these securities are eliminated in consolidation. The Company acted as retention holder in connection with the CLO II Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such was required to retain a portion of the CLO II Preferred Shares.
The Adviser serves as collateral manager for the CLO II Issuer under a collateral management agreement dated as of the CLO II Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO II Issuers’ equity or notes owned by the Company.
The CLO II Debt was secured by all of the assets of the CLO II Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO II Transaction, ORCC Financing III LLC and the Company sold and contributed approximately $400 million par amount of middle market loans to the CLO II Issuer on the CLO II Closing Date. Such loans constituted the initial portfolio assets securing the CLO II Debt. The Company and ORCC Financing III LLC each made customary representations, warranties, and covenants to the CLO II Issuer regarding such sales and contributions under a loan sale agreement.
Through January 20, 2022, a portion of the proceeds received by the CLO II Issuer from the loans securing the CLO II Debt could be used by the CLO II Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager for the CLO II Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.
The CLO II Debt was the secured obligation of the CLO II Issuers, and the CLO II Indenture includes customary covenants and events of default. Assets pledged to holders of the CLO II Debt and the other secured parties under the CLO II Indenture were not available to pay the debts of the Company.
The CLO II Debt was offered in reliance on Section 4(a)(2) of the Securities Act. The CLO II Debt has not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable.
CLO II Refinancing
On April 9, 2021 (the “CLO II Refinancing Date”), the Company completed a $398.1 million term debt securitization refinancing (the “CLO II Refinancing”), also known as a collateralized loan obligation refinancing, which is a form of secured financing incurred by the Company. The secured notes and preferred shares issued in the CLO II Refinancing were issued by the CLO II Issuer and the CLO II Co-Issuer and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO II Issuer.
The CLO II Refinancing was executed by the issuance of the following classes of notes pursuant to the CLO II Indenture, as supplemented by the supplemental indenture dated as of the CLO II Refinancing Date (the “CLO II Refinancing Indenture”), by and among the CLO II Issuers and State Street Bank and Trust Company: (i) $204 million of AAA(sf) Class A-LR Notes, which bear interest at three-month LIBOR plus 1.55%, (ii) $20 million of AAA(sf) Class A-FR Notes, which bear interest at a fixed rate of 2.48% and (iii) $36 million of AA(sf) Class B-R Notes, which bear interest at three-month LIBOR plus 1.90% (together, the “CLO II Refinancing Debt”). The CLO II Refinancing Debt is secured by the middle market loans, participation interests in middle market loans and other assets of the CLO II Issuer. The CLO II Refinancing Debt is scheduled to mature on April 20, 2033. The CLO II Refinancing Debt was privately placed by Deutsche Bank Securities Inc. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO II Refinancing Debt. The proceeds from the CLO II Refinancing were used to redeem in full the classes of notes issued on the CLO II Closing Date.
Concurrently with the issuance of the CLO II Refinancing Debt, the CLO II Issuer issued 1,500 additional shares of CLO II Preferred Shares at an issue price of U.S.$1,000 per share (the “CLO II Refinancing Preferred Shares”) resulting in a total outstanding number of CLO II Preferred Shares of 138,100 ($138.1 million total issue price). The CLO II Refinancing Preferred Shares were issued by the CLO II Issuer as part of its issued share capital and are not secured by the collateral securing the CLO II Refinancing Debt. The
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Company purchased all of the CLO II Refinancing Preferred Shares. The Company acts as retention holder in connection with the CLO II Refinancing for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO II Preferred Shares. The proceeds from the CLO II Refinancing Preferred Shares were used to pay certain expenses incurred in connection with the CLO II Refinancing.
Through April 20, 2025, a portion of the proceeds received by the CLO II Issuer from the loans securing the CLO II Refinancing Debt may be used by the CLO II Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO II Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.
The CLO II Refinancing Debt is the secured obligation of the CLO II Issuers, and the CLO II Refinancing Indenture includes customary covenants and events of default. The CLO II Refinancing Debt has not been registered under the Securities Act, or any state securities (e.g., “blue sky”) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration.
On March 26, 2020 (the “CLO III Closing Date”), the Company completed a $395.31 million term debt securitization transaction (the “CLO III Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company. The secured notes and preferred shares issued in the CLO III Transaction were issued by the Company’s consolidated subsidiaries Owl Rock CLO III, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO III Issuer”), and Owl Rock CLO III, LLC, a Delaware limited liability company (the “CLO III Co-Issuer” and together with the CLO III Issuer, the “CLO III Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO III Issuer.
The CLO III Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the CLO III Closing Date (the “CLO III Indenture”), by and among the CLO III Issuers and State Street Bank and Trust Company: (i) $166 million of AAA(sf) Class A-1L Notes, which bear interest at three-month LIBOR plus 1.80%, (ii) $40 million of AAA(sf) Class A-1F Notes, which bear interest at a fixed rate of 2.75%, (iii) $20 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.00%, and (iv) $34 million of AA(sf) Class B Notes, which bear interest at three-month LIBOR plus 2.45% (together, the “CLO III Debt”). The CLO III Debt is scheduled to mature on April 20, 2032. The CLO III Debt was privately placed by SG Americas Securities, LLC. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO III Debt.
Concurrently with the issuance of the CLO III Debt, the CLO III Issuer issued approximately $135.31 million of subordinated securities in the form of 135,310 preferred shares at an issue price of U.S.$1,000 per share (the “CLO III Preferred Shares”). The CLO III Preferred Shares were issued by the CLO III Issuer as part of its issued share capital and are not secured by the collateral securing the CLO III Debt. The Company owns all of the CLO III Preferred Shares, and as such, these securities are eliminated in consolidation. The Company acts as retention holder in connection with the CLO III Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO III Preferred Shares.
The Adviser serves as collateral manager for the CLO III Issuer under a collateral management agreement dated as of the CLO III Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO III Issuers’ equity or notes owned by the Company.
The CLO III Debt is secured by all of the assets of the CLO III Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO III Transaction, ORCC Financing IV LLC and the Company sold and contributed approximately $400 million par amount of middle market loans to the CLO III Issuer on the CLO III Closing Date. Such loans constituted the initial portfolio assets securing the CLO III Debt. The Company and ORCC Financing IV LLC each made customary representations, warranties, and covenants to the CLO III Issuer regarding such sales and contributions under a loan sale agreement.
Through April 20, 2024, a portion of the proceeds received by the CLO III Issuer from the loans securing the CLO III Debt may be used by the CLO III Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager for the CLO III Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.
The CLO III Debt is the secured obligation of the CLO III Issuers, and the CLO III Indenture includes customary covenants and events of default. Assets pledged to holders of the CLO III Debt and the other secured parties under the CLO III Indenture will not be available to pay the debts of the Company.
The CLO III Debt was offered in reliance on Section 4(a)(2) of the Securities Act. The CLO III Debt has not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable.
On May 28, 2020 (the “CLO IV Closing Date”), the Company completed a $438.9 million term debt securitization transaction (the “CLO IV Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company. The secured notes and preferred shares issued in the CLO IV Transaction were issued by the Company’s consolidated subsidiaries Owl Rock CLO IV, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO IV Issuer”), and Owl Rock CLO IV, LLC, a Delaware limited liability company (the “CLO IV Co-Issuer” and together with the CLO IV Issuer, the “CLO IV Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO IV Issuer.
The CLO IV Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO IV Indenture”), by and among the CLO IV Issuers and State Street Bank and Trust Company: (i) $236.5 million of AAA(sf) Class A-1 Notes, which bear interest at three-month LIBOR plus 2.62% and (ii) $15.5 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 3.40% (together, the “CLO IV Secured Notes”). The CLO IV Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the CLO IV Issuer. The CLO IV Secured Notes are scheduled to mature on May 20, 2029. The CLO IV Secured Notes were privately placed by Natixis Securities Americas LLC.
The CLO IV Secured Notes were redeemed in the CLO IV Refinancing, described below.
Concurrently with the issuance of the CLO IV Secured Notes, the CLO IV Issuer issued approximately $186.9 million of subordinated securities in the form of 186,900 preferred shares at an issue price of U.S.$1,000 per share (the “CLO IV Preferred Shares”). The CLO IV Preferred Shares were issued by the CLO IV Issuer as part of its issued share capital and are not secured by the collateral securing the CLO IV Secured Notes. The Company owns all of the outstanding CLO IV Preferred Shares, and as such, these securities are eliminated in consolidation. The Company acted as retention holder in connection with the CLO IV Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such was required to retain a portion of the CLO IV Preferred Shares while the CLO IV Secured Notes were outstanding.
As part of the CLO IV Transaction, the Company entered into a loan sale agreement with the CLO IV Issuer dated as of the CLO IV Closing Date, which provided for the sale and contribution of approximately $275.07 million par amount of middle market loans from the Company to the CLO IV Issuer on the CLO IV Closing Date and for future sales from the Company to the CLO IV Issuer on an ongoing basis. Such loans constituted part of the initial portfolio of assets securing the CLO IV Secured Notes. The remainder of the initial portfolio assets securing the CLO IV Secured Notes consisted of approximately $174.92 million par amount of middle market loans purchased by the CLO IV Issuer from ORCC Financing II LLC, a wholly-owned subsidiary of the Company, under an additional loan sale agreement executed on the CLO IV Closing Date between the Issuer and ORCC Financing II LLC. The Company and ORCC Financing II LLC each made customary representations, warranties, and covenants to the Issuer under the applicable loan sale agreement.
Through November 20, 2021, a portion of the proceeds received by the CLO IV Issuer from the loans securing the CLO IV Secured Notes could be used by the CLO IV Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO IV Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.
The CLO IV Secured Notes were the secured obligation of the CLO IV Issuers, and the CLO IV Indenture includes customary covenants and events of default. The CLO IV Secured Notes have not been registered under the Securities Act, or any state securities (e.g., “blue sky”) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration. Assets pledged to the holders of the CLO IV Secured Notes were not available to pay the debts of the Company.
CLO IV Refinancing
On July 9, 2021 (the “CLO IV Refinancing Date”), the Company completed a $440.5 million term debt securitization refinancing (the “CLO IV Refinancing”), also known as a collateralized loan obligation refinancing, which is a form of secured financing incurred by the Company. The secured notes and preferred shares issued in the CLO IV Refinancing were issued by the CLO IV Issuer and the CLO IV Co-Issuer and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO IV Issuer.
The CLO IV Refinancing was executed by the issuance of the following classes of notes pursuant to the CLO IV Indenture as supplemented by the supplemental indenture dated as of the CLO IV Refinancing Date (the “CLO IV Refinancing Indenture”), by and among the CLO IV Issuers and State Street Bank and Trust Company: (i) $252 million of AAA(sf) Class A-1-R Notes, which bear interest at three-month LIBOR plus 1.60% and (ii) $40.5 million of AA(sf) Class A-2-R Notes, which bear interest at a fixed rate of 1.90% (together, the “CLO IV Refinancing Secured Notes”). The CLO IV Refinancing Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the Issuer. The CLO IV Refinancing Secured Notes are scheduled to mature on August 20, 2033. The CLO IV Refinancing Secured Notes were privately placed by Natixis Securities Americas LLC. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO IV Refinancing Secured Notes. The proceeds from the CLO IV Refinancing were used to redeem in full the classes of notes issued on the CLO IV Closing Date, to redeem a portion of the preferred shares of the CLO IV Issuer as described below and to pay expenses incurred in connection with the CLO IV Refinancing.
Concurrently with the issuance of the CLO IV Refinancing Secured Notes, the CLO IV Issuer redeemed 38,900 preferred shares held by the Company at a total redemption price of $38.9 million ($1,000 per preferred share). The Company retains the 148,000 CLO IV Preferred Shares that remain outstanding and that the Company acquired on the CLO IV Closing Date. The CLO IV Preferred Shares were issued by the Issuer as part of its issued share capital and are not secured by the collateral securing the CLO IV Refinancing Secured Notes. The Company acts as retention holder in connection with the CLO IV Refinancing for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the Preferred Shares.
Through August 20, 2025, a portion of the proceeds received by the CLO IV Issuer from the loans securing the CLO IV Refinancing Secured Notes may be used by the Issuer to purchase additional middle market loans under the direction of the Advisor, in its capacity as collateral manager for the CLO IV Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.
The CLO IV Refinancing Secured Notes are the secured obligation of the CLO IV Issuers, and the CLO IV Refinancing Indenture includes customary covenants and events of default. The CLO IV Refinancing Secured Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities (e.g., “blue sky”) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration.
The Adviser serves as collateral manager for the CLO IV Issuer under a collateral management agreement dated as of the CLO IV Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO IV Issuers’ equity or notes owned by the Company.
On November 20, 2020 (the “CLO V Closing Date”), the Company completed a $345.45 million term debt securitization transaction (the “CLO V Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company. The secured notes and preferred shares issued in the CLO V Transaction were issued by the Company’s consolidated subsidiaries Owl Rock CLO V, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO V Issuer”), and Owl Rock CLO V, LLC, a Delaware limited liability company (the “CLO V Co-Issuer” and together with the CLO V Issuer, the “CLO V Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO V Issuer.
The CLO V Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO V Indenture”), by and among the CLO V Issuers and State Street Bank and Trust Company: (i) $182 million of AAA(sf)/AAAsf Class A-1 Notes, which bear interest at three-month LIBOR plus 1.85% and (ii) $14 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.20% (together, the “CLO V Secured Notes”). The CLO V Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the CLO V Issuer. The CLO V Secured Notes are scheduled to mature on November 20, 2029. The CLO V Secured Notes
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were privately placed by Natixis Securities Americas LLC. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO V Secured Notes.
Concurrently with the issuance of the CLO V Secured Notes, the CLO V Issuer issued approximately $149.45 million of subordinated securities in the form of 149,450 preferred shares at an issue price of U.S.$1,000 per share (the “CLO V Preferred Shares”). The CLO V Preferred Shares were issued by the CLO V Issuer as part of its issued share capital and are not secured by the collateral securing the CLO V Secured Notes. The Company purchased all of the CLO V Preferred Shares, and as such, these securities are eliminated in consolidation. The Company acts as retention holder in connection with the CLO V Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO V Preferred Shares.
As part of the CLO V Transaction, the Company entered into a loan sale agreement with the CLO V Issuer dated as of the CLO V Closing Date, which provided for the sale and contribution of approximately $201.75 million par amount of middle market loans from the Company to the CLO V Issuer on the CLO V Closing Date and for future sales from the Company to the CLO V Issuer on an ongoing basis. Such loans constituted part of the initial portfolio of assets securing the CLO V Secured Notes. The remainder of the initial portfolio assets securing the CLO V Secured Notes consisted of approximately $84.74 million par amount of middle market loans purchased by the CLO V Issuer from ORCC Financing II LLC, a wholly-owned subsidiary of the Company, under an additional loan sale agreement executed on the CLO V Closing Date between the Issuer and ORCC Financing II LLC. The Company and ORCC Financing II LLC each made customary representations, warranties, and covenants to the Issuer under the applicable loan sale agreement.
Through July 20, 2022, a portion of the proceeds received by the CLO V Issuer from the loans securing the CLO V Secured Notes may be used by the CLO V Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO V Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.
The Secured Notes are the secured obligation of the CLO V Issuers, and the CLO V Indenture includes customary covenants and events of default. The CLO V Secured Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities (e.g., “blue sky”) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration.
The Adviser will serve as collateral manager for the CLO V Issuer under a collateral management agreement dated as of the CLO V Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO V Issuers’ equity or notes owned by the Company.
On May 5, 2021 (the “CLO VI Closing Date”), the Company completed a $397.78 million term debt securitization transaction (the “CLO VI Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by the Company. The secured notes and preferred shares issued in the CLO VI Transaction were issued by the Company’s consolidated subsidiaries Owl Rock CLO VI, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO VI Issuer”), and Owl Rock CLO VI, LLC, a Delaware limited liability company (the “CLO VI Co-Issuer” and together with the CLO VI Issuer, the “CLO VI Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO VI Issuer.
The CLO VI Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO VI Indenture”), by and among the CLO VI Issuers and State Street Bank and Trust Company: (i) $ 224 million of AAA(sf) Class A Notes, which bear interest at three-month LIBOR plus 1.45%, (ii) $26 million of AA(sf) Class B-1 Notes, which bear interest at three-month LIBOR plus 1.75% and (iii) $10 million of AA(sf) Class B-F Notes, which bear interest at a fixed rate of 2.83% (together, the “CLO VI Secured Notes”). The CLO VI Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the CLO VI Issuer. The CLO VI Secured Notes are scheduled to mature on June 21, 2032. The CLO VI Secured Notes are privately placed by SG Americas Securities, LLC. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO VI Secured Notes.
Concurrently with the issuance of the CLO VI Secured Notes, the CLO VI Issuer issued approximately $137.78 million of subordinated securities in the form of 137,775 preferred shares at an issue price of U.S.$1,000 per share (the “CLO VI Preferred Shares”). The CLO VI Preferred Shares were issued by the CLO VI Issuer as part of its issued share capital and are not secured by the collateral securing the CLO VI Secured Notes. The Company purchased all of the CLO VI Preferred Shares, and as such, these securities are eliminated in consolidation. The Company acts as retention holder in connection with the CLO VI Transaction for the purposes of
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satisfying certain U.S., United Kingdom and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO VI Preferred Shares.
As part of the CLO VI Transaction, the Company entered into a loan sale agreement with the CLO VI Issuer dated as of the CLO VI Closing Date, which provides for the sale and contribution of approximately $205.6 million par amount of middle market loans from the Company to the CLO VI Issuer on the CLO VI Closing Date and for future sales from the Company to the CLO VI Issuer on an ongoing basis. Such loans constitute part of the initial portfolio of assets securing the CLO VI Secured Notes. The remainder of the initial portfolio assets securing the CLO VI Secured Notes consists of approximately $164.7 million par amount of middle market loans purchased by the CLO VI Issuer from ORCC Financing IV LLC, a wholly-owned subsidiary of the Company, under an additional loan sale agreement executed on the CLO VI Closing Date between the Issuer and ORCC Financing IV LLC. The Company and ORCC Financing IV LLC each made customary representations, warranties, and covenants to the Issuer under the applicable loan sale agreement.
Through June 20, 2024, a portion of the proceeds received by the CLO VI Issuer from the loans securing the CLO VI Secured Notes may be used by the CLO VI Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO VI Issuer and in accordance with the Company’s investing strategy and ability to originate eligible middle market loans.
The Secured Notes are the secured obligation of the CLO VI Issuers, and the CLO VI Indenture includes customary covenants and events of default. The CLO VI Secured Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities (e.g., “blue sky”) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration.
The Adviser serves as collateral manager for the CLO VI Issuer under a collateral management agreement dated as of the CLO VI Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO VI Issuers’ equity or notes owned by the Company.
Unsecured Notes
2023 Notes
On December 21, 2017, the Company entered into a Note Purchase Agreement governing the issuance of $150 million in aggregate principal amount of unsecured notes (the “2023 Notes”) to institutional investors in a private placement. The issuance of $138.5 million of the 2023 Notes occurred on December 21, 2017, and $11.5 million of the 2023 Notes were issued in January 2018. The 2023 Notes had a fixed interest rate of 4.75% and were due on June 21, 2023. Interest on the 2023 Notes was due and ranked semiannually. This interest rate was subject to increase (up to a maximum interest rate of 5.50%) in the event that, subject to certain exceptions, the 2023 Notes ceased to have an investment grade rating. The Company was obligated to offer to repay the 2023 Notes at par if certain change in control events occur. The 2023 Notes were general unsecured obligations of the Company and ranked pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by the Company.
The Note Purchase Agreement for the 2023 Notes contained customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a BDC within the meaning of the 1940 Act and a RIC under the Code, minimum shareholders equity, minimum asset coverage ratio and prohibitions on certain fundamental changes at the Company or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of the Company or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy.
The 2023 Notes were offered in reliance on Section 4(a)(2) of the Securities Act.
In connection with the offering of the 2023 Notes, on December 21, 2017 the Company entered into a centrally cleared interest rate swap. The notional amount of the interest rate swap was $150 million. The Company received fixed rate interest semi-annually at 4.75% and paid variable rate interest monthly based on 1-month LIBOR plus 2.545%. The interest rate swap matured on December 21, 2021, and therefore, for the three months ended March 31, 2022, the Company did not make any periodic payments. For the three months ended March 31, 2021, the Company made periodic payments of $1.0 million. The interest expense related to the 2023 Notes is equally offset by the proceeds received from the interest rate swap. The swap adjusted interest expense is included as a component of interest expense on the Company’s Consolidated Statements of Operations. Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on the Company’s Consolidated Statements of Assets and Liabilities. The change in fair value of the interest rate swap is offset by the change in fair value of the 2023 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations.
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On November 23, 2021, we caused notice to be issued to the holders of the 2023 Notes regarding our exercise of the option to redeem in full all $150 million in aggregate principal amount of the 2023 Notes at 100% of their principal amount, plus the accrued and unpaid interest thereon through, but excluding, the redemption date, December 23, 2021. On December 23, 2021, we redeemed in full all $150 million in aggregate principal amount of the 2023 Notes at 100% of their principal amount, plus the accrued and unpaid interest thereon through, but excluding, December 23, 2021
On April 10, 2019, the Company issued $400 million aggregate principal amount of notes that mature on April 15, 2024 (the “2024 Notes”). The 2024 Notes bear interest at a rate of 5.25% per year, payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2019. The Company may redeem some or all of the 2024 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2024 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2024 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any 2024 Notes on or after March 15, 2024 (the date falling one month prior to the maturity date of the 2024 Notes), the redemption price for the 2024 Notes will be equal to 100% of the principal amount of the 2024 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In connection with the issuance of the 2024 Notes, on April 10, 2019 the Company entered into centrally cleared interest rate swaps. The notional amount of the interest rate swaps is $400 million. The Company will receive fixed rate interest at 5.25% and pay variable rate interest based on one-month LIBOR plus 2.937%. The interest rate swaps mature on April 10, 2024. For the three months ended March 31, 2022 and 2021, the Company did not make periodic payments. The interest expense related to the 2024 Notes is equally offset by the proceeds received from the interest rate swaps. The swap adjusted interest expense is included as a component of interest expense on the Company’s Consolidated Statements of Operations. As of March 31, 2022 and December 31, 2021, the interest rate swap had a fair value of $(1.5) million and $12.0 million, respectively. Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on the Company’s Consolidated Statements of Assets and Liabilities. The change in fair value of the interest rate swap is offset by the change in fair value of the 2024 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations.
On October 8, 2019, the Company issued $425 million aggregate principal amount of notes that mature on March 30, 2025 (the “2025 Notes”). The 2025 Notes bear interest at a rate of 4.00% per year, payable semi-annually on March 30 and September 30 of each year, commencing on March 30, 2020. The Company may redeem some or all of the 2025 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2025 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2025 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 40 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any 2025 Notes on or after February 28, 2025 (the date falling one month prior to the maturity date of the 2025 Notes), the redemption price for the 2025 Notes will be equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
On January 22, 2020, the Company issued $500 million aggregate principal amount of notes that mature on July 22, 2025 (the “July 2025 Notes”). The July 2025 Notes bear interest at a rate of 3.75% per year, payable semi-annually on January 22 and July 22, of each year, commencing on July 22, 2020. The Company may redeem some or all of the July 2025 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the July 2025 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the July 2025 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 35 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any July 2025 Notes on or after June 22, 2025 (the date falling one month prior to the maturity date of the 2025 Notes), the redemption price for the July 2025 Notes will be equal to 100% of the principal amount of the July 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
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On July 23, 2020, the Company issued $500 million aggregate principal amount of notes that mature on January 15, 2026 (the “2026 Notes”). The 2026 Notes bear interest at a rate of 4.25% per year, payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2021. The Company may redeem some or all of the 2026 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any 2026 Notes on or after December, 15 2025 (the date falling one month prior to the maturity date of the 2026 Notes), the redemption price for the 2026 Notes will be equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
On December 8, 2020, the Company issued $1.0 billion aggregate principal amount of notes that mature on July 15, 2026 (the “July 2026 Notes”). The July 2026 Notes bear interest at a rate of 3.40% per year, payable semi-annually on January 15 and July 15 of each year, commencing on July 15, 2021. The Company may redeem some or all of the July 2026 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the July 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the July 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any July 2026 Notes on or after June 15, 2025 (the date falling one month prior to the maturity date of the July 2026 Notes), the redemption price for the July 2026 Notes will be equal to 100% of the principal amount of the July 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
On April 26, 2021, the Company issued $500 million aggregate principal amount of notes that mature on January 15, 2027 (the “2027 Notes”). The 2027 Notes bear interest at a rate of 2.625% per year, payable semi-annually on January 15 and July 15, of each year, commencing on July 15, 2021. The Company may redeem some or all of the 2027 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2027 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2027 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 30 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any 2027 Notes on or after December 15, 2026 (the date falling one month prior to the maturity date of the 2027 Notes), the redemption price for the 2027 Notes will be equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In connection with the issuance of the 2027 Notes, on April 26, 2021, the Company entered into centrally cleared interest rate swaps. The notional amount of the interest rate swaps is $500 million. The Company will receive fixed rate interest at 2.625% and pay variable rate interest based on one-month LIBOR plus 1.655%. The interest rate swaps mature on January 15, 2027. For the three months ended March 31, 2022, the Company made periodic payments of $2.0 million. For the three months ended March 31, 2021, the Company did not make periodic payments. The interest expense related to the 2027 Notes is equally offset by the proceeds received from the interest rate swaps. The swap adjusted interest expense is included as a component of interest expense on the Company’s Consolidated Statements of Operations. As of March 31, 2022 and December 31, 2021, the interest rate swaps had a fair value of $(33.3) million and $7.6 million, respectively. Depending on the nature of the balance at period end, the fair value of the interest rate swaps is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on the Company’s Consolidated Statements of Assets and Liabilities. The change in fair value of the interest rate swaps is offset by the change in fair value of the 2027 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations.
On June 11, 2021, the Company issued $450 million aggregate principal amount of notes that mature on June 11, 2028 and on August 17, 2021, the Company issued an additional $400 million aggregate principal amount of the Company's 2.875% notes due 2028 (together, the “2028 Notes”). The 2028 Notes bear interest at a rate of 2.875% per year, payable semi-annually on June 11 and December 11, of each year, commencing on December 11, 2021. The Company may redeem some or all of the 2028 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2028 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2028 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 30 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if the Company redeems any 2028 Notes on or after April 11, 2028 (the date
falling two months prior to the maturity date of the 2028 Notes), the redemption price for the 2028 Notes will be equal to 100% of the principal amount of the 2028 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
Note 7. Commitments and Contingencies
Portfolio Company Commitments
From time to time, the Company may enter into commitments to fund investments. As of March 31, 2022 and December 31, 2021, the Company had the following outstanding commitments to fund investments in current portfolio companies:
3ES Innovation Inc. (dba Aucerna)
3,893
ABB/Con-cise Optical Group LLC
4,458
Accela, Inc.
Alera Group, Inc.
417
AmSpec Group, Inc. (fka AmSpec Services Inc.)
14,462
10,665
Apex Group Treasury, LLC
25,147
Apptio, Inc.
1,667
Aramsco, Inc.
2,695
8,378
Ardonagh Midco 3 PLC
10,730
11,038
Ascend Buyer, LLC (dba PPC Flexible Packaging)
471
Associations, Inc.
32,923
AxiomSL Group, Inc.
8,331
18,227
Bayshore Intermediate #2, L.P. (dba Boomi)
6,913
BCPE Osprey Buyer, Inc. (dba PartsSource)
28,014
11,855
BCTO BSI Buyer, Inc. (dba Buildertrend)
2,339
BP Veraison Buyer, LLC (dba Sun World)
29,054
8,716
Brightway Holdings, LLC
3,158
Centrify Corporation
6,817
CivicPlus, LLC
6,673
1,335
Denali BuyerCo, LLC (dba Summit Companies)
8,305
9,849
2,199
3,556
Diamondback Acquisition, Inc. (dba Sphera)
1,080
Dodge Data & Analytics LLC
1,888
Douglas Products and Packaging Company LLC
16,208
3,936
EET Buyer, Inc. (dba e-Emphasys)
Entertainment Benefits Group, LLC
11,200
Evolution BuyerCo, Inc. (dba SIAA)
10,709
96
Forescout Technologies, Inc.
5,345
Fortis Solutions Group, LLC
1,347
462
Gainsight, Inc.
3,357
Galls, LLC
14,483
20,468
Gaylord Chemical Company, L.L.C.
13,202
Gerson Lehrman Group, Inc.
21,563
GI Ranger Intermediate, LLC (dba Rectangle Health)
614
332
369
Global Music Rights, LLC
667
GovBrands Intermediate, Inc.
1,111
793
Granicus, Inc.
1,006
1,187
Guidehouse Inc.
H&F Opportunities LUX III S.À R.L (dba Checkmarx)
16,250
Hercules Borrower, LLC (dba The Vincit Group)
18,685
20,916
HGH Purchaser, Inc. (dba Horizon Services)
49,359
4,042
7,031
Hometown Food Company
4,235
Ideal Tridon Holdings, Inc.
5,727
3,927
IG Investments Holdings, LLC (dba Insight Global)
3,179
Individual Foodservice Holdings, LLC
6,890
17,733
20,609
Innovation Ventures HoldCo, LLC (dba 5 Hour Energy)
Inovalon Holdings, Inc.
18,988
Integrity Marketing Acquisition, LLC
14,832
Intelerad Medical Systems Incorporated (fka 11849573 Canada Inc.)
1,607
Interoperability Bidco, Inc. (dba Lyniate)
3,043
IQN Holding Corp. (dba Beeline)
22,672
KPSKY Acquisition, Inc. (dba BluSky)
97
Lazer Spot G B Holdings, Inc.
25,223
26,833
Lignetics Investment Corp.
3,922
3,373
Litera Bidco LLC
5,176
5,738
CSC Mkg Topco LLC (Medical Knowledge Group)
Medline Borrower, LP
7,190
MHE Intermediate Holdings, LLC (dba OnPoint Group)
14,914
15,536
Milan Laser Holdings LLC
2,078
MINDBODY, Inc.
Ministry Brands Holdings, LLC
226
National Dentex Labs LLC (fka Barracuda Dental LLC)
3,980
2,576
6,322
Natural Partners, LLC
Nelipak Holding Company
4,288
7,518
NMI Acquisitionco, Inc. (dba Network Merchants)
4,073
1,652
Norvax, LLC (dba GoHealth)
2,761
Notorious Topco, LLC (dba Beauty Industry Group)
15,962
7,023
7,981
OB Hospitalist Group, Inc.
15,148
13,533
Ole Smoky Distillery, LLC
116
Patriot Acquisition TopCo S.A.R.L (dba Corza Health, Inc.)
13,538
Peter C. Foy & Associates Insurance Services, LLC (dba PCF Insurance Services)
8,695
6,161
Pluralsight, LLC
6,235
Project Power Buyer, LLC (dba PEC-Veriforce)
3,188
2,648
2,650
QAD, Inc.
3,429
98
Quva Pharma, Inc.
2,880
Reef Global Acquisition LLC (fka Cheese Acquisition, LLC)
6,312
5,377
Refresh Parent Holdings, Inc.
797
6,897
Relativity ODA LLC
7,333
Sara Lee Frozen Bakery, LLC (fka KSLB Holdings, LLC)
6,960
8,700
Smarsh Inc.
190
Sonny's Enterprises LLC
17,968
15,402
6,228
10,230
7,118
SWK BUYER, Inc. (dba Stonewall Kitchen)
175
Tahoe Finco, LLC
9,244
Tamarack Intermediate, L.L.C. (dba Verisk 3E)
141
TC Holdings, LLC (dba TrialCard)
7,685
TEMPO BUYER CORP. (dba Global Claims Services)
308
154
The Shade Store, LLC
909
THG Acquisition, LLC (dba Hilb)
8,608
Thunder Purchaser, Inc. (dba Vector Solutions)
10,965
3,011
3,838
Troon Golf, L.L.C.
17,567
21,621
Ultimate Baked Goods Midco, LLC
3,730
4,724
USRP Holdings, Inc. (dba U.S. Retirement and Benefits Partners)
4,168
Valence Surface Technologies LLC
Velocity HoldCo III Inc. (dba VelocityEHS)
1,340
When I Work, Inc.
925
77,712
51,962
WU Holdco, Inc. (dba Weiman Products, LLC)
14,829
17,285
13,444
Total Unfunded Portfolio Company Commitments
985,730
963,808
As of March 31, 2022, the Company believed they had adequate financial resources to satisfy the unfunded portfolio company commitments.
Other Commitments and Contingencies
On November 3, 2020, the Board approved a repurchase program (the “Repurchase Plan”) under which the Company may repurchase up to $100 million of the Company’s outstanding common stock. Under the program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. Unless extended by the Board, the repurchase program will terminate 12-months from the date it was approved. On November 2, 2021,
the Board approved an extension to the Repurchase Plan and, unless further extended by the Board, will terminate 12-months from that date. As of March 31, 2022, Goldman, Sachs & Co., as agent, has repurchased 186,150 shares of the Company’s common stock pursuant to the Repurchase Plan for approximately $2.6 million.
From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. At March 31, 2022, management was not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.
Note 8. Net Assets
Equity Issuances
The Company has the authority to issue 500,000,000 common shares at $0.01 per share par value.
On March 1, 2016, the Company issued 100 common shares for $1,500 to the Adviser.
There were no sales of the Company’s common stock during the three months ended March 31, 2022 and 2021.
The following table reflects the distributions declared on shares of the Company’s common stock during the three months ended March 31, 2022:
Date Declared
Record Date
Payment Date
Distribution per Share
May 13, 2022
0.31
The following table reflects the distributions declared on shares of the Company’s common stock during the three months ended March 31, 2021:
March 31, 2021
February 23, 2021
May 14, 2021
Dividend Reinvestment
With respect to distributions, the Company has adopted an “opt out” dividend reinvestment plan for common shareholders. As a result, in the event of a declared distribution, each shareholder that has not “opted out” of the dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of the Company’s common stock rather than receiving cash distributions. Shareholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.
100
The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the three months ended March 31, 2022:
Shares
January 31, 2022
814,084
The following table reflects the common stock issued pursuant to the dividend reinvestment plan during the three months ended March 31, 2021:
November 4, 2020
December 31, 2020
January 19, 2021
1,435,099
Stock Repurchase Plans
On November 3, 2020, the Board approved the Repurchase Plan under which the Company may repurchase up to $100 million of the Company’s outstanding common stock. Under the program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. Unless extended by the Board, the repurchase program will terminate 12-months from the date it was approved. On November 2, 2021, the Board approved an extension to the Repurchase Plan and, unless further extended by the Board, will terminate 12-months from that date. As of March 31, 2022, Goldman Sachs & Co., as agent, has repurchased 186,150 shares of the Company’s common stock pursuant to the Repurchase Plan for approximately $2.6 million.
There has been no share repurchase activity under the Repurchase Plan for the period ended March 31, 2022.
The following table provides information regarding purchases of the Company’s common stock by Goldman Sachs & Co., as agent, pursuant to the Repurchase Plan for each month in the year ended December 31, 2021:
Period($ in millions, except share and per share amounts)
Total Number of Shares Repurchased
Average Price Paid per Share
ApproximateDollar Value ofShares that have beenPurchased Underthe Plans
ApproximateDollar Value of Shares that May Yet BePurchased Underthe Plan
October 1, 2021 - October 31, 2021
November 1, 2021 - November 30, 2021
22,900
13.92
99.7
December 1, 2021 - December 31, 2021
163,250
14.00
97.4
186,150
Note 9. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2022 and 2021:
($ in thousands, except per share amounts)
Increase (decrease) in net assets resulting from operations
Weighted average shares of common stock outstanding—basic and diluted
Earnings per common share-basic and diluted
Note 10. Income Taxes
The Company has elected to be treated as a RIC under Subchapter M of the Code, and intends to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, the Company must, among other
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things, distribute to its shareholders in each taxable year generally at least 90% of the Company’s investment company taxable income, as defined by the Code, and net tax-exempt income for that taxable year. To maintain tax treatment as a RIC, the Company, among other things, intends to make the requisite distributions to its shareholders, which generally relieves the Company from corporate-level U.S. federal income taxes.
Depending on the level of taxable income earned in a tax year, the Company can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, the Company will accrue excise tax on estimated excess taxable income.
For the three months ended March 31, 2022, the Company recorded U.S. federal income tax expense/(benefit) of $0.8 million, including no U.S. federal excise tax expense/(benefit). For the three months ended March 31, 2021, the Company recorded U.S. federal income tax expense/(benefit) of $1.1 million, including $0.2 million of U.S. federal excise tax expense/(benefit).
Taxable Subsidiaries
Certain of the Company’s consolidated subsidiaries are subject to U.S. federal and state corporate-level income taxes. For the three months ended March 31, 2022 and 2021, the Company recorded a net tax expense of approximately $0.8 million and $0.9 million for taxable subsidiaries, respectively.
The Company recorded a net deferred tax liability of $12.2 million and $12.0 million as of March 31, 2022 and December 31, 2021, respectively, for taxable subsidiaries, which is significantly related to GAAP to tax outside basis differences in the taxable subsidiaries' investment in certain partnership interests.
Note 11. Financial Highlights
The following are the financial highlights for a common share outstanding during the three months ended March 31, 2022 and 2020:
($ in thousands, except share and per share amounts)
Per share data:
Net asset value, beginning of period
14.74
Net investment income(1)
0.26
Net realized and unrealized gain (loss)
(0.20
0.13
Total from operations
0.39
Repurchase of common shares(2)
Distributions declared from earnings(2)
(0.31
Total increase (decrease) in net assets
0.08
Net asset value, end of period
14.82
Shares outstanding, end of period
394,580,939
391,401,787
Per share market value at end of period
14.78
13.77
Total Return, based on market value(3)
6.6
Total Return, based on net asset value(4)
Ratios / Supplemental Data(5)
Ratio of total expenses to average net assets(6)
9.6
Ratio of net investment income to average net assets
Net assets, end of period
Weighted-average shares outstanding
Total capital commitments, end of period
Ratio of total contributed capital to total committed capital, end of period
Portfolio turnover rate
__________________
Note 12. Subsequent Events
In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date of issuance. There are no subsequent events to disclose except for the following:
On April 20, 2022 the Company completed a $669.2 mllion term debt securitization refinancing in CLO V. As part of the refinancing the Company issued the following classes of notes: (i) $354.4 million of AAA(sf) Class A-1R Notes, which bear interest at the Term SOFR plus 1.78%, (ii) $30.4 million of AAA(sf) Class A-2R Notes, which bear interest at the Term SOFR plus 1.95%, (iii) $49.0 million of AA(sf) Class B-1 Notes, which bear interest at the Term SOFR plus 2.20%, (iv) $5.0 million of AA(sf) Class B-2 Notes, which bear interest at 4.25%, (v) $31.5 million of A(sf) Class C-1 Notes, which bear interest at the Term SOFR plus 3.15% and (vi) $39.4 million of A(sf) Class C-2 Notes, which bear interest at 5.10%. The Company also issued approximately $10.2 million of additional subordinated securities, for a total of $159.6 of subordinated securities in the form of 159,620 preferred shares at an issue price of U.S.$1,000 per share held by the Company. Following the refinancing, the reinvestment period was extended to April 20, 2026 and the maturity date was extended to April 20, 2034.
On May 3, 2022, the parties to the SPV Asset Facility III amended certain terms of the facility, including converting the benchmark rate of the facility from LIBOR to term SOFR, extending the Revolving Period through June 14, 2023, extending the Facility Termination Date through June 14, 2025 and reducing the Facility Amount from $500 million to $250 million.
On May 3, 2022 the Board declared a distribution of $0.31 per share for shareholders of record on June 30, 2022 payable on or before August 15, 2022.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information contained in this section should be read in conjunction with “ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS”. This discussion contains forward-looking statements, which relate to future events or the future performance or financial condition of Owl Rock Capital Corporation and involves numerous risks and uncertainties, including, but not limited to, those described in our Form 10-K for the fiscal year December 31, 2021 and in “ITEM 1A. RISK FACTORS.” This discussion also should be read in conjunction with the “Cautionary Statement Regarding Forward Looking Statements” set forth on page 1 of this Quarterly Report on Form 10-Q. Actual results could differ materially from those implied or expressed in any forward-looking statements.
Overview
Owl Rock Capital Corporation (the “Company”, “we”, “us” or “our”) is a Maryland corporation formed on October 15, 2015. We were formed primarily to originate and make loans to, and make debt and equity investments in, U.S. middle market companies. We invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities including warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity. Our investment objective is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns.
We are managed by Owl Rock Capital Advisors LLC (“the Adviser” or “our Adviser”). The Adviser is registered with the U.S. Securities and Exchange Commission (the “SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), an indirect subsidiary of Blue Owl Capital Inc. ("Blue Owl") (NYSE: OWL) and part of Owl Rock, a division of Blue Owl focused on direct lending. Subject to the overall supervision of our board of directors (“the Board” or “our Board”), the Adviser manages our day-to-day operations, and provides investment advisory and management services to us. The Adviser or its affiliates may engage in certain origination activities and receive attendant arrangement, structuring or similar fees. The Adviser is responsible for managing our business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring our investments, and monitoring our portfolio companies on an ongoing basis through a team of investment professionals.
On July 22, 2019, we closed our initial public offering (“IPO”), issuing 10 million shares of our common stock at a public offering price of $15.30 per share, and on August 2, 2019, the underwriters exercised their option to purchase an additional 1.5 million shares of common stock at a purchase price of $15.30 per share. Net of underwriting fees and offering costs, we received total cash proceeds of $164.0 million. Our common stock began trading on the New York Stock Exchange (“NYSE”) under the symbol “ORCC” on July 18, 2019. In connection with the IPO, on July 22, 2019, we entered into a stock repurchase plan (the “Company 10b5-1 Plan”), to acquire up to $150 million in the aggregate of our common stock at prices below its net asset value per share over a specified period, in accordance with the guidelines specified in Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Under the Company 10b5-1 Plan, we acquired 12,515,624 shares for approximately $150 million. The Company 10b5-1 Plan commenced on August 19, 2019 and was exhausted on August 4, 2020.
The Adviser also serves as investment adviser to Owl Rock Capital Corporation II and Owl Rock Core Income Corp.
Blue Owl consists of three divisions: (1) Owl Rock, which focuses on direct lending, (2) Dyal, which focuses on providing capital to institutional alternative asset managers and (3) Oak Street, which focuses on real estate strategies. Owl Rock is comprised of the Adviser, Owl Rock Technology Advisors LLC (“ORTA”), Owl Rock Technology Advisors II LLC ("ORTA II"), Owl Rock Capital Private Fund Advisors LLC (“ORPFA”) and Owl Rock Diversified Advisors LLC (“ORDA” and together with the Adviser, ORTA, ORTA II, ORPFA and ORDA, the "Owl Rock Advisers"), which also are investment advisers. As of March 31, 2022, the Adviser and its affiliates had $44.8 billion of assets under management across the Owl Rock division of Blue Owl. As of April 1, 2022, the Owl Rock division of Blue Owl also includes a CLO business ("Wellfleet"), which was acquired from affiliates of Littlejohn & Co. LLC.
The management of our investment portfolio is the responsibility of the Adviser and the Investment Committee. We consider these individuals to be our portfolio managers. The Investment Team, is led by Douglas I. Ostrover, Marc S. Lipschultz and Craig W. Packer and is supported by certain members of the Adviser's senior executive team and the Investment Committee. The Investment Team, including members of Wellfleet, under the Investment Committee's supervision, sources investment opportunities, conducts research, performs due diligence on potential investments, structures our investments and will monitor our portfolio companies on an ongoing basis. The Investment Committee is comprised of Douglas I. Ostrover, Marc S. Lipschultz, Craig W. Packer, Alexis Maged and Jeff Walwyn. The Investment Committee meets regularly to consider our investments, direct our strategic initiatives and supervise the actions taken by the Adviser on our behalf. In addition, the Investment Committee reviews and determines whether to make prospective investments (including approving parameters or guidelines pursuant to which investments in broadly syndicated loans may be bought and sold), structures financings and monitors the performance of the investment portfolio. Each investment opportunity requires the approval of a majority of the Investment Committee. Follow-on investments in existing portfolio companies may require the Investment Committee's approval beyond that obtained when the initial investment in the portfolio company was made. In addition, temporary investments, such as those in cash equivalents, U.S. government securities and other high quality debt investments that mature in one year or less, may require approval by the Investment Committee. The compensation packages of certain Investment Committee members from
the Adviser include various combinations of discretionary bonuses and variable incentive compensation based primarily on performance for services provided and may include shares of Blue Owl.
We may be prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of our directors who are not interested persons and, in some cases, the prior approval of the SEC. We, our Adviser and certain affiliates have been granted exemptive relief by the SEC to permit us to co-invest with other funds managed by our Adviser or certain of its affiliates, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. Pursuant to such exemptive relief, we generally are permitted to co-invest with certain of our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act of our independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our shareholders and do not involve overreaching by us or our shareholders on the part of any person concerned, (2) the transaction is consistent with the interests of our shareholders and is consistent with our investment objective and strategies, (3) the investment by our affiliates would not disadvantage us, and our participation would not be on a basis different from or less advantageous than that on which our affiliates are investing and (4) the proposed investment by us would not benefit our Adviser or its affiliates or any affiliated person of any of them (other than the parties to the transaction), except to the extent permitted by the exemptive relief and applicable law, including the limitations set forth in Section 57(k) of the 1940 Act. The Owl Rock Advisers’ investment allocation policy seeks to ensure equitable allocation of investment opportunities over time between us and other funds managed by our Adviser or its affiliates. As a result of the exemptive relief, there could be significant overlap in our investment portfolio and the investment portfolio of the Owl Rock Clients and/or other funds managed by the Adviser or its affiliates that could avail themselves of the exemptive relief and that have an investment objective similar to ours.
On April 27, 2016, we formed a wholly-owned subsidiary, OR Lending LLC, a Delaware limited liability company, which holds a California finance lenders license. OR Lending LLC makes loans to borrowers headquartered in California. From time to time we may form wholly-owned subsidiaries to facilitate our normal course of business.
Certain consolidated subsidiaries of ours are subject to U.S. federal and state corporate-level income taxes.
We have elected to be regulated as a BDC under the 1940 Act and as a regulated investment company (“RIC”) for tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). As a result, we are required to comply with various statutory and regulatory requirements, such as:
COVID-19 Developments
In March 2020, the outbreak of COVID -19 was recognized as a pandemic by the World Health Organization. In response to the outbreak, our Adviser instituted a work from home policy and began monitoring the ability of its employees to safely return to the office. In October 2021, the Adviser implemented a return to in-office work policy across all of its offices. The policy encourages a return to in-office work but allows for flexibility to work from home based on current conditions.
We have and continue to assess the impact of COVID-19 on our portfolio companies. We cannot predict the full impact of the COVID-19 pandemic, including its duration in the United States and worldwide, the effectiveness of governmental responses designed to mitigate strain to businesses and the economy and the magnitude of the economic impact of the outbreak. The COVID-19 pandemic and preventative measures taken to contain or mitigate its spread have caused, and may in the future cause, business shutdowns and cancellations of events and travel. In addition, while economic activity remains healthy and well improved from the beginning of the COVID-19 pandemic, we continue to observe supply chain interruptions, labor difficulties, commodity inflation and elements of geopolitical, economic and financial market instability both globally and in the United States.
We have built our portfolio management team to include workout experts and continue to closely monitor our portfolio companies; however, we are unable to predict the duration of any business and supply-chain disruptions or labor difficulties, the extent to which COVID-19 will negatively affect our portfolio companies’ operating results or the impact that such disruptions may have on our results of operations and financial condition.
Our Investment Framework
We are a Maryland corporation organized primarily to originate and make loans to, and make debt and equity investments in, U.S. middle market companies. Our investment objective is to generate current income, and to a lesser extent, capital appreciation by targeting investment opportunities with favorable risk-adjusted returns. Since our Adviser and its affiliates began investment activities in April
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2016 through March 31, 2022, our Adviser and its affiliates have originated $56.0 billion aggregate principal amount of investments, of which $53.0 billion of aggregate principal amount of investments prior to any subsequent exits or repayments, was retained by either us or a corporation or fund advised by our Adviser or its affiliates. We seek to generate current income primarily in U.S. middle market companies through direct originations of senior secured loans or originations of unsecured loans, subordinated loans or mezzanine loans, broadly syndicated loans and, to a lesser extent, investments in equity and equity-related securities including warrants, preferred stock and similar forms of senior equity. Our equity investments are typically not control-oriented investments and we may structure such equity investments to include provisions protecting our rights as a minority-interest holder.
We define “middle market companies” generally to mean companies with earnings before interest expense, income tax expense, depreciation and amortization, or “EBITDA,” between $10 million and $250 million annually and/or annual revenue of $50 million to $2.5 billion at the time of investment, although we may on occasion invest in smaller or larger companies if an opportunity presents itself. We generally seek to invest in companies with a loan-to-value ratio of 50% or below.
We expect that generally our portfolio composition will be majority debt or income producing securities, which may include “covenant-lite” loans (as defined below), with a lesser allocation to equity or equity-linked opportunities, which we may hold directly or through special purpose vehicles. In addition, we may invest a portion of our portfolio in opportunistic investments and broadly syndicated loans, which will not be our primary focus, but will be intended to enhance returns to our shareholders and from time to time, we may evaluate and enter into strategic portfolio transactions which may result in additional portfolio companies which we are considered to control. These investments may include high-yield bonds and broadly-syndicated loans, including publicly traded debtinstruments, which are typically originated and structured by banks on behalf of large corporate borrowers with employee counts, revenues, EBITDAs and enterprise values larger than the middle market characteristics described above. In addition, we generally do not intend to invest more than 20% of our total assets in companies whose principal place of business is outside the United States, although we do not generally intend to invest in companies whose principal place of business is in an emerging market. Our portfolio composition may fluctuate from time to time based on market conditions and interest rates.
Covenants are contractual restrictions that lenders place on companies to limit the corporate actions a company may pursue. Generally, the loans in which we expect to invest will have financial maintenance covenants, which are used to proactively address materially adverse changes in a portfolio company’s financial performance. However, to a lesser extent, we may invest in “covenant-lite” loans. We use the term “covenant-lite” to refer generally to loans that do not have a complete set of financial maintenance covenants. Generally, “covenant-lite” loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and can only be breached following an affirmative action of the borrower, rather than by a deterioration in the borrower’s financial condition. Accordingly, to the extent we invest in “covenant-lite” loans, we may have fewer rights against a borrower and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with financial maintenance covenants.
We target portfolio companies where we can structure larger transactions. As of March 31, 2022, our average debt investment size in each of our portfolio companies was approximately $78.3 million based on fair value. As of March 31, 2022, our portfolio companies, excluding the investment in ORCC SLF and certain investments that fall outside of our typical borrower profile and represent 84.1% of our total debt portfolio based on fair value, had weighted average annual revenue of $658 million, weighted average annual EBITDA of $145 million and an average interest coverage of 2.7x.
The companies in which we invest use our capital to support their growth, acquisitions, market or product expansion, refinancings and/or recapitalizations. The debt in which we invest typically is not rated by any rating agency, but if these instruments were rated, they would likely receive a rating of below investment grade (that is, below BBB- or Baa3), which is often referred to as “high yield” or “junk”.
A majority of our new investments are indexed to SOFR; however we have material contracts that are indexed to USD-LIBOR and are monitoring this activity, evaluating the related risks and our exposure, and adding alternative language to contracts, where necessary. Certain contracts have an orderly market transition already in process. However, it is not possible to predict the effect of any of these developments, and any future initiatives to regulate, reform or change the manner of administration of LIBOR could result in adverse consequences to the rate of interest payable and receivable on, market value of and market liquidity for LIBOR-based financial instruments.
Key Components of Our Results of Operations
We focus primarily on the direct origination of loans to middle market companies domiciled in the United States.
Our level of investment activity (both the number of investments and the size of each investment) can and will vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle market companies,
the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.
In addition, as part of our risk strategy on investments, we may reduce the levels of certain investments through partial sales or syndication to additional lenders.
Revenues
We generate revenues primarily in the form of interest income from the investments we hold. In addition, we generate income from dividends on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights. Our debt investments typically have a term of three to ten years. As of March 31, 2022, 98.8% of our debt investments based on fair value bear interest at a floating rate, subject to interest rate floors, in certain cases. Interest on our debt investments is generally payable either monthly or quarterly.
Our investment portfolio consists primarily of floating rate loans, and our credit facilities bear interest at floating rates. Macro trends in base interest rates like London Interbank Offered Rate (“LIBOR”), the Secured Overnight Financing Rate ("SOFR") and any alternative reference rates may affect our net investment income over the long term. However, because we generally originate loans to a small number of portfolio companies each quarter, and those investments vary in size, our results in any given period, including the interest rate on investments that were sold or repaid in a period compared to the interest rate of new investments made during that period, often are idiosyncratic, and reflect the characteristics of the particular portfolio companies that we invested in or exited during the period and not necessarily any trends in our business or macro trends.
Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts under U.S. generally accepted accounting principles ("U.S. GAAP") as interest income using the effective yield method for term instruments and the straight-line method for revolving or delayed draw instruments. Repayments of our debt investments can reduce interest income from period to period. The frequency or volume of these repayments may fluctuate significantly. We record prepayment premiums on loans as interest income. We may also generate revenue in the form of commitment, loan origination, structuring, or due diligence fees, fees for providing managerial assistance to our portfolio companies and possibly consulting fees.
Dividend income on equity investments is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded companies.
Our portfolio activity also reflects the proceeds from sales of investments. We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the amortized cost basis of the investment without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized gains (losses) on investments in the consolidated statement of operations.
Our primary operating expenses include the payment of the management fee and, since the expiration of the incentive fee waiver on October 18, 2020, the incentive fee, expenses reimbursable under the Administration Agreement and Investment Advisory Agreement, legal and professional fees, interest and other debt expenses and other operating expenses. The management fee and incentive fee compensate our Adviser for work in identifying, evaluating, negotiating, closing, monitoring and realizing our investments.
Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory and management services to us, the base compensation, bonus and benefits, and the routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Adviser. We bear our allocable portion of the compensation paid by the Adviser (or its affiliates) to our Chief Compliance Officer and Chief Financial Officer and their respective staffs (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs). We bear all other costs and expenses of our operations, administration and transactions, including, but not limited to (i) investment advisory fees, including management fees and incentive fees, to the Adviser, pursuant to the Investment Advisory Agreement; (ii) our allocable portion of overhead and other expenses incurred by the Adviser in performing its administrative obligations under the Administration Agreement; and (iii) all other costs and expenses of its operations and transactions including, without limitation, those relating to:
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We expect, but cannot assure, that our general and administrative expenses will increase in dollar terms during periods of asset growth, but will decline as a percentage of total assets during such periods.
Leverage
The amount of leverage we use in any period depends on a variety of factors, including cash available for investing, the cost of financing and general economic and market conditions. Generally, our total borrowings are limited so that we cannot incur additional borrowings, including through the issuance of additional debt securities, if such additional indebtedness would cause our asset coverage ratio to fall below 200% or 150%, if certain requirements are met. This means that generally, $1 for every $1 of investor equity (or, if certain conditions are met, we can borrow up to $2 for every $1 of investor equity). In any period, our interest expense will depend largely on the extent of our borrowing, and we expect interest expense will increase as we increase our debt outstanding. In addition, we may dedicate assets to financing facilities. On June 8, 2020, we received shareholder approval for the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Small Business Credit Availability Act. As a result, effective on June 9, 2020, our asset coverage requirement applicable to senior securities was reduced from 200% to 150%. Our current target leverage ratio is 0.90x-1.25x.
Market Trends
We believe the middle-market lending environment provides opportunities for us to meet our goal of making investments that generate attractive risk-adjusted returns.
Limited Availability of Capital for Middle-Market Companies. We believe that regulatory and structural changes in the market have reduced the amount of capital available to U.S. middle-market companies. In particular, we believe there are currently fewer providers of capital to middle market companies. We believe that many commercial and investment banks have, in recent years, de-emphasized their service and product offerings to middle-market businesses in favor of lending to large corporate clients and managing capital markets transactions. In addition, these lenders may be constrained in their ability to underwrite and hold bank loans and high yield securities for middle-market issuers as they seek to meet existing and future regulatory capital requirements. We also believe that there is a lack of market participants that are willing to hold meaningful amounts of certain middle-market loans. As a result, we believe our ability to
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minimize syndication risk for a company seeking financing by being able to hold its loans without having to syndicate them, coupled with reduced capacity of traditional lenders to serve the middle-market, present an attractive opportunity to invest in middle-market companies.
Capital Markets Have Been Unable to Fill the Void in U.S. Middle Market Finance Left by Banks. While underwritten bond and syndicated loan markets have been robust in recent years, middle market companies are less able to access these markets for reasons including the following:
High Yield Market – Middle market companies generally are not issuing debt in an amount large enough to be an attractively sized bond. High yield bonds are generally purchased by institutional investors who, among other things, are focused on the liquidity characteristics of the bond being issued. For example, mutual funds and exchange traded funds (“ETFs”) are significant buyers of underwritten bonds. However, mutual funds and ETFs generally require the ability to liquidate their investments quickly in order to fund investor redemptions and/or comply with regulatory requirements. Accordingly, the existence of an active secondary market for bonds is an important consideration in these entities’ initial investment decision. Because there is typically little or no active secondary market for the debt of U.S. middle market companies, mutual funds and ETFs generally do not provide debt capital to U.S. middle market companies. We believe this is likely to be a persistent problem and creates an advantage for those like us who have a more stable capital base and have the ability to invest in illiquid assets.
Syndicated Loan Market – While the syndicated loan market is modestly more accommodating to middle market issuers, as with bonds, loan issue size and liquidity are key drivers of institutional appetite and, correspondingly, underwriters’ willingness to underwrite the loans. Loans arranged through a bank are done either on a “best efforts” basis or are underwritten with terms plus provisions that permit the underwriters to change certain terms, including pricing, structure, yield and tenor, otherwise known as “flex”, to successfully syndicate the loan, in the event the terms initially marketed are insufficiently attractive to investors. Furthermore, banks are generally reluctant to underwrite middle market loans because the arrangement fees they may earn on the placement of the debt generally are not sufficient to meet the banks’ return hurdles. Loans provided by companies such as ours provide certainty to issuers in that we can commit to a given amount of debt on specific terms, at stated coupons and with agreed upon fees. As we are the ultimate holder of the loans, we do not require market “flex” or other arrangements that banks may require when acting on an agency basis.
Robust Demand for Debt Capital. We believe U.S. middle market companies will continue to require access to debt capital to refinance existing debt, support growth and finance acquisitions. In addition, we believe the large amount of uninvested capital held by funds of private equity firms broadly, estimated by Preqin Ltd., an alternative assets industry data and research company, to be $1.7 trillion as of January 2022, will continue to drive deal activity. We expect that private equity sponsors will continue to pursue acquisitions and leverage their equity investments with secured loans provided by companies such as us.
The Middle Market is a Large Addressable Market. According to GE Capital’s National Center for the Middle Market 4th quarter 2021 Middle Market Indicator, there are approximately 200,000 U.S. middle market companies, which have approximately 48 million aggregate employees. Moreover, the U.S. middle market accounts for one-third of private sector gross domestic product (“GDP”). GE defines U.S. middle market companies as those between $10 million and $1 billion in annual revenue, which we believe has significant overlap with our definition of U.S. middle market companies.
Attractive Investment Dynamics. An imbalance between the supply of, and demand for, middle market debt capital creates attractive pricing dynamics. We believe the directly negotiated nature of middle market financings also generally provides more favorable terms to the lender, including stronger covenant and reporting packages, better call protection, and lender-protective change of control provisions. Additionally, we believe BDC managers’ expertise in credit selection and ability to manage through credit cycles has generally resulted in BDCs experiencing lower loss rates than U.S. commercial banks through credit cycles. Further, we believe that historical middle market default rates have been lower, and recovery rates have been higher, as compared to the larger market capitalization, broadly distributed market, leading to lower cumulative losses. Lastly, we believe that in the current environment, lenders with available capital may be able to take advantage of attractive investment opportunities as the economy reopens and may be able to achieve improved economic spreads and documentation terms.
Conservative Capital Structures. Following the credit crisis, which we define broadly as occurring between mid-2007 and mid-2009, lenders have generally required borrowers to maintain more equity as a percentage of their total capitalization, specifically to protect lenders during economic downturns. With more conservative capital structures, U.S. middle market companies have exhibited higher levels of cash flows available to service their debt. In addition, U.S. middle market companies often are characterized by simpler capital structures than larger borrowers, which facilitates a streamlined underwriting process and, when necessary, restructuring process.
Attractive Opportunities in Investments in Loans. We invest in senior secured or unsecured loans, subordinated loans or mezzanine loans and, to a lesser extent, equity and equity-related securities. We believe that opportunities in senior secured loans are significant because of the floating rate structure of most senior secured debt issuances and because of the strong defensive characteristics of these types of investments. We believe that debt issues with floating interest rates offer a superior return profile as compared with fixed-rate investments, since floating rate structures are generally less susceptible to declines in value experienced by fixed-rate securities in a rising interest rate environment. Senior secured debt also provides strong defensive characteristics. Senior secured debt has priority in payment among an issuer’s security holders whereby holders are due to receive payment before junior creditors and equity holders. Further, these investments are secured by the issuer’s assets, which may provide protection in the event of a default.
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Portfolio and Investment Activity
As of March 31, 2022, based on fair value, our portfolio consisted of 74.0% first lien senior secured debt investments (of which 60% we consider to be unitranche debt investments (including “last out” portions of such loans)), 14.7% second lien senior secured debt investments, 2.1% unsecured debt investments, 1.9% preferred equity investments, 5.0% common equity investments and 2.3% investment funds and vehicles.
As of March 31, 2022, our weighted average total yield of the portfolio at fair value and amortized cost was 7.8% and 7.8%, respectively, and our weighted average yield of accruing debt and income producing securities at fair value and amortized cost was 7.9% and 8.0%, respectively(1). As of March 31, 2022, the weighted average spread of total debt investments was 6.6%.
As of March 31, 2022, we had investments in 157 portfolio companies with an aggregate fair value of $12.8 billion. As of March 31, 2022 we had net leverage of 1.17x debt-to-equity.
Based on current market conditions, the pace of our investment activities, including originations and repayments, may vary. The strength of the financing and merger and acquisitions markets and the current low interest rate environment, has led to increased originations and repayments, an active pipeline of investment opportunities including demand for large unitranche debt investments. However, there have been headwinds in the financing and merger and acquisitions markets resulting from high and persistent inflation, a shifting interest rate environment, geopolitical events and the ongoing impact from COVID-19 globally. We are monitoring the effect that market volatility, including as a result of a rising interest rate environment may have on our portfolio companies and our investment activities and we will continue to seek to invest in recession-resistant industries that we are familiar with. For the three months ended March 31, 2022, we received repayments of approximately $375 million and we expect to continue to receive repayments in the current environment.
Through March 31, 2022, Owl Rock has committed to more than 5 large unitranche transactions each in excess of $1 billion in size which are expected to close subsequent to March 31, 2022. We may sell all or a portion of these investments and certain of these investments may result in the repayment of existing investments. We cannot assure you that we will make any of these investments or that we will sell all or any portion of these investments.
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Our investment activity for the three months ended March 31, 2022 and 2021 is presented below (information presented herein is at par value unless otherwise indicated).
New investment commitments
Gross originations
533,848
919,685
Less: Sell downs
(3,409
(56,145
Total new investment commitments
530,439
863,540
Principal amount of investments funded:
223,302
529,122
12,400
69,989
132,288
Preferred equity investments(3)
Common equity investments(3)
1,968
7,567
Total principal amount of investments funded
347,884
684,377
Principal amount of investments sold or repaid:
(326,994
(287,315
(25,000
(224,851
(22,843
Total principal amount of investments sold or repaid
(374,837
(512,166
Number of new investment commitments in new portfolio companies(1)
Average new investment commitment amount
21,952
78,952
Weighted average term for new debt investment commitments (in years)
Percentage of new debt investment commitments at floating rates
97.3
Percentage of new debt investment commitments at fixed rates
0.0
Weighted average interest rate of new debt investment commitments(2)
Weighted average spread over LIBOR of new floating rate debt investment commitments
As of March 31, 2022 and December 31, 2021, our investments consisted of the following:
(3)
The table below describes investments by industry composition based on fair value as of March 31, 2022 and December 31, 2021:
The table below describes investments by geographic composition based on fair value as of March 31, 2022 and December 31, 2021:
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The weighted average yields and interest rates of our investments at fair value as of March 31, 2022 and December 31, 2021 were as follows:
Weighted average total yield of portfolio
Weighted average total yield of accruing debt and income producing securities
Weighted average interest rate of accruing debt securities
Weighted average spread over LIBOR of all accruing floating rate investments
(1) For non-stated rate income producing investments, computed based on (a) the dividend or interest income earned for the respective trailing twelve months ended on the measurement date, divided by (b) the ending fair value. In instances where historical dividend or interest income data is not available or not representative for the trailing twelve months ended, the dividend or interest income is annualized.
The weighted average yield of our accruing debt and income producing securities is not the same as a return on investment for our shareholders but, rather, relates to our investment portfolio and is calculated before the payment of all of our and our subsidiaries’ fees and expenses. The weighted average yield was computed using the effective interest rates as of each respective date, including accretion of original issue discount and loan origination fees, but excluding investments on non-accrual status, if any. There can be no assurance that the weighted average yield will remain at its current level.
Our Adviser monitors our portfolio companies on an ongoing basis. It monitors the financial trends of each portfolio company to determine if they are meeting their respective business plans and to assess the appropriate course of action with respect to each portfolio company. Our Adviser has several methods of evaluating and monitoring the performance and fair value of our investments, which may include the following:
As part of the monitoring process, our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser rates the credit risk of all investments on a scale of 1 to 5. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio
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investment (i.e., at the time of origination or acquisition), although it may also take into account the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The rating system is as follows:
Investment Rating
Description
Investments rated 1 involve the least amount of risk to our initial cost basis. The borrower is performing above expectations, and the trends and risk factors for this investment since origination or acquisition are generally favorable;
Investments rated 2 involve an acceptable level of risk that is similar to the risk at the time of origination or acquisition. The borrower is generally performing as expected and the risk factors are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a rating of 2;
Investments rated 3 involve a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination or acquisition;
Investments rated 4 involve a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination or acquisition. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 120 days past due); and
Investments rated 5 involve a borrower performing substantially below expectations and indicates that the loan’s risk has increased substantially since origination or acquisition. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 5 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.
Our Adviser rates the investments in our portfolio at least quarterly and it is possible that the rating of a portfolio investment may be reduced or increased over time. For investments rated 3, 4 or 5, our Adviser enhances its level of scrutiny over the monitoring of such portfolio company.
The following table shows the composition of our portfolio on the 1 to 5 rating scale as of March 31, 2022 and December 31, 2021:
Percentage of Total Portfolio
1,618,306
1,486,521
9,791,357
76.8
9,989,520
78.4
1,333,092
10.5
1,249,149
9.8
13,568
16,450
The following table shows the amortized cost of our performing and non-accrual debt investments as of March 31, 2022 and December 31, 2021:
Percentage
Performing
11,638,345
99.8
11,637,373
Non-accrual
27,374
11,665,719
11,664,747
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Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.
ORCC Senior Loan Fund (fka Sebago Lake LLC), a Delaware limited liability company, was formed as a joint venture between us and The Regents of the University of California (“Regents”) and commenced operations on June 20, 2017. ORCC SLF’s principal purpose is to make investments, primarily in senior secured loans that are made to middle-market companies or in broadly syndicated loans. Through June 30, 2021, both we and Regents (the “Initial Members”) had a 50% economic ownership in ORCC SLF. Each of the Initial Members initially agreed to contribute up to $100 million to ORCC SLF. On July 26, 2018, each of the Initial Members increased their contribution to ORCC SLF up to an aggregate of $125 million. Effective as of June 30, 2021, capital commitments to ORCC SLF were increased to an aggregate of $371.5 million. In connection with this change, the Company increased its economic ownership interest to 87.5% from 50.0% and Regents transferred its remaining economic interest of 12.5% to Nationwide Life Insurance Company (“Nationwide” and together with us, the “Members” and each a “Member”). ORCC SLF is managed by the Members, each of which have equal voting rights. Investment decisions must be approved by each of the Members. Except under certain circumstances, contributions to ORCC SLF cannot be redeemed.
We have determined that ORCC SLF is an investment company under Accounting Standards Codification (“ASC”) 946, however, in accordance with such guidance, we will generally not consolidate our investment in a company other than a wholly owned investment company subsidiary or a controlled operating company whose business consists of providing services to us. Accordingly, we do not consolidate our non-controlling interest in ORCC SLF.
As of March 31, 2022 and December 31, 2021, ORCC SLF had total investments in senior secured debt at fair value of $869.0 million and $790.3 million, respectively. The determination of fair value is in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”), as amended; however, such fair value is not included in our Board’s valuation process. The following table is a summary of ORCC SLF’s portfolio as well as a listing of the portfolio investments in ORCC SLF’s portfolio as of March 31, 2022 and December 31, 2021:
115
117
118
120
121
122
123
124
125
On August 9, 2017, Sebago Lake Financing LLC and SL Lending LLC, wholly-owned subsidiaries of ORCC SLF, entered into a credit facility with Goldman Sachs Bank USA. Goldman Sachs Bank USA serves as the sole lead arranger, syndication agent and administrative agent, and State Street Bank and Trust Company serves as the collateral administrator and agent. The credit facility includes a maximum borrowing capacity of $400 million. On June 22, 2021, Sebago Lake Financing LLC and SL Lending LLC entered into an amendment with Goldman Sachs Bank USA to extend the reinvestment period on the credit facility to October 6, 2021, and again on September 20, 2021, extended the reinvestment period on the credit facility to December 6, 2021. As of March 31, 2022, there was $479.9 million outstanding under the credit facility. On March 1, 2022, SLF Financing I LLC, a wholly-owned subsidiary of ORCC SLF, entered into a credit facility with Natixis, New York Branch which serves as the administrative agent and the initial lender, and State Street Bank and Trust Company which serves as the collateral agent, collateral administrator and custodian. The credit facility includes a maximum borrowing capacity of $300 million. The re-investment period on the credit facility ends on March 1, 2024 and the maturity date of the credit facility is March 1, 2032. As of March 31, 2022, there was $40.0 million outstanding under the credit facility.
2,415
2,097
315
406
496,605
349,358
Results of Operations
The following table represents the operating results for the three months ended March 31, 2022 and 2021:
($ in millions)
264.2
221.5
Less: Net operating expenses
141.0
117.8
123.2
103.7
Less: Income tax expense (benefit), including excise tax expense (benefit)
122.4
102.6
(82.2
52.9
44.0
157.8
Net increase (decrease) in net assets resulting from operations can vary from period to period as a result of various factors, including the level of new investment commitments, expenses, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. For the quarter ended March 31, 2022, our net asset value per share decreased slightly, primarily driven by market spreads widening.
Investment income for the three months ended March 31, 2022 and 2021 were as follows:
Interest income from investments
210.4
201.5
Payment-in-kind interest income from investments
22.4
Dividend Income from investments
27.4
Total investment income
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For the three months ended March 31, 2022 and 2021
Investment income increased to $264.2 million for the three months ended March 31, 2022 from $221.5 million for the same period in prior year primarily due to an increase in our investment portfolio. Our debt investment portfolio, at par, increased from $11.0 billion as of March 31, 2021, to $11.9 billion as of March 31, 2022. In addition to portfolio growth, dividend income increased due to a $9.5 million dividend earned from Wingspire Capital for the three months ended March 31, 2022 that was not earned in the same period in prior year. Included in interest income are other fees such as prepayment fees and accelerated amortization of upfront fees from unscheduled paydowns. Period over period, income generated from these fees slightly decreased from $6.4 million to $6.2 million, for the three months ended March 31, 2021 and 2022, respectively. Payment-in-kind income represented 10.4% of investment income for the three months ended March 31, 2022 and 5.2% of investment income for the three months ended March 31, 2021. Other income increased period-over-period due to an increase in incremental fee income, which are fees that are generally available to us as a result of closing investments and generally paid at the time of closing. We expect that investment income will vary based on a variety of factors including the pace of our originations and repayments. Based on current market conditions and the age of our portfolio, we expect repayments to increase.
Expenses for the three months ended March 31, 2022 and 2021 were as follows:
61.4
48.1
47.4
42.1
26.0
21.8
Total operating expenses
Management and incentive fees waived
Net operating expenses
Under the terms of the Administration Agreement, we reimburse the Adviser for services performed for us. In addition, pursuant to the terms of the Administration Agreement, the Adviser may delegate its obligations under the Administration Agreement to an affiliate or to a third party and we reimburse the Adviser for any services performed for us by such affiliate or third party.
Total expenses increased to $141.0 million for the three months ended March 31, 2022 from $117.8 million for the same period in the prior year primarily due to an increase in interest expense and management and incentive fees. The increase in interest expense of $13.3 million was primarily driven by an increase in the average daily borrowings from $5.3 billion to $7.2 billion period over period partially offset by a decrease in the average interest rate from 3.2% to 2.9%. Management fees and incentive fees increased primarily due to an increase in our investment portfolio, which at par, increased from $11.0 billion as of March 31, 2021 to $11.9 billion as of March 31, 2022. As a percentage of total assets, professional fees, directors’ fees, and other general and administrative expenses remained relatively consistent period over period.
Income Taxes, Including Excise Taxes
We have elected to be treated as a RIC under Subchapter M of the Code, and we intend to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, we must, among other things, distribute to our shareholders in each taxable year generally at least 90% of our investment company taxable income, as defined by the Code, and net tax-exempt income for that taxable year. To maintain our tax treatment as a RIC, we, among other things, intend to make the requisite distributions to our shareholders, which generally relieves us from corporate-level U.S. federal income taxes.
Depending on the level of taxable income earned in a tax year, we can be expected to carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on such taxable income, as required. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such income, we will accrue excise tax on estimated excess taxable income.
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For the three months ended March 31, 2022, we recorded U.S. federal income tax expense/(benefit) of $0.8 million, including no U.S. federal excise tax expense/(benefit). For the three months ended March 31, 2021, we recorded U.S. federal income tax expense/(benefit) of $1.1 million, including $0.2 million for U.S. federal excise tax expense/(benefit).
Certain of our consolidated subsidiaries are subject to U.S. federal and state income taxes. For the three months ended March 31, 2022 and 2021, we recorded a net tax expense of $0.8 million and $0.9 million, respectively. The income tax expense for our taxable consolidated subsidiaries will vary depending on the level of investment income earnings and realized gains from the exits of investments held by such taxable subsidiaries during the respective periods.
Net Unrealized Gains (Losses)
We fair value our portfolio investments quarterly and any changes in fair value are recorded as unrealized gains or losses. During the three months ended March 31, 2022 and 2021, net unrealized gains (losses) were comprised of the following:
Net change in unrealized gain (loss) on investments
(81.7
57.9
(2.6
Net change in translation of assets and liabilities in foreign currencies
(0.5
(2.4
For the three months ended March 31, 2022, the net unrealized loss was primarily driven by a decrease in the fair value of our debt investments as compared to December 31, 2021. As of March 31, 2022, the fair value of our debt investments as a percentage of principal was 97.7%, as compared to 98.2% as of December 31, 2021. The primary driver of our portfolio’s unrealized loss was due to current market conditions and credit spreads widening. The changes in net unrealized gain and loss on investments during the three months ended March 31, 2022 consisted of the following:
Portfolio Company($ in millions)
Net Change in Unrealized Gain (Loss)
Remaining Portfolio Companies
(52.5
(2.9
Walker Edison Furniture Company LLC
(3.4
(3.6
Packaging Coordinators Midco, Inc.
(5.1
(8.0
FR Arsenal Holdings II Corp. (dba Applied-Cleveland Holdings, Inc.)
(9.5
For the three months ended March 31, 2021, the net unrealized gain was primarily driven by an increase in the fair value of our debt investments as compared to December 31, 2020. As of March 31, 2021, the fair value of our debt investments as a percentage of principal was 97.8%, as compared to 97.3% as of December 31, 2020. The changes in net unrealized gain and loss on investments during the three months ended March 31, 2021 consisted of the following:
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Innovative Water Care
ABB Concise Optical Group LLC
Blackhawk Network Holdings
Sonny's Enterprises, Inc.
Aviation Solutions Midco, LLC
Mavis Tire Express Services Corp.
Remaining portfolio companies
30.7
(3.9
CIBT Global, Inc.
(7.1
Net Realized Gains (Losses)
The realized gains and losses on fully exited and partially exited portfolio companies during the three months ended March 31, 2022 and 2021 were comprised of the following:
Net realized gain (loss) on investments
Net realized gain (loss) on foreign currency transactions
(0.9
Realized Gross Internal Rate of Return
Since we began investing in 2016 through March 31, 2022, our exited investments have resulted in an aggregate cash flow realized gross internal rate of return to us of over 10.2% (based on total capital invested of $7.3 billion and total proceeds from these exited investments of $8.6 billion). Over sixty percent of these exited investments resulted in an aggregate cash flow realized gross internal rate of return (“IRR”) to us of 10% or greater.
IRR, is a measure of our discounted cash flows (inflows and outflows). Specifically, IRR is the discount rate at which the net present value of all cash flows is equal to zero. That is, IRR is the discount rate at which the present value of total capital invested in each of our investments is equal to the present value of all realized returns from that investment. Our IRR calculations are unaudited.
Capital invested, with respect to an investment, represents the aggregate cost basis allocable to the realized or unrealized portion of the investment, net of any upfront fees paid at closing for the term loan portion of the investment.
Realized returns, with respect to an investment, represents the total cash received with respect to each investment, including all amortization payments, interest, dividends, prepayment fees, upfront fees (except upfront fees paid at closing for the term loan portion of an investment), administrative fees, agent fees, amendment fees, accrued interest, and other fees and proceeds.
Gross IRR, with respect to an investment, is calculated based on the dates that we invested capital and dates we received distributions, regardless of when we made distributions to our shareholders. Initial investments are assumed to occur at time zero.
Gross IRR reflects historical results relating to our past performance and is not necessarily indicative of our future results. In addition, gross IRR does not reflect the effect of management fees, expenses, incentive fees or taxes borne, or to be borne, by us or our shareholders, and would be lower if it did.
Aggregate cash flow realized gross IRR on our exited investments reflects only invested and realized cash amounts as described above, and does not reflect any unrealized gains or losses in our portfolio.
Financial Condition, Liquidity and Capital Resources
Our liquidity and capital resources are generated primarily from cash flows from interest, dividends and fees earned from our investments and principal repayments, our credit facilities, debt securitization transactions, and other secured and unsecured debt. We may also generate cash flow from operations, future borrowings and future offerings of securities including public and/or private issuances of debt and/or equity securities through both registered offerings off of our shelf registration statement and private offerings. The primary uses of our cash are (i) investments in portfolio companies and other investments and to comply with certain portfolio
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diversification requirements, (ii) the cost of operations (including paying or reimbursing our Adviser), (iii) debt service, repayment and other financing costs of any borrowings and (iv) cash distributions to the holders of our shares.
We may from time to time enter into additional debt facilities, increase the size of our existing credit facilities, enter into additional debt securitization transactions, or issue additional debt securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to incur borrowings, issue debt securities or issue preferred stock, if immediately after the borrowing or issuance, the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness plus preferred stock, is at least 150%. Our current target ratio is 0.90x-1.25x.
As of March 31, 2022 and December 31, 2021, our asset coverage ratio was 182% and 182%, respectively. We seek to carefully consider our unfunded commitments for the purpose of planning our ongoing financial leverage. Further, we maintain sufficient borrowing capacity within the 150% asset coverage limitation to cover any outstanding unfunded commitments we are required to fund.
Cash and restricted cash as of March 31, 2022, taken together with our available debt, is expected to be sufficient for our investing activities and to conduct our operations in the near term. As of March 31, 2022, we had $1.4 billion available under our credit facilities.
Our long-term cash needs will include principal payments on outstanding indebtedness and funding of additional portfolio investments. Funding for long-term cash needs will come from unused net proceeds from financing activities. We believe that our liquidity and sources of capital are adequate to satisfy our short and long-term cash requirements. We cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to us in sufficient amounts in the future.
As of March 31, 2022, we had $332.8 million in cash and restricted cash. During the three months ended March 31, 2022, we used $13.5 million in cash for operating activities, primarily as a result of funding portfolio investments of $675.4 million, partially offset by sell downs and repayments of $615.9 million and other operating activity of $46.0 million. Lastly, cash used in financing activities was $0.1 billion during the period, which was primarily the result of distributions paid of $0.1 billion.
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Equity
There were no sales of our common stock during the three months ended March 31, 2022 and 2021.
The following table reflects the distributions declared on shares of our common stock during the three months ended March 31, 2022:
During certain periods, our distributions may exceed our earnings. As a result, it is possible that a portion of the distributions we make may represent a return of capital. A return of capital generally is a return of a shareholder’s investment rather than a return of earnings or gains derived from our investment activities. Each year, a statement on Form 1099-DIV identifying the tax character of the distributions will be mailed to our shareholders. The tax character of the distributions are not determined until our taxable year end.
The following table reflects the distributions declared on shares of our common stock during the three months ended March 31, 2021:
Pursuant to our second amended and restated dividend reinvestment plan, we will reinvest all cash distributions declared by the Board on behalf of our shareholders who do not elect to receive their distribution in cash as provided below. As a result, if the Board authorizes, and we declare, a cash dividend or other distribution, then our shareholders who have not opted out of our dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of our common stock as described below, rather than receiving the cash dividend or other distribution. Any fractional share otherwise issuable to a participant in the dividend reinvestment plan will instead be paid in cash.
If newly issued shares are used to implement the dividend reinvestment plan, the number of shares to be issued to a shareholder will be determined by dividing the total dollar amount of the cash dividend or distribution payable to a shareholder by the market price per share of our common stock at the close of regular trading on the New York Stock Exchange on the payment date of a distribution, or if no sale is reported for such day, the average of the reported bid and ask prices. However, if the market price per share on the payment date of a cash dividend or distribution exceeds the most recently computed net asset value per share, we will issue shares at the greater of (i) the most recently computed net asset value per share and (ii) 95% of the current market price per share (or such lesser discount to the current market price per share that still exceeded the most recently computed net asset value per share). For example, if the most recently computed net asset value per share is $15.00 and the market price on the payment date of a cash dividend is $16.00 per share, we will issue shares at $15.20 per share (95% of the current market price). If the most recently computed net asset value per share is $15.00 and the market price on the payment date of a cash dividend is $15.50 per share, we will issue shares at $15.00 per share, as net asset value is greater than 95% ($14.73 per share) of the current market price. Pursuant to our second amended and restated dividend reinvestment plan, if shares are purchased in the open market to implement the dividend reinvestment plan, the number of shares to be issued to a shareholder shall be determined by dividing the dollar amount of the cash dividend payable to such shareholder by the weighted average price per share for all shares purchased by the plan administrator in the open market in connection with the dividend. Shareholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.
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Stock Repurchase Plan
On November 3, 2020, the Board approved a repurchase program (the “Repurchase Plan”) under which we may repurchase up to $100 million of our outstanding common stock and on November 2, 2021, the Board extended the Repurchase Plan. Under the program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. Unless extended by the Board, the repurchase program will terminate 12-months from the date it was approved. On November 2, 2021, the Board approved an extension to the Repurchase Plan and, unless further extended by the Board, will terminate 12-months from that date. As of March 31, 2022, Goldman Sachs & Co., as agent, has repurchased 186,150 shares of the Company’s common stock pursuant to the Repurchase Plan for approximately $2.6 million.
The following table provides information regarding purchases of our common stock by Goldman Sachs & Co., as agent, pursuant to the Repurchase Plan for each month in the year ended December 31, 2021:
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Debt
Aggregate Borrowings
133
134
Senior Securities
Information about our senior securities is shown in the following table as of March 31, 2022 and the fiscal years ended December 31, 2021, 2020, 2019, 2018, 2017 and 2016.
Class and Period
Total Amount Outstanding Exclusive of Treasury Securities(1)($ in millions)
Asset Coverage per Unit(2)
Involuntary Liquidating Preference per Unit(3)
Average Market Value per Unit(4)
March 31, 2022 (unaudited)
440.4
892.3
1,820
252.5
2,060
December 31, 2019
480.9
2,926
December 31, 2018
308.6
2,254
December 31, 2017
2,580
SPV Asset Facility I(6)
300.0
400.0
350.00
350.0
550.0
395.00
190.0
375.0
255.0
155.00
155.0
295.0
60.3
135
390.0
260.0
292.5
252.0
196.0
Subscription Credit Facility(5)
883.0
393.5
December 31, 2016
495.0
2,375
136
2023 Notes(7)
150.0
138.5
1,042.8
1,089.7
1,037.1
1,039.3
425.0
1,011.3
1,057.3
984.2
997.9
500.0
998.0
1,049.9
971.1
1,013.3
1,068.7
1,018.5
1,000.0
973.1
1,032.8
1,005.0
932.4
997.4
850.0
922.1
994.3
On February 1, 2017, we entered into a senior secured revolving credit agreement (and as amended by that certain First Amendment to Senior Secured Revolving Credit Agreement, dated as of July 17, 2017, the First Omnibus Amendment to Senior Secured Revolving Credit Agreement and Guarantee and Security Agreement, dated as of March 29, 2018, the Third Amendment to Senior Secured Revolving Credit Agreement, dated as of June 21, 2018, the Fourth Amendment to Senior Secured Revolving Credit Agreement, dated as of April 2, 2019, the Fifth Amendment to Senior Secured Revolving Credit Agreement, dated as of May 7, 2020, the Sixth Amendment to Senior Secured Revolving Credit Agreement, dated as of September 3, 2020 and the Seventh Amendment to Senior Secured Revolving Credit Agreement, dated as of September 22, 2021, the “Revolving Credit Facility”). The parties to the Revolving Credit Facility include us, as Borrower, the lenders from time to time parties thereto (each a “Lender” and collectively, the “Lenders”), the parties in their capacity as issuers of letters of credit (referred to as "Issuing Banks"), and Truist Securities, Inc. and ING Capital LLC as Joint Lead Arrangers and Joint Book Runners, Truist Bank as Administrative Agent and ING Capital LLC as Syndication Agent.
The Revolving Credit Facility is guaranteed by OR Lending LLC, our subsidiary, and will be guaranteed by certain domestic subsidiaries of ours that are formed or acquired by us in the future (collectively, the “Guarantors”). Proceeds of the Revolving Credit Facility may be used for general corporate purposes, including the funding of portfolio investments.
The maximum principal amount of the Revolving Credit Facility is $1.655 billion, subject to availability under the borrowing base, which is based on our portfolio investments and other outstanding indebtedness. As amended on September 22, 2021, maximum capacity under the Revolving Credit Facility may be increased to $2.2 billion through our exercise of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The Revolving Credit Facility includes a $50 million limit for swingline loans and is secured by a perfected first-priority interest in substantially all of the portfolio investments held by us and each Guarantor, subject to certain exceptions.
We borrow amounts in U.S. dollars or certain other permitted currencies. Amounts drawn under the Revolving Credit Facility with respect to the Extending Commitments will bear interest at either (i) LIBOR plus margin of either 1.875% per annum or, if the borrowing base is greater than or equal to the product of 1.60 and the combined debt amount, 1.75% per annum, (ii) an alternative base rate plus margin of either 0.875% per annum or, if the borrowing base is greater than or equal to the product of 1.60 and the combined debt amount, 0.75% per annum, or (iii) for amounts drawn under the Revolving Credit Facility in Sterling or Swiss Francs, either the Sterling Overnight Interbank Average Rate ("SONIA") or the Swiss Average Rate Overnight ("SARON"), as applicable, plus margin of either 1.875% per annum or, if the borrowing base is greater than or equal to the product of 1.60 and the combined debt amount, 1.75% per annum plus an applicable credit adjustment spread. Amounts drawn under the Revolving Credit Facility with respect to the Non-Extended Commitments will bear interest at either (i) LIBOR plus 2.00% per annum, (ii) an alternative base rate plus 1.00% per annum or (iii) SONIA or SARON, as applicable, plus 2.00% per annum plus an applicable credit adjustment spread. Further, the Revolving Credit Facility builds in a hardwired approach for the replacement of LIBOR loans in U.S. dollars. For LIBOR loans in other permitted currencies, the Revolving Credit Facility includes customary fallback mechanics for us and the Administrative Agent to select an alternative benchmark, subject to the negative consent of required Lenders. We may elect the currency and rate at the time of drawdown, and loans may be converted from one rate to another at any time at our option, subject to certain conditions. We predominantly borrow utilizing LIBOR rate loans, generally electing one-month upon borrowing, to the extent applicable. We also pay a fee of 0.375% on undrawn amounts under the Revolving Credit Facility.
The Revolving Credit Facility includes customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the
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occurrence of certain events and certain financial covenants related to asset coverage and liquidity and other maintenance covenants, as well as customary events of default. The agreement requires a minimum asset coverage ratio of 100% with respect to our consolidated assets and our subsidiaries, measured at the last day of any fiscal quarter and a minimum asset coverage ratio of no less than 2.00 to 1.00 with respect to our consolidated assets and our subsidiary guarantors (including certain limitations on the contribution of equity in financing subsidiaries as specified therein) to our secured debt and our subsidiary guarantors (the “Obligor Asset Coverage Ratio”), measured at the last day of each fiscal quarter. The agreement concentration limits in connection with the calculation of the borrowing base, based upon the Obligor Asset Coverage Ratio.
Certain of our wholly owned subsidiaries are parties to credit facilities (the “SPV Asset Facilities”). Pursuant to the SPV Asset Facilities, we sell and contribute certain investments to these wholly owned subsidiaries pursuant to sale and contribution agreements by and between us and the wholly owned subsidiaries. No gain or loss is recognized as a result of these contributions. Proceeds from the SPV Asset Facilities are used to finance the origination and acquisition of eligible assets by the wholly owned subsidiary, including the purchase of such assets from us. We retain a residual interest in assets contributed to or acquired to the wholly owned subsidiary through our ownership of the wholly owned subsidiary.
The SPV Asset Facilities are secured by a perfected first priority security interest in the assets of these wholly owned subsidiaries and on any payments received by such wholly owned subsidiaries in respect of those assets. Assets pledged to lenders under the SPV Asset Facilities will not be available to pay our debts.
The SPV Asset Facilities contain customary covenants, including certain limitations on the incurrence by us of additional indebtedness and on our ability to make distributions to our shareholders, or redeem, repurchase or retire shares of stock, upon the occurrence of certain events, and customary events of default (with customary cure and notice provisions).
On December 21, 2017 (the “SPV Asset Facility I Closing Date”), ORCC Financing LLC (“ORCC Financing”), a Delaware limited liability company and our subsidiary, entered into a Loan and Servicing Agreement (as amended, the “SPV Asset Facility I”), with ORCC Financing as Borrower, us as Transferor and Servicer, the lenders from time to time parties thereto (the “SPV Lenders”), Morgan Stanley Asset Funding Inc. as Administrative Agent, State Street Bank and Trust Company as Collateral Agent and Cortland Capital Market Services LLC as Collateral Custodian.
From time to time, we sold and contributed certain investments to ORCC Financing pursuant to a Sale and Contribution Agreement by and between us and ORCC Financing. No gain or loss was recognized as a result of the contribution. Proceeds from the SPV Asset Facility I were used to finance the origination and acquisition of eligible assets by ORCC Financing, including the purchase of such assets from us. We retained a residual interest in assets contributed to or acquired by ORCC Financing through its ownership of ORCC Financing. The maximum principal amount of the SPV Asset Facility I was $400 million; the availability of this amount was subject to a borrowing base test, which was based on the value of ORCC Financing’s assets from time to time, and satisfaction of certain conditions, including certain concentration limits.
The SPV Asset Facility I provided for the ability to draw and redraw amounts under the SPV Asset Facility I for a period of up to three years after the SPV Asset Facility I Closing Date (the “SPV Asset Facility I Commitment Termination Date”). The SPV Asset Facility I was terminated on June 2, 2020 (the “SPV Asset Facility I Termination Date”). Prior to the SPV Asset Facility I Termination Date, proceeds received by ORCC Financing from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to us, subject to certain conditions. On the SPV Asset Facility I Termination Date, ORCC Financing repaid in full all outstanding fees and expenses and all principal and interest on outstanding borrowings.
Amounts drawn bore interest at LIBOR plus a spread of 2.25% until the six-month anniversary of the SPV Asset Facility I Closing Date, increasing to 2.50% thereafter, until the SPV Asset Facility I Commitment Termination Date. We predominantly borrowed utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. After a ramp-up period, there was an unused fee of 0.75% per annum on the amount, if any, by which the undrawn amount under the SPV Asset Facility I exceeded 25% of the maximum principal amount of the SPV Asset Facility I. The SPV Asset Facility I contained customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility I was secured by a perfected first priority security interest in the assets of ORCC Financing and on any payments received by ORCC Financing in respect of those assets. Assets pledged to the SPV Lenders were not available to pay our debts.
On May 22, 2018, our subsidiary, ORCC Financing II LLC (“ORCC Financing II”), a Delaware limited liability company and our subsidiary, entered into a Credit Agreement (as amended, the “SPV Asset Facility II”), with ORCC Financing II, as Borrower, the lenders from time to time parties thereto, Natixis, New York Branch, as Administrative Agent, State Street Bank and Trust Company, as
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Collateral Agent, and Cortland Capital Market Services LLC as Document Custodian. The parties to the SPV Asset Facility II have entered into various amendments, including to admit new lenders, increase or decrease the maximum principal amount available under the facility, extend the availability period and maturity date, change the interest rate and make various other changes. The following describes the terms of SPV Asset Facility II amended through March 25, 2022 (the “SPV Asset Facility II Seventh Amendment Date”).
From time to time, we sell and contribute certain investments to ORCC Financing II pursuant to a sale and contribution agreement by and between us and ORCC Financing II. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility II will be used to finance the origination and acquisition of eligible assets by ORCC Financing II, including the purchase of such assets. The Company retains a residual interest in assets contributed to or acquired by ORCC Financing II through the Company’s ownership of ORCC Financing II. The maximum principal amount of the SPV Asset Facility II as of the SPV Asset Facility II Seventh Amendment Date is $350 million (which includes terms loans of $100 million and revolving commitments of $250 million); the availability of this amount is subject to an overcollateralization ratio test, which is based on the value of ORCC Financing II’s assets from time to time, and satisfaction of certain conditions, including an interest coverage ratio test, certain concentration limits and collateral quality tests.
The SPV Asset Facility II provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility II through April 12, 2023, unless the revolving commitments are terminated or converted to term loans sooner as provided in the SPV Asset Facility II (the “SPV Asset Facility II Commitment Termination Date”). Unless otherwise terminated, the SPV Asset Facility II will mature on December 22, 2029 (the "SPV Assert Facility II Stated Maturity"). Prior to the SPV Asset Facility II Stated Maturity, proceeds received by ORCC Financing II from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to us, subject to certain conditions. On October 10, 2026, ORCC Financing II must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to us.
With respect to revolving loans, amounts drawn bear interest at Term SOFR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and Term SOFR plus 0.40%) plus a spread that steps up from 2.30% to 2.55% during the period from March 25, 2022, to the Reinvestment Period End Date. With respect to term loans, amounts drawn bear interest at Term SOFR (or, in the case of certain lenders that are commercial paper conduits, the lower of their cost of funds and Term SOFR plus 0.40%) plus a spread that steps up from 2.30% to 2.55% during the same period. From March 25, 2022 to the SPV Asset Facility II Commitment Termination Date, there is a commitment fee ranging from 0.50% to 0.625% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility II. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On December 14, 2018, ORCC Financing III LLC (“ORCC Financing III”), a Delaware limited liability company and our subsidiary, entered into a Loan Financing and Servicing Agreement (the “SPV Asset Facility III”), with ORCC Financing III, as borrower, ourselves, as equity holder and services provider, the lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as Facility Agent, State Street Bank and Trust Company, as Collateral Agent and Cortland Capital Market Services LLC, as Collateral Custodian. The parties to the SPV Asset Facility III have entered into various amendments, including those relating to the undrawn fee and make-whole fee and definition of “Change of Control.” The following describes the terms of SPV Asset Facility III as amended through December 13, 2021.
The maximum principal amount of the SPV Asset Facility III is $500 million; the availability of this amount is subject to a borrowing base test, which is based on the value of ORCC Financing III’s assets from time to time, and satisfaction of certain conditions, including interest spread and weighted average coupon tests, certain concentration limits and collateral quality tests.
The SPV Asset Facility III provides for the ability to borrow, reborrow, repay and prepay advances under the SPV Asset Facility III until June 14, 2022 unless such period is extended or accelerated under the terms of the SPV Asset Facility III (the “SPV Asset Facility III Revolving Period”). Unless otherwise extended, accelerated or terminated under the terms of the SPV Asset Facility III, the SPV Asset Facility III will mature on the date that is two years after the last day of the SPV Asset Facility III Revolving Period (the “SPV Asset Facility III Stated Maturity”). Prior to the SPV Asset Facility III Stated Maturity, proceeds received by ORCC Financing III from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding advances, and the excess may be returned to us, subject to certain conditions. On the SPV Asset Facility III Stated Maturity, ORCC Financing III must pay in full all outstanding fees and expenses and all principal and interest on outstanding advances, and the excess may be returned to us.
Amounts drawn bear interest at LIBOR (or, in the case of certain SPV Lenders III that are commercial paper conduits, the lower of (a) their cost of funds and (b) LIBOR, such LIBOR not to be lower than zero) plus a spread equal to 2.20% per annum, which spread will increase (a) on and after the end of the SPV Asset Facility III Revolving Period by 0.15% per annum if no event of default has occurred and (b) by 2.00% per annum upon the occurrence of an event of default (such spread, the “Applicable Margin”). LIBOR may be replaced as a base rate under certain circumstances. We predominantly borrow utilizing LIBOR rate loans, generally electing one-month LIBOR upon borrowing. During the Revolving Period, ORCC Financing III will pay an undrawn fee ranging from 0.25% to 0.50% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility III. During the Revolving Period, if the undrawn
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commitments are in excess of a certain portion (initially 20% and increasing in stages to 75%) of the total commitments under the SPV Asset Facility III, ORCC Financing III will also pay a make-whole fee equal to the Applicable Margin multiplied by such excess undrawn commitment amount, reduced by the undrawn fee payable on such excess. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On August 2, 2019 (the “SPV Asset Facility IV Closing Date”), ORCC Financing IV LLC (“ORCC Financing IV”), a Delaware limited liability company and newly formed subsidiary, entered into a Credit Agreement (the “SPV Asset Facility IV”), with ORCC Financing IV, as borrower, Société Générale, as initial Lender and as Administrative Agent, State Street Bank and Trust Company, as Collateral Agent, Collateral Administrator and Custodian, and Cortland Capital Market Services LLC as Document Custodian and the lenders from time to time party thereto pursuant to Assignment and Assumption Agreements.
On March 11, 2022 (the “SPV Asset Facility IV Amendment Date”), the parties to the SPV Asset Facility IV amended the SPV Asset Facility IV to extend the reinvestment period from April 1, 2022 until October 3, 2022 and the stated maturity from April 1, 2030 to October 1, 2030. The amendment also changed the applicable interest rate from LIBOR plus an applicable margin of 2.15% during the reinvestment period and LIBOR plus an applicable margin of 2.40% after the reinvestment period to term SOFR plus an applicable margin of 2.30% during the reinvestment period and term SOFR plus an applicable margin of 2.55% after the reinvestment period. In the case of certain lenders that are commercial paper conduits, the applicable rate is the cost of funds rate plus the applicable margin.
From time to time, we expect to sell and contribute certain investments to ORCC Financing IV pursuant to a Sale and Contribution Agreement by and between us and ORCC Financing IV. No gain or loss will be recognized as a result of the contribution. Proceeds from the SPV Asset Facility IV will be used to finance the origination and acquisition of eligible assets by ORCC Financing IV, including the purchase of such assets from us. We retain a residual interest in assets contributed to or acquired by ORCC Financing IV through our ownership of ORCC Financing IV. The maximum principal amount of the Credit Facility is currently $250 million; the availability of this amount is subject to an overcollateralization ratio test, which is based on the value of ORCC Financing IV’s assets from time to time, and satisfaction of certain conditions, including an interest coverage ratio test, certain concentration limits and collateral quality tests.
The SPV Asset Facility IV provides for the ability to (1) draw term loans and (2) draw and redraw revolving loans under the SPV Asset Facility IV until the last day of the reinvestment period unless the revolving commitments are terminated or converted to term loans sooner as provided in the SPV Asset Facility IV (the “Commitment Termination Date”). Unless otherwise terminated, the SPV Asset Facility IV will mature on October 1, 2030 (the “SPV Asset Facility IV Stated Maturity”). Prior to the SPV Asset Facility IV Stated Maturity, proceeds received by ORCC Financing IV from principal and interest, dividends, or fees on assets must be used to pay fees, expenses and interest on outstanding borrowings, and the excess may be returned to us, subject to certain conditions. On the SPV Asset Facility IV Stated Maturity, ORCC Financing IV must pay in full all outstanding fees and expenses and all principal and interest on outstanding borrowings, and the excess may be returned to us.
From the Closing Date to the Commitment Termination Date, there is a commitment fee ranging from 0.50% to 0.75% per annum on the undrawn amount, if any, of the revolving commitments in the SPV Asset Facility IV. The SPV Asset Facility IV contains customary covenants, including certain financial maintenance covenants, limitations on the activities of ORCC Financing IV, including limitations on incurrence of incremental indebtedness, and customary events of default. The SPV Asset Facility IV is secured by a perfected first priority security interest in the assets of ORCC Financing IV and on any payments received by ORCC Financing IV in respect of those assets. Assets pledged to the Lenders will not be available to pay our debts. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On May 28, 2019 (the “CLO I Closing Date”), we completed a $596 million term debt securitization transaction (the “CLO I Transaction”), also known as a collateralized loan obligation transaction. The secured notes and preferred shares issued in the CLO I Transaction and the secured loan borrowed in the CLO I Transaction were issued and incurred, as applicable, by our consolidated subsidiaries Owl Rock CLO I, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO I Issuer”), and Owl Rock CLO I, LLC, a Delaware limited liability company (the “CLO I Co-Issuer” and together with the CLO I Issuer, the “CLO I Issuers”) ”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO I Issuer.
In the CLO I Transaction the CLO I Issuers (A) issued the following notes pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO I Indenture”), by and among the CLO I Issuers and State Street Bank and Trust Company: (i) $242 million of AAA(sf) Class A Notes, which bear interest at three-month LIBOR plus 1.80%, (ii) $30 million of AAA(sf) Class A-F Notes, which bear interest at a fixed rate of 4.165%, and (iii) $68 million of AA(sf) Class B Notes, which bear interest at three-month LIBOR plus 2.70% (together, the “CLO I Notes”) and (B) borrowed $50 million under floating rate loans (the “Class A Loans” and together with the CLO I Notes, the “CLO I Debt”), which bear interest at three-month LIBOR plus 1.80%, under a credit agreement (the “CLO I Credit Agreement”), dated as of the CLO I Closing Date, by and among the CLO I Issuers, as borrowers, various financial institutions, as
lenders, and State Street Bank and Trust Company, as collateral trustee and loan agent. The Class A Loans may be exchanged by the lenders for Class A Notes at any time, subject to certain conditions under the CLO I Credit Agreement and the Indenture. The CLO I Debt is scheduled to mature on May 20, 2031. The CLO I Notes were privately placed by Natixis Securities Americas, LLC and SG Americas Securities, LLC.
Concurrently with the issuance of the CLO I Notes and the borrowing under the Class A Loans, the CLO I Issuer issued approximately $206.1 million of subordinated securities in the form of 206,106 preferred shares at an issue price of U.S.$1,000 per share (the “CLO I Preferred Shares”). The CLO I Preferred Shares were issued by the CLO I Issuer as part of its issued share capital and are not secured by the collateral securing the CLO I Debt. We own all of the CLO I Preferred Shares, and as such, are eliminated in consolidation. We act as retention holder in connection with the CLO I Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO I Preferred Shares.
The Adviser serves as collateral manager for the CLO I Issuer under a collateral management agreement dated as of the CLO I Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO I Issuers’ equity or notes that we own.
The CLO I Debt is secured by all of the assets of the CLO I Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO I Transaction, we and ORCC Financing II LLC sold and contributed approximately $575 million par amount of middle market loans to the CLO I Issuer on the CLO I Closing Date. Such loans constituted the initial portfolio assets securing the CLO I Debt. We and ORCC Financing II LLC each made customary representations, warranties, and covenants to the CLO I Issuer regarding such sales and contributions under a loan sale agreement.
Through May 20, 2023, a portion of the proceeds received by the CLO I Issuer from the loans securing the CLO I Debt may be used by the CLO I Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager in the CLO I Transaction.
The CLO I Debt is the secured obligation of the CLO I Issuers, and the CLO I Indenture and the CLO I Credit Agreement include customary covenants and events of default. Assets pledged to holders of the Secured Debt and the other secured parties under the Indenture will not be available to pay our debts.
The CLO I Notes were offered in reliance on Section 4(a)(2) of the Securities Act. The CLO I Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") as applicable. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On December 12, 2019 (the “CLO II Closing Date”), we completed a $396.6 million term debt securitization transaction (the “CLO II Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by us. The secured notes and preferred shares issued in the CLO II Transaction were issued by our consolidated subsidiaries Owl Rock CLO II, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO II Issuer”), and Owl Rock CLO II, LLC, a Delaware limited liability company (the “CLO II Co-Issuer” and together with the Issuer, the “CLO II Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the Issuer.
The CLO II Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO II Indenture”), by and among the Issuers and State Street Bank and Trust Company: (i) $157 million of AAA(sf) Class A-1L Notes, which bear interest at three-month LIBOR plus 1.75%, (ii) $40 million of AAA(sf) Class A-1F Notes, which bear interest at a fixed rate of 3.44%, (iii) $20 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.20%, (iv) $40 million of AA(sf) Class B-L Notes, which bear interest at three-month LIBOR plus 2.75% and (v) $3 million of AA(sf) Class B-F Notes, which bear interest at a fixed rate of 4.46% (together, the “CLO II Debt”). The CLO II Debt was scheduled to mature on January 20, 2031. The CLO II Debt was privately placed by Deutsche Bank Securities Inc.
Concurrently with the issuance of the CLO II Debt, the CLO II Issuer issued approximately $136.6 million of subordinated securities in the form of 136,600 preferred shares at an issue price of U.S.$1,000 per share (the “CLO II Preferred Shares”). The CLO II Preferred Shares were issued by the CLO II Issuer as part of its issued share capital and are not secured by the collateral securing the CLO II Debt. We purchased all of the CLO II Preferred Shares. We acted as retention holder in connection with the CLO II Transaction for the
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purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such was required to retain a portion of the CLO II Preferred Shares.
The Adviser serves as collateral manager for the CLO II Issuer under a collateral management agreement dated as of the CLO II Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO II Issuers’ equity or notes that we own.
The CLO II Debt was secured by all of the assets of the CLO II Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO II Transaction, we and ORCC Financing III LLC sold and contributed approximately $400 million par amount of middle market loans to the CLO II Issuer on the CLO II Closing Date. Such loans constituted the initial portfolio assets securing the CLO II Debt. We and ORCC Financing III LLC each made customary representations, warranties, and covenants to the CLO II Issuer regarding such sales and contributions under a loan sale agreement.
Through January 20, 2022, a portion of the proceeds received by the CLO II Issuer from the loans securing the CLO II Debt could be used by the CLO II Issuer to purchase additional middle market loans under the direction of the Adviser as collateral manager for the CLO II Issuer and in accordance with the our investing strategy and ability to originate eligible middle market loans.
The CLO II Debt was the secured obligation of the CLO II Issuers, and the CLO II Indenture includes customary covenants and events of default. Assets pledged to holders of the Secured Debt and the other secured parties under the Indenture were not available to pay our debts.
The CLO II Debt was offered in reliance on Section 4(a)(2) of the Securities Act. The CLO II Notes have not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On April 9, 2021 (the “CLO II Refinancing Date”), we completed a $398.1 million term debt securitization refinancing (the “CLO II Refinancing”), also known as a collateralized loan obligation refinancing, which is a form of secured financing incurred by us. The secured notes and preferred shares issued in the CLO II Refinancing were issued by the CLO II Issuer and the CLO II Co-Issuer and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO II Issuer.
Concurrently with the issuance of the CLO II Refinancing Debt, the CLO II Issuer issued 1,500 additional shares of CLO II Preferred Shares at an issue price of U.S.$1,000 per share (the “CLO II Refinancing Preferred Shares”) resulting in a total outstanding number of CLO II Preferred Shares of 138,100 ($138.1 million total issue price). The CLO II Refinancing Preferred Shares were issued by the CLO II Issuer as part of its issued share capital and are not secured by the collateral securing the CLO II Refinancing Debt. We purchased all of the CLO II Refinancing Preferred Shares. We act as retention holder in connection with the CLO II Refinancing for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO II Preferred Shares. The proceeds from the CLO II Refinancing Preferred Shares were used to pay certain expenses incurred in connection with the CLO II Refinancing.
Through April 20, 2025, a portion of the proceeds received by the CLO II Issuer from the loans securing the CLO II Refinancing Debt may be used by the CLO II Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO II Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans.
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The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO II Issuers’ equity or notes that we own. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On March 26, 2020 (the “CLO III Closing Date”), we completed a $395.31 million term debt securitization transaction (the “CLO III Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing incurred by us. The secured notes and preferred shares issued in the CLO III Transaction were issued by our consolidated subsidiaries Owl Rock CLO III, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO III Issuer”), and Owl Rock CLO III, LLC, a Delaware limited liability company (the “CLO III Co-Issuer” and together with the CLO III Issuer, the “CLO III Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO III Issuer.
Concurrently with the issuance of the CLO III Debt, the CLO III Issuer issued approximately $135.31 million of subordinated securities in the form of 135,310 preferred shares at an issue price of U.S.$1,000 per share (the “CLO III Preferred Shares”). The CLO III Preferred Shares were issued by the CLO III Issuer as part of its issued share capital and are not secured by the collateral securing the CLO III Debt. We own all of the CLO III Preferred Shares, and as such, these securities are eliminated in consolidation. We act as retention holder in connection with the CLO III Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO III Preferred Shares.
The Adviser serves as collateral manager for the CLO III Issuer under a collateral management agreement dated as of the CLO III Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO III Issuers’ equity or notes that we own.
The CLO III Debt is secured by all of the assets of the CLO III Issuer, which will consist primarily of middle market loans, participation interests in middle market loans, and related rights and the cash proceeds thereof. As part of the CLO III Transaction, we and ORCC Financing IV LLC sold and contributed approximately $400 million par amount of middle market loans to the CLO III Issuer on the CLO III Closing Date. Such loans constituted the initial portfolio assets securing the CLO III Debt. Us and ORCC Financing IV LLC each made customary representations, warranties, and covenants to the CLO III Issuer regarding such sales and contributions under a loan sale agreement.
Through April 20, 2024, a portion of the proceeds received by the CLO III Issuer from the loans securing the CLO III Debt may be used by the CLO III Issuer to purchase additional middle market loans under the direction of the Adviser as the collateral manager for the CLO III Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans.
The CLO III Debt is the secured obligation of the CLO III Issuers, and the CLO III Indenture includes customary covenants and events of default. Assets pledged to holders of the CLO III Debt and the other secured parties under the CLO III Indenture will not be available to pay our debts.
The CLO III Debt was offered in reliance on Section 4(a)(2) of the Securities Act. The CLO III Debt has not been registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
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On May 28, 2020 (the “CLO IV Closing Date”), we completed a $438.9 million term debt securitization transaction (the “CLO IV Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing. The secured notes and preferred shares issued in the CLO IV Transaction were issued by our consolidated subsidiaries Owl Rock CLO IV, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO IV Issuer”), and Owl Rock CLO IV, LLC, a Delaware limited liability company (the “CLO IV Co-Issuer” and together with the CLO IV Issuer, the “CLO IV Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO IV Issuer.
Concurrently with the issuance of the CLO IV Secured Notes, the CLO IV Issuer issued approximately $186.9 million of subordinated securities in the form of 186,900 preferred shares at an issue price of U.S.$1,000 per share (the “CLO IV Preferred Shares”). The CLO IV Preferred Shares were issued by the CLO IV Issuer as part of its issued share capital and are not secured by the collateral securing the CLO IV Secured Notes. We own all of the outstanding CLO IV Preferred Shares, and as such, these securities are eliminated in consolidation. We acted as retention holder in connection with the CLO IV Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such was required to retain a portion of the CLO IV Preferred Shares while the CLO IV Secured Notes were outstanding.
As part of the CLO IV Transaction, we entered into a loan sale agreement with the CLO IV Issuer dated as of the CLO IV Closing Date, which provided for the sale and contribution of approximately $275.07 million par amount of middle market loans to the CLO IV Issuer on the CLO IV Closing Date and for future sales to the CLO IV Issuer on an ongoing basis. Such loans constituted part of the initial portfolio of assets securing the CLO IV Secured Notes. The remainder of the initial portfolio assets securing the CLO IV Secured Notes consisted of approximately $174.92 million par amount of middle market loans purchased by the CLO IV Issuer from ORCC Financing II LLC, our wholly-owned subsidiary, under an additional loan sale agreement executed on the CLO IV Closing Date between the Issuer and ORCC Financing II LLC. We and ORCC Financing II LLC each made customary representations, warranties, and covenants to the Issuer under the applicable loan sale agreement.
Through November 20, 2021, a portion of the proceeds received by the CLO IV Issuer from the loans securing the CLO IV Secured Notes could be used by the CLO IV Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO IV Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans.
The CLO IV Secured Notes were the secured obligation of the CLO IV Issuers, and the CLO IV Indenture includes customary covenants and events of default. The CLO IV Secured Notes have not been registered under the Securities Act, or any state securities (e.g., “blue sky”) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration. Assets pledged to the holders of the CLO IV Secured Notes were not available to pay our debts.
On July 9, 2021 (the “CLO IV Refinancing Date”), the Company completed a $440.5 million term debt securitization refinancing (the “CLO IV Refinancing”), also known as a collateralized loan obligation refinancing, which is a form of secured financing. The secured notes and preferred shares issued in the CLO IV Refinancing were issued by the CLO IV Issuer and the CLO IV Co-Issuer and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO IV Issuer.
The CLO IV Refinancing was executed by the issuance of the following classes of notes pursuant to the CLO IV Indenture as supplemented by the supplemental indenture dated as of the CLO IV Refinancing Date (the “CLO IV Refinancing Indenture”), by and among the CLO IV Issuers and State Street Bank and Trust Company: (i) $252 million of AAA(sf) Class A-1-R Notes, which bear interest at three-month LIBOR plus 1.60% and (ii) $40.5 million of AA(sf) Class A-2-R Notes, which bear interest at a fixed rate of 1.90% (together, the “CLO IV Refinancing Secured Notes”). The CLO IV Refinancing Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the Issuer. The CLO IV Refinancing Secured Notes are scheduled to mature on August 20, 2033. The CLO IV Refinancing Secured Notes were privately placed by Natixis Securities Americas LLC. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference
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rate for interest accruing on the CLO IV Refinancing Secured Notes. The proceeds from the CLO IV Refinancing were used to redeem in full the classes of notes issued on the CLO IV Closing Date, to redeem a portion of the preferred shares of the CLO IV Issuer as described below and to pay expenses incurred in connection with the CLO IV Refinancing.
Concurrently with the issuance of the CLO IV Refinancing Secured Notes, the CLO IV Issuer redeemed 38,900 preferred shares we held at a total redemption price of $38.9 million ($1,000 per preferred share). We retain the 148,000 CLO IV Preferred Shares that remain outstanding and that we acquired on the CLO IV Closing Date. The CLO IV Preferred Shares were issued by the Issuer as part of its issued share capital and are not secured by the collateral securing the CLO IV Refinancing Secured Notes. We act as retention holder in connection with the CLO IV Refinancing for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the Preferred Shares.
Through August 20, 2025, a portion of the proceeds received by the CLO IV Issuer from the loans securing the CLO IV Refinancing Secured Notes may be used by the Issuer to purchase additional middle market loans under the direction of the Advisor, in its capacity as collateral manager for the CLO IV Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans.
The Adviser serves as collateral manager for the CLO IV Issuer under a collateral management agreement dated as of the CLO IV Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO IV Issuers’ equity or notes we own. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On November 20, 2020 (the “CLO V Closing Date”), we completed a $345.45 million term debt securitization transaction (the “CLO V Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing. The secured notes and preferred shares issued in the CLO V Transaction were issued by our consolidated subsidiaries Owl Rock CLO V, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO V Issuer”), and Owl Rock CLO V, LLC, a Delaware limited liability company (the “CLO V Co-Issuer” and together with the CLO V Issuer, the “CLO V Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO V Issuer.
The CLO V Transaction was executed by the issuance of the following classes of notes and preferred shares pursuant to an indenture and security agreement dated as of the Closing Date (the “CLO V Indenture”), by and among the CLO V Issuers and State Street Bank and Trust Company: (i) $182 million of AAA(sf)/AAAsf Class A-1 Notes, which bear interest at three-month LIBOR plus 1.85% and (ii) $14 million of AAA(sf) Class A-2 Notes, which bear interest at three-month LIBOR plus 2.20% (together, the “CLO V Secured Notes”). The CLO V Secured Notes are secured by the middle market loans, participation interests in middle market loans and other assets of the CLO V Issuer. The CLO V Secured Notes are scheduled to mature on November 20, 2029. The CLO V Secured Notes were privately placed by Natixis Securities Americas LLC. Upon the occurrence of certain triggering events relating to the end of LIBOR, a different benchmark rate will replace LIBOR as the reference rate for interest accruing on the CLO V Secured Notes.
Concurrently with the issuance of the CLO V Secured Notes, the CLO V Issuer issued approximately $149.45 million of subordinated securities in the form of 149,450 preferred shares at an issue price of U.S.$1,000 per share (the “CLO V Preferred Shares”). The CLO V Preferred Shares were issued by the CLO V Issuer as part of its issued share capital and are not secured by the collateral securing the CLO V Secured Notes. We purchased all of the CLO V Preferred Shares, and as such, these securities are eliminated in consolidation. We act as retention holder in connection with the CLO V Transaction for the purposes of satisfying certain U.S. and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO V Preferred Shares.
As part of the CLO V Transaction, we entered into a loan sale agreement with the CLO V Issuer dated as of the CLO V Closing Date, which provided for the sale and contribution of approximately $201.75 million par amount of middle market loans to the CLO V Issuer on the CLO V Closing Date and for future sales to the CLO V Issuer on an ongoing basis. Such loans constituted part of the initial portfolio of assets securing the CLO V Secured Notes. The remainder of the initial portfolio assets securing the CLO V Secured Notes consisted of approximately $84.74 million par amount of middle market loans purchased by the CLO V Issuer from ORCC Financing II LLC, our wholly-owned subsidiary, under an additional loan sale agreement executed on the CLO V Closing Date between the Issuer and ORCC
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Financing II LLC. We and ORCC Financing II LLC each made customary representations, warranties, and covenants to the Issuer under the applicable loan sale agreement.
Through July 20, 2022, a portion of the proceeds received by the CLO V Issuer from the loans securing the CLO V Secured Notes may be used by the CLO V Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO V Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans.
The Adviser will serve as collateral manager for the CLO V Issuer under a collateral management agreement dated as of the CLO V Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO V Issuers’ equity or notes that we own. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On May 5, 2021 (the “CLO VI Closing Date”), we completed a $397.78 million term debt securitization transaction (the “CLO VI Transaction”), also known as a collateralized loan obligation transaction, which is a form of secured financing. The secured notes and preferred shares issued in the CLO VI Transaction were issued by our consolidated subsidiaries Owl Rock CLO VI, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (the “CLO VI Issuer”), and Owl Rock CLO VI, LLC, a Delaware limited liability company (the “CLO VI Co-Issuer” and together with the CLO VI Issuer, the “CLO VI Issuers”) and are backed by a portfolio of collateral obligations consisting of middle market loans and participation interests in middle market loans as well as by other assets of the CLO VI Issuer.
Concurrently with the issuance of the CLO VI Secured Notes, the CLO VI Issuer issued approximately $137.78 million of subordinated securities in the form of 137,775 preferred shares at an issue price of U.S.$1,000 per share (the “CLO VI Preferred Shares”). The CLO VI Preferred Shares were issued by the CLO VI Issuer as part of its issued share capital and are be secured by the collateral securing the CLO VI Secured Notes. We purchased all of the CLO VI Preferred Shares, and as such, these securities are eliminated in consolidation. We will act as retention holder in connection with the CLO VI Transaction for the purposes of satisfying certain U.S., United Kingdom and European Union regulations requiring sponsors of securitization transactions to retain exposure to the performance of the securitized assets and as such is required to retain a portion of the CLO VI Preferred Shares.
As part of the CLO VI Transaction, we entered into a loan sale agreement with the CLO VI Issuer dated as of the CLO VI Closing Date, which provides for the sale and contribution of approximately $205.6 million par amount of middle market loans to the CLO VI Issuer on the CLO VI Closing Date and for future sales to the CLO VI Issuer on an ongoing basis. Such loans constitute part of the initial portfolio of assets securing the CLO VI Secured Notes. The remainder of the initial portfolio assets securing the CLO VI Secured Notes consists of approximately $164.7 million par amount of middle market loans purchased by the CLO VI Issuer from ORCC Financing IV LLC, our wholly-owned subsidiary, under an additional loan sale agreement executed on the CLO VI Closing Date between the Issuer and ORCC Financing IV LLC. We and ORCC Financing IV LLC each made customary representations, warranties, and covenants to the Issuer under the applicable loan sale agreement.
Through June 20, 2024, a portion of the proceeds received by the CLO VI Issuer from the loans securing the CLO VI Secured Notes may be used by the CLO VI Issuer to purchase additional middle market loans under the direction of the Adviser, in its capacity as collateral manager for the CLO VI Issuer and in accordance with our investing strategy and ability to originate eligible middle market loans.
The Secured Notes are the secured obligation of the CLO VI Issuers, and the CLO VI Indenture includes customary covenants and events of default. The CLO VI Secured Notes have not been registered under the Securities Act of 1933, as amended (the “Securities
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Act”), or any state securities (e.g., “blue sky”) laws, and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or pursuant to an applicable exemption from such registration.
The Adviser serves as collateral manager for the CLO VI Issuer under a collateral management agreement dated as of the CLO VI Closing Date. The Adviser is entitled to receive fees for providing these services. The Adviser has waived its right to receive such fees but may rescind such waiver at any time; provided, however, that if the Adviser rescinds such waiver, the management fee payable to the Adviser pursuant to the Investment Advisory Agreement will be offset by the amount of the collateral management fee attributable to the CLO VI Issuers’ equity or notes that we own. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On December 21, 2017, we entered into a Note Purchase Agreement governing the issuance of $150 million in aggregate principal amount of unsecured notes (the “2023 Notes”) to institutional investors in a private placement. The 2023 Notes had a fixed interest rate of 4.75% and were due on June 21, 2023. Interest on the 2023 Notes was due and ranked semiannually. This interest rate was subject to increase (up to a maximum interest rate of 5.50%) in the event that, subject to certain exceptions, the 2023 Notes ceased to have an investment grade rating. We were obligated to offer to repay the 2023 Notes at par if certain change in control events occur. The 2023 Notes were our general unsecured obligations and ranked pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by us.
The Note Purchase Agreement for the 2023 Notes contained customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a BDC within the meaning of the 1940 Act and a RIC under the Code, minimum shareholders equity, minimum asset coverage ratio and prohibitions on certain fundamental changes at us or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of us or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy.
In connection with the offering of the 2023 Notes, on December 21, 2017 we entered into a centrally cleared interest rate swap. The notional amount of the interest rate swap was $150 million. We received fixed rate interest semi-annually at 4.75% and paid variable rate interest monthly based on 1-month LIBOR plus 2.545%. The interest rate swap matured on December 21, 2021, and therefore, for the three months ended March 31, 2022, we did not make any periodic payments. For the three months ended March 31, 2021, we made periodic payments of $1.0 million. The interest expense related to the 2023 Notes was equally offset by proceeds received from the interest rate swap. The swap adjusted interest expense is included as a component of interest expense in our Consolidated Statements of Operations. Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on our Consolidated Statements of Assets and Liabilities. The change in fair value of the interest rate swap is offset by the change in fair value of the 2023 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On November 23, 2021, we caused notice to be issued to the holders of the 2023 Notes regarding our exercise of the option to redeem in full all $150 million in aggregate principal amount of the 2023 Notes at 100% of their principal amount, plus the accrued and unpaid interest thereon through, but excluding, the redemption date, December 23, 2021. On December 23, 2021, we redeemed in full all $150 million in aggregate principal amount of the 2023 Notes at 100% of their principal amount, plus the accrued and unpaid interest thereon through, but excluding, December 23, 2021.
On April 10, 2019, we issued $400 million aggregate principal amount of notes that mature on April 15, 2024 (the “2024 Notes”). The 2024 Notes bear interest at a rate of 5.250% per year, payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2019. We may redeem some or all of the 2024 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2024 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2024 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2024 Notes on or after March 15, 2024 (the date falling one month prior to the maturity date of the 2024 Notes), the redemption price for the 2024 Notes will be equal to 100% of the principal amount of the 2024 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In connection with the issuance of the 2024 Notes, on April 10, 2019 we entered into centrally cleared interest rate swaps. The notional amount of the interest rate swaps is $400 million. We will receive fixed rate interest at 5.25% and pay variable rate interest based
on one-month LIBOR plus 2.937%. The interest rate swaps mature on April 10, 2024. For the three months ended March 31, 2022 and 2021, we made no periodic payments. The interest expense related to the 2024 Notes is equally offset by the proceeds received from the interest rate swaps. The swap adjusted interest expense is included as a component of interest expense on our Consolidated Statements of Operations. As of March 31, 2022 and December 31, 2021, the interest rate swap had a fair value of $(1.5) million and $12.0 million, respectively. Depending on the nature of the balance at period end, the fair value of the interest rate swap is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on our Consolidated Statements of Assets and Liabilities. The change in fair value of the interest rate swap is offset by the change in fair value of the 2024 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On October 8, 2019, we issued $425 million aggregate principal amount of notes that mature on March 30, 2025 (the “2025 Notes”). The 2025 Notes bear interest at a rate of 4.00% per year, payable semi-annually on March 30 and September 30 of each year, commencing on March 30, 2020. We may redeem some or all of the 2025 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2025 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2025 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 40 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2025 Notes on or after February 28, 2025 (the date falling one month prior to the maturity date of the 2025 Notes), the redemption price for the 2025 Notes will be equal to 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On January 22, 2020, we issued $500 million aggregate principal amount of notes that mature on July 22, 2025 (the “July 2025 Notes”). The July 2025 Notes bear interest at a rate of 3.75% per year, payable semi-annually on January 22 and July 22, of each year, commencing on July 22, 2020. We may redeem some or all of the July 2025 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the July 2025 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the July 2025 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 35 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any July 2025 Notes on or after June 22, 2025 (the date falling one month prior to the maturity date of the 2025 Notes), the redemption price for the July 2025 Notes will be equal to 100% of the principal amount of the July 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On July 23, 2020, we issued $500 million aggregate principal amount of notes that mature on January 15, 2026 (the “2026 Notes”). The 2026 Notes bear interest at a rate of 4.25% per year, payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2021. We may redeem some or all of the 2026 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2026 Notes on or after December, 15 2025 (the date falling one month prior to the maturity date of the 2026 Notes), the redemption price for the 2026 Notes will be equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On December 8, 2020, we issued $1.0 billion aggregate principal amount of notes that mature on July 15, 2026 (the “July 2026 Notes”). The July 2026 Notes bear interest at a rate of 3.40% per year, payable semi-annually on January 15 and July 15 of each year, commencing on July 15, 2021. We may redeem some or all of the July 2026 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the July 2026 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the July 2026 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any July 2026 Notes on or after June 15, 2026 (the date falling one month prior to the maturity date of the July 2026 Notes), the redemption price for the July 2026 Notes will be equal to 100% of the principal amount of the July 2026
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Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt."
On April 26, 2021, we issued $500 million aggregate principal amount of notes that mature on January 15, 2027 (the “2027 Notes”). The 2027 Notes bear interest at a rate of 2.625% per year, payable semi-annually on January 15 and July 15, of each year, commencing on July 15, 2021. We may redeem some or all of the 2027 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2027 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2027 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 30 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2027 Notes on or after December 15, 2026 (the date falling one month prior to the maturity date of the 2027 Notes), the redemption price for the 2027 Notes will be equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
In connection with the issuance of the 2027 Notes, on April 26, 2021 we entered into centrally cleared interest rate swaps. The notional amount of the interest rate swaps is $500 million. We will receive fixed rate interest at 2.625% and pay variable rate interest based on one-month LIBOR plus 1.655%. The interest rate swaps mature on January 15, 2027. For the three months ended March 31, 2022 we made periodic payments of $2.0 million. For the three months ended March 31, 2021, we made no periodic payments. The interest expense related to the 2027 Notes is equally offset by the proceeds received from the interest rate swaps. The swap adjusted interest expense is included as a component of interest expense on our Consolidated Statements of Operations. As of March 31, 2022 and December 31, 2021, the interest rate swaps had a fair value of $(33.3) million and 7.6 million, respectively. Depending on the nature of the balance at period end, the fair value of the interest rate swaps is either included as a component of accrued expenses and other liabilities or prepaid expenses and other assets on our Consolidated Statements of Assets and Liabilities. The change in fair value of the interest rate swaps is offset by the change in fair value of the 2027 Notes, with the remaining difference included as a component of interest expense on the Consolidated Statements of Operations. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
On June 11, 2021, we issued $450 million aggregate principal amount of notes that mature on June 11, 2028 and on August 17, 2021, we issued an additional $400 million aggregate principal amount of our 2.875% notes due 2028 (together, the “2028 Notes”). The 2028 Notes bear interest at a rate of 2.875% per year, payable semi-annually on June 11 and December 11, of each year, commencing on December 11, 2021. We may redeem some or all of the 2028 Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2028 Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the 2028 Notes to be redeemed, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 30 basis points, plus, in each case, accrued and unpaid interest to the redemption date; provided, however, that if we redeem any 2028 Notes on or after April 11, 2028 (the date falling two months prior to the maturity date of the 2028 Notes), the redemption price for the 2028 Notes will be equal to 100% of the principal amount of the 2028 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. For further details, see “ITEM 1. – Notes to Consolidated Financial Statements – Note 6. Debt.”
150
Off-Balance Sheet Arrangements
From time to time, we may enter into commitments to fund investments. As of March 31, 2022 and December 31, 2021, we had the following outstanding commitments to fund investments in current portfolio companies:
151
152
We seek to carefully consider our unfunded portfolio company commitments for the purpose of planning our ongoing financial leverage. Further, we consider any outstanding unfunded portfolio company commitments we are required to fund within the 150% asset coverage limitation. As of March 31, 2022, we believed we had adequate financial resources to satisfy the unfunded portfolio company commitments.
On November 3, 2020, our Board approved a repurchase program under which we may repurchase up to $100 million of our outstanding common stock. Under the program, purchases may be made at management’s discretion from time to time in open-market transactions, in accordance with all applicable securities laws and regulations. Unless extended by the Board, the repurchase program will terminate 12-months from the date it was approved. On November 2, 2021, the Board approved an extension to the Repurchase Plan and, unless further extended by the Board, will terminate 12-months from that date. As of December 31, 2021, Goldman Sachs & Co., as agent, has repurchased 186,150 shares of the Company’s common stock pursuant to the Repurchase Plan for approximately $2.6 million.
From time to time, we may become a party to certain legal proceedings incidental to the normal course of its business. At March 31, 2022, we were not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure.
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Contractual Obligations
A summary of our contractual payment obligations under our credit facilities as of March 31, 2022, is as follows:
Payments Due by Period
Less than 1 year
1-3 years
3-5 years
After 5 years
395.0
Total Contractual Obligations
7,173.9
795.0
3,365.4
3,013.5
Related-Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the following:
In addition to the aforementioned agreements, we, our Adviser and certain of our Adviser’s affiliates have been granted exemptive relief by the SEC to co-invest with other funds managed by the Adviser or its affiliates, in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. See “ITEM 1. – Notes to Consolidated Financial Statements – Note 3. Agreements and Related Party Transactions” for further details.
We invest through Wingspire and, together with Nationwide, through ORCC SLF, controlled affiliated investments as defined in the 1940 Act. See “ITEM 1. – Notes to Consolidated Financial Statements – Note 3. Agreements and Related Party Transactions” for further details.
Critical Accounting Policies
The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies should be read in connection with our risk factors as described in “ITEM 1A. RISK FACTORS.”
Investment transactions are recorded on the trade date. Realized gains or losses are measured by the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. The net change in unrealized gains or losses primarily reflects the change in investment values, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.
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Investments for which market quotations are readily available are typically valued at the bid price of those market quotations. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available, as is the case for substantially all of our investments, are valued at fair value as determined in good faith by our Board, based on, among other things, the input of the Adviser, our audit committee and independent third-party valuation firm(s) engaged at the direction of the Board.
As part of the valuation process, the Board takes into account relevant factors in determining the fair value of our investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Board considers whether the pricing indicated by the external event corroborates its valuation.
We conduct this valuation process on a quarterly basis.
We apply ASC 820, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, we consider its principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:
Transfers between levels, if any, are recognized at the beginning of the period in which the transfer occurred. In addition to using the above inputs in investment valuations, we apply the valuation policy approved by our Board that is consistent with ASC 820. Consistent with the valuation policy, we evaluate the source of the inputs, including any markets in which our investments are trading (or any markets in which securities with similar attributes are trading), in determining fair value. When an investment is valued based on prices provided by reputable dealers or pricing services (that is, broker quotes), we subject those prices to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level 2 or Level 3 investment. For example, we, or the independent valuation firm(s), review pricing support provided by dealers or pricing services in order to determine if observable market information is being used, versus unobservable inputs.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.
Rule 2a-5 under the 1940 Act was recently adopted by the SEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act. We are evaluating the impact of adopting Rule 2a-5 on the consolidated financial statements and intend to comply with the new rule’s requirements on or before the compliance date in September 2022.
Interest income is recorded on the accrual basis and includes amortization of discounts or premiums. Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK interest or dividends represent accrued interest or dividends that are added to the principal amount of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or at the occurrence of a liquidation event. Discounts to par value on securities purchased are amortized into interest income over the contractual life of the respective security using the effective yield method. Premiums to par value on securities purchased are amortized to first call date. The amortized cost of investments represents the original cost adjusted for the amortization of discounts or premiums, if any. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.
Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. If at any point we believe PIK interest is not expected to be realized, the investment generating PIK interest will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest income. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.
We have elected to be treated for U.S. federal income tax purposes, and qualify annually thereafter, as a RIC under Subchapter M of the Code. To obtain and maintain our tax treatment as a RIC, we must distribute (or be deemed to distribute) in each taxable year distributions for tax purposes equal to at least 90 percent of the sum of our:
As a RIC, we (but not our shareholders) generally will not be subject to U.S. federal tax on investment company taxable income and net capital gains that we distribute to our shareholders.
We intend to distribute annually all or substantially all of such income. To the extent that we retain our net capital gains or any investment company taxable income, we generally will be subject to corporate-level U.S. federal income tax. We can be expected to carry forward our net capital gains or any investment company taxable income in excess of current year dividend distributions, and pay the U.S. federal excise tax as described below.
Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% U.S. federal excise tax payable by us. We may be subject to a nondeductible 4% U.S. federal excise tax if we do not distribute (or are treated as distributing) during each calendar year an amount at least equal to the sum of:
While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% U.S. federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed and as a result, in such cases, the excise tax
158
will be imposed. In such an event, we will be liable for this tax only on the amount by which we do not meet the foregoing distribution requirement.
We intend to pay quarterly distributions to our shareholders out of assets legally available for distribution. All distributions will be paid at the discretion of our Board and will depend on our earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as our Board may deem relevant from time to time.
To the extent our current taxable earnings for a year fall below the total amount of our distributions for that year, a portion of those distributions may be deemed a return of capital to our shareholders for U.S. federal income tax purposes. Thus, the source of a distribution to our shareholders may be the original capital invested by the shareholder rather than our income or gains. Shareholders should read written disclosure carefully and should not assume that the source of any distribution is our ordinary income or gains.
We have adopted an “opt out” dividend reinvestment plan for our common shareholders. As a result, if we declare a cash dividend or other distribution, each shareholder that has not “opted out” of our dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares of our common stock rather than receiving cash distributions. Shareholders who receive distributions in the form of shares of common stock will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.
We have elected to be treated as a BDC under the 1940 Act. We have also elected to be treated as a RIC under the Code beginning with the taxable year ending December 31, 2016 and intend to continue to qualify as a RIC. So long as we maintain our tax treatment as a RIC, we generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we distribute at least annually to our shareholders as distributions. Rather, any tax liability related to income earned and distributed by us represents obligations of our investors and will not be reflected in our consolidated financial statements.
To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, we must distribute to our shareholders, for each taxable year, at least 90% of our “investment company taxable income” for that year, which is generally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses. In order for us to not be subject to U.S. federal excise taxes, we must distribute annually an amount at least equal to the sum of (i) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. We, at our discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. excise tax on this income.
We evaluate tax positions taken or expected to be taken in the course of preparing our consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. There were no material uncertain tax positions through December 31, 2021. The 2018 through 2020 tax years remain subject to examination by the IRS, and generally years 2017 through 2020 remain subject to examination by state and local tax authorities.
Recent Developments
On April 20, 2022 we completed a $669.2 mllion term debt securitization refinancing in CLO V. As part of the refinancing, we issued the following classes of notes: (i) $354.4 million of AAA(sf) Class A-1R Notes, which bear interest at the Term SOFR plus 1.78%, (ii) $30.4 million of AAA(sf) Class A-2R Notes, which bear interest at the Term SOFR plus 1.95%, (iii) $49.0 million of AA(sf) Class B-1 Notes, which bear interest at the Term SOFR plus 2.20%, (iv) $5.0 million of AA(sf) Class B-2 Notes, which bear interest at 4.25%, (v) $31.5 million of A(sf) Class C-1 Notes, which bear interest at the Term SOFR plus 3.15% and (vi) $39.4 million of A(sf) Class C-2 Notes, which bear interest at 5.10%. We also issued approximately $10.2 million of additional subordinated securities, for a total of $159.6 of subordinated securities in the form of 159,620 preferred shares at an issue price of U.S.$1,000 per share held by us. Following the refinancing, the reinvestment period was extended to April 20, 2026 and the maturity date was extended to April 20, 2034.
On May 3, 2022, the Board declared a distribution of $0.31 per share for shareholders of record on June 30, 2022 payable on or before August 15, 2022.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are subject to financial market risks, including valuation risk and interest rate risk.
Valuation Risk
We have invested, and plan to continue to invest, primarily in illiquid debt and equity securities of private companies. Most of our investments will not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board, based on, among other things, the input of the Adviser, our Audit Committee and independent third-party valuation firm(s) engaged at the direction of the Board, and in accordance with our valuation policy. There is no single standard for determining fair value. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize amounts that are different from the amounts presented and such differences could be material.
Interest Rate Risk
Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. We intend to fund portions of our investments with borrowings, and at such time, our net investment income will be affected by the difference between the rate at which we invest and the rate at which we borrow. Accordingly, we cannot assure you that a significant change in market interest rates will not have a material adverse effect on our net investment income.
In a prolonged low interest rate environment, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net income and potentially adversely affecting our operating results. Conversely, in a rising interest rate environment, such difference could potentially increase thereby increasing our net income as indicated per the table below.
Substantially all of our assets and liabilities are financial in nature. As a result, changes in interest rates and other factors drive our performance more directly than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. As of March 31, 2022, 98.8% of our debt investments based on fair value were floating rates. Additionally, the weighted average LIBOR floor, based on fair value, of our debt investments was 0.8% and the majority of our debt investments have a floor of 1.0%.
Based on our Consolidated Statements of Assets and Liabilities as of March 31, 2022, the following table shows the annualized impact on net income of hypothetical base rate changes in interest rates on our debt investments (considering interest rate floors for floating rate instruments) assuming each floating rate investment is subject to 3-month LIBOR and there are no changes in our investment and borrowing structure:
Interest Expense
Net Income
Up 300 basis points
348.1
114.0
234.1
Up 200 basis points
231.0
76.0
Up 100 basis points
38.0
Up 50 basis points
55.4
19.0
36.4
Down 50 basis points
(12.8
(19.0
Down 100 basis points
(16.0
(36.9
We may in the future hedge against interest rate fluctuations by using hedging instruments such as additional interest rate swaps, futures, options, and forward contracts. While hedging activities may mitigate our exposure to adverse fluctuations in interest rates, certain hedging transactions that we may enter into in the future, such as interest rate swap agreements, may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio investments.
Currency Risk
From time to time, we may make investments that are denominated in a foreign currency. These investments are translated into U.S. dollars at each balance sheet date, exposing us to movements in foreign exchange rates. We may employ hedging techniques to minimize these risks, but we cannot assure you that such strategies will be effective or without risk to us. We may seek to utilize instruments such as, but not limited to, forward contracts to seek to hedge against fluctuations in the relative values of our portfolio positions from changes in currency exchange rates. We also have the ability to borrow in certain foreign currencies under our credit facilities. Instead of entering into a foreign currency forward contract in connection with loans or other investments we have made that are denominated in a foreign currency, we may borrow in that currency to establish a natural hedge against our loan or investment. To the extent the loan or investment is based on a floating rate other than a rate under which we can borrow under our credit facilities, we may seek to utilize interest rate derivatives to hedge our exposure to changes in the associated rate.
Item 4. Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective as of the end of the period covered by the Quarterly Report on Form 10-Q.
There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Neither we nor the Adviser are currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of any such future legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any such future proceedings will have a material effect upon our financial condition or results of operations.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “ITEM 1A. RISK FACTORS” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Global economic, political and market conditions, including uncertainty about the financial stability of the United States, could have a significant adverse effect on our business, financial condition and results of operations.
The current worldwide financial markets situation, as well as various social and political tensions in the United States and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to increased market volatility, may have long term effects on the United States and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide.
For example, the COVID-19 pandemic continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets.
In addition, the rising conflict between Russia and Ukraine, and resulting market volatility, could adversely affect our business, financial condition or results of operations. In response to the conflict between Russia and Ukraine, the U.S. and other countries have imposed sanctions or other restrictive actions against Russia. The ongoing conflict and the rapidly evolving measures in response could be expected to have a negative impact on the economy and business activity globally and could have a material adverse effect on our portfolio companies and our business, financial condition, cash flows and results of operations. The severity and duration of the conflict and its impact on global economic and market conditions are impossible to predict. In addition, sanctions could also result in Russia taking counter measures or retaliatory actions which could adversely impact our business or the business of our portfolio companies, including, but not limited to, cyberattacks targeting private companies, individuals or other infrastructure upon which our business and the business of our portfolio companies rely.
Any of the above factors, including sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common shares and/or debt securities to decline. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in doing so.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Other than the shares issued pursuant to our dividend reinvestment plan, we did not sell any unregistered equity securities, except as previously disclosed in certain 8-Ks filed with the SEC.
On January 31, 2022, pursuant to our dividend reinvestment plan, we issued 814,084 shares of our common stock, at a price of $14.68 per share, to stockholders of record as of December 31, 2021 that did not opt out of our dividend reinvestment plan in order to satisfy the reinvestment portion of our dividends. This issuance was not subject to the registration requirements of the Securities Act of 1933, as amended.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Executive Officers
On May 3, 2022, the Board, appointed Jennifer McMillon to serve as the Company's Co-Treasurer and Co-Controller.
Ms. McMillon is a Managing Director of Blue Owl and also serves as the Co-Chief Accounting officer of ORCC II, ORCC III, ORCIC and ORTIC and as the Co-Treasurer and Co-Controller of each of the Owl Rock BDCs. Before joining Blue Owl, Ms. McMillon led the accounting department of Tiptree Inc. (TIPT), a national capital holding company, as the Vice President of Technical Accounting and External Reporting from 2017-2022. She was responsible for financial reporting, valuation/purchase accounting, and numerous internal control functions. From 2013-2017, Ms. McMillon served as the Regional Accounting & Reporting Director, Americas of Koch Industries/Georgia Pacific, from 2009-2013 she served as an Accounting Manager at Oaktree Capital and Centerbridge Partners, and prior to that Ms. McMillon worked in public accounting for nearly ten years, spending most of this tenure at PricewaterhouseCoopers. Ms. McMillon earned her B.S. in Accounting from Florida State University and is a licensed Certified Public Accountant in New York.
Item 6. Exhibits, Financial Statement Schedules
Exhibit Number
Description of Exhibits
Articles of Amendment and Restatement, dated March 1, 2016 (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form 10 filed on April 11, 2016).
Bylaws, dated January 11, 2016 (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q filed on April 11, 2016).
Fourth Amendment to Credit Agreement, dated as of March 11, 2022, among ORCC Financing IV LLC, as borrower, Société Générale, as administrative agent, State Street Bank and Trust Company, as collateral agent, collateral administrator and custodian, Cortland Capital Market Services LLC, as document custodian, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's current report on Form 8-K, filed on March 17, 2022).
Amendment No. 7 to Credit Agreement, dated as of March 25, 2022, among ORCC Financing II LLC, as Borrower, the Lenders referred to therein, Natixis, New York Branch, as Administrative Agent, State Street Bank and Trust Company, as Collateral Agent, Collateral Administrator, Custodian and Cortland Capital Market Services LLC as Document Custodian (incorproated by reference to Exhibit 10.1 to the Company's current report on Form 8-K filed on March 30, 2022).
31.1*
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
* Filed herein.
** Furnished herein.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 4, 2022
By:
/s/ Craig W. Packer
Craig W. Packer
Chief Executive Officer
/s/ Jonathan Lamm
Jonathan Lamm
Chief Operating Officer and Chief Financial Officer