Document
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2021
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF THE SECURITIES EXCHANGE ACT OF 1934
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COMMISSION FILE NUMBER: 1-33901
Oaktree Specialty Lending Corporation
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE
(State or jurisdiction of
incorporation or organization)
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26-1219283
(I.R.S. Employer
Identification No.)
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333 South Grand Avenue, 28th Floor
Los Angeles, CA
(Address of principal executive office)
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90071
(Zip Code)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(213) 830-6300
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange
on Which Registered
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Common Stock, par value $0.01 per share
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OCSL
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The Nasdaq Stock Market LLC
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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
þ
NO
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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
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NO
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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 definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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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
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES
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NO
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The registrant had 180,360,662 shares of common stock outstanding as of August 3, 2021.
OAKTREE SPECIALTY LENDING CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2021
TABLE OF CONTENTS
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PART I — FINANCIAL INFORMATION
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Item 1.
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Consolidated Financial Statements:
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PART II — OTHER INFORMATION
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PART I — FINANCIAL INFORMATION
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Item 1.
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Consolidated Financial Statements.
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Oaktree Specialty Lending Corporation
Consolidated Statements of Assets and Liabilities
(in thousands, except per share amounts)
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June 30, 2021 (unaudited)
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September 30, 2020
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ASSETS
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Investments at fair value:
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Control investments (cost June 30, 2021: $283,707; cost September 30, 2020: $245,950)
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$
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269,478
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$
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201,385
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Affiliate investments (cost June 30, 2021: $14,788; cost September 30, 2020: $7,551)
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13,959
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6,509
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Non-control/Non-affiliate investments (cost June 30, 2021: $2,021,729; cost September 30, 2020: $1,415,669)
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2,055,864
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1,365,957
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Total investments at fair value (cost June 30, 2021: $2,320,224; cost September 30, 2020: $1,669,170)
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2,339,301
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1,573,851
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Cash and cash equivalents
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84,689
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39,096
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Restricted cash
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2,840
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—
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Interest, dividends and fees receivable
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15,415
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6,935
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Due from portfolio companies
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1,394
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2,725
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Receivables from unsettled transactions
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2,466
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9,123
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Due from broker
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1,640
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—
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Deferred financing costs
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9,413
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5,947
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Deferred offering costs
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34
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67
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Deferred tax asset, net
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735
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847
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Derivative assets at fair value
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2,449
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223
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Other assets
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2,332
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1,898
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Total assets
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$
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2,462,708
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$
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1,640,712
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LIABILITIES AND NET ASSETS
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Liabilities:
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Accounts payable, accrued expenses and other liabilities
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$
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3,925
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$
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1,072
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Base management fee and incentive fee payable
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31,127
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11,212
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Due to affiliate
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5,011
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2,130
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Interest payable
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5,277
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1,626
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Payables from unsettled transactions
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10,588
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478
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Derivative liability at fair value
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267
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—
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Credit facilities payable
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464,057
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414,825
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Unsecured notes payable (net of $6,876 and $3,272 of unamortized financing costs as of June 30, 2021 and September 30, 2020, respectively)
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640,042
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294,490
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Total liabilities
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1,160,294
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725,833
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Commitments and contingencies (Note 14)
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Net assets:
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Common stock, $0.01 par value per share, 250,000 shares authorized; 180,361 and 140,961 shares issued and outstanding as of June 30, 2021 and September 30, 2020, respectively
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1,804
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1,409
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Additional paid-in-capital
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1,730,083
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1,487,774
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Accumulated overdistributed earnings
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(429,473)
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(574,304)
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Total net assets (equivalent to $7.22 and $6.49 per common share as of June 30, 2021 and September 30, 2020, respectively) (Note 12)
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1,302,414
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914,879
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Total liabilities and net assets
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$
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2,462,708
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$
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1,640,712
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See notes to Consolidated Financial Statements.
Oaktree Specialty Lending Corporation
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
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Three months ended June 30, 2021
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Three months ended June 30, 2020
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Nine months ended June 30, 2021
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Nine months ended June 30, 2020
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Interest income:
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Control investments
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$
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3,405
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$
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2,558
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$
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8,122
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$
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7,502
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Affiliate investments
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189
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127
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437
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379
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Non-control/Non-affiliate investments
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48,403
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27,406
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110,720
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80,214
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Interest on cash and cash equivalents
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2
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21
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8
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320
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Total interest income
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51,999
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30,112
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119,287
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88,415
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PIK interest income:
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Non-control/Non-affiliate investments
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4,597
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2,183
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11,487
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5,290
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Total PIK interest income
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4,597
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2,183
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11,487
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5,290
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Fee income:
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Control investments
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13
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13
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46
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27
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Affiliate investments
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5
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5
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15
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15
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Non-control/Non-affiliate investments
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7,805
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1,809
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13,392
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4,906
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Total fee income
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7,823
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1,827
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13,453
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4,948
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Dividend income:
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Control investments
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1,019
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281
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1,358
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881
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Total dividend income
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1,019
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281
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1,358
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881
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Total investment income
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65,438
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34,403
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145,585
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99,534
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Expenses:
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Base management fee
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8,905
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5,988
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22,520
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16,890
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Part I incentive fee
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6,990
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3,556
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15,583
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9,988
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Part II incentive fee
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2,837
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—
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15,986
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(5,557)
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Professional fees
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1,059
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545
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2,943
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1,854
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Directors fees
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147
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143
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447
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428
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Interest expense
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8,823
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6,406
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21,486
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20,156
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Administrator expense
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421
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373
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1,047
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1,194
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General and administrative expenses
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716
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622
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2,009
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1,934
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Total expenses
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29,898
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17,633
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82,021
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46,887
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Reversal of fees waived (fees waived)
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(750)
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—
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(858)
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5,200
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Net expenses
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29,148
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17,633
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81,163
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52,087
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Net investment income before taxes
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36,290
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16,770
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64,422
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47,447
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(Provision) benefit for taxes on net investment income
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(358)
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—
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(358)
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—
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Net investment income
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35,932
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16,770
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64,064
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47,447
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Unrealized appreciation (depreciation):
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Control investments
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3,590
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13,790
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30,336
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(39,605)
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Affiliate investments
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109
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(45)
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213
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(1,839)
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Non-control/Non-affiliate investments
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(898)
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87,225
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83,842
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(19,018)
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Foreign currency forward contracts
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1,116
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(398)
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2,226
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380
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Net unrealized appreciation (depreciation)
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3,917
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100,572
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116,617
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(60,082)
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Realized gains (losses):
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Control investments
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—
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—
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—
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777
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Non-control/Non-affiliate investments
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9,350
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2,821
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26,267
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(18,117)
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Extinguishment of unsecured notes payable
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—
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—
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—
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(2,541)
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Foreign currency forward contracts
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(740)
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—
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(3,586)
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(490)
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Net realized gains (losses)
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8,610
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2,821
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22,681
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(20,371)
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(Provision) benefit for taxes on realized and unrealized gains (losses)
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(1,421)
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68
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(2,663)
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1,613
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Net realized and unrealized gains (losses), net of taxes
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11,106
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103,461
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136,635
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(78,840)
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Net increase (decrease) in net assets resulting from operations
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$
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47,038
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$
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120,231
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$
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200,699
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$
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(31,393)
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Net investment income per common share — basic and diluted
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$
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0.20
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$
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0.12
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$
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0.41
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$
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0.34
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Earnings (loss) per common share — basic and diluted (Note 5)
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$
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0.26
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$
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0.85
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$
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1.29
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$
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(0.22)
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Weighted average common shares outstanding — basic and diluted
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180,361
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140,961
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155,970
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140,961
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See notes to Consolidated Financial Statements.
Oaktree Specialty Lending Corporation
Consolidated Statements of Changes in Net Assets
(in thousands, except per share amounts)
(unaudited)
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Three months ended June 30, 2021
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Three months ended June 30, 2020
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Nine months ended June 30, 2021
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Nine months ended June 30, 2020
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Operations:
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Net investment income
|
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$
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35,932
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$
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16,770
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$
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64,064
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$
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47,447
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Net unrealized appreciation (depreciation)
|
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3,917
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100,572
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116,617
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(60,082)
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Net realized gains (losses)
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8,610
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2,821
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22,681
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(20,371)
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(Provision) benefit for taxes on realized and unrealized gains (losses)
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(1,421)
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68
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(2,663)
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1,613
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Net increase (decrease) in net assets resulting from operations
|
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47,038
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120,231
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200,699
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(31,393)
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Stockholder transactions:
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Distributions to stockholders
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(23,447)
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(13,392)
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(55,868)
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(40,174)
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Net increase (decrease) in net assets from stockholder transactions
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(23,447)
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(13,392)
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(55,868)
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(40,174)
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Capital share transactions:
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Issuance of common stock in connection with the Mergers
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—
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—
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242,704
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|
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—
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Issuance of common stock under dividend reinvestment plan
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|
520
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|
390
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1,559
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1,377
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Repurchases of common stock under dividend reinvestment plan
|
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(520)
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(390)
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(1,559)
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(1,377)
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Net increase (decrease) in net assets from capital share transactions
|
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—
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|
|
—
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242,704
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—
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Total increase (decrease) in net assets
|
|
23,591
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|
|
106,839
|
|
|
387,535
|
|
|
(71,567)
|
|
|
Net assets at beginning of period
|
|
1,278,823
|
|
|
752,224
|
|
|
914,879
|
|
|
930,630
|
|
|
Net assets at end of period
|
|
$
|
1,302,414
|
|
|
$
|
859,063
|
|
|
$
|
1,302,414
|
|
|
$
|
859,063
|
|
|
Net asset value per common share
|
|
$
|
7.22
|
|
|
$
|
6.09
|
|
|
$
|
7.22
|
|
|
$
|
6.09
|
|
|
Common shares outstanding at end of period
|
|
180,361
|
|
|
140,961
|
|
|
180,361
|
|
|
140,961
|
|
See notes to Consolidated Financial Statements.
Oaktree Specialty Lending Corporation
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
June 30, 2021
|
|
Nine months ended
June 30, 2020
|
|
Operating activities:
|
|
|
|
|
|
Net increase (decrease) in net assets resulting from operations
|
|
$
|
200,699
|
|
|
$
|
(31,393)
|
|
|
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
|
|
|
|
|
|
Net unrealized (appreciation) depreciation
|
|
(116,617)
|
|
|
60,082
|
|
|
Net realized (gains) losses
|
|
(22,681)
|
|
|
20,371
|
|
|
PIK interest income
|
|
(11,487)
|
|
|
(5,290)
|
|
|
Accretion of original issue discount on investments
|
|
(18,032)
|
|
|
(8,378)
|
|
|
Accretion of original issue discount on unsecured notes payable
|
|
403
|
|
|
175
|
|
|
Amortization of deferred financing costs
|
|
3,030
|
|
|
1,565
|
|
|
Deferred taxes
|
|
112
|
|
|
(1,470)
|
|
|
Purchases of investments
|
|
(714,791)
|
|
|
(576,866)
|
|
|
Proceeds from the sales and repayments of investments
|
|
586,812
|
|
|
388,338
|
|
|
Cash acquired in the Mergers
|
|
20,945
|
|
|
—
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
(Increase) decrease in interest, dividends and fees receivable
|
|
(3,434)
|
|
|
3,267
|
|
|
(Increase) decrease in due from portfolio companies
|
|
1,956
|
|
|
(103)
|
|
|
(Increase) decrease in receivables from unsettled transactions
|
|
8,199
|
|
|
(9,520)
|
|
|
(Increase) decrease in due from broker
|
|
(1,640)
|
|
|
—
|
|
|
(Increase) decrease in other assets
|
|
(1,444)
|
|
|
328
|
|
|
Increase (decrease) in accounts payable, accrued expenses and other liabilities
|
|
476
|
|
|
(686)
|
|
|
Increase (decrease) in base management fee and incentive fee payable
|
|
17,994
|
|
|
2,822
|
|
|
Increase (decrease) in due to affiliate
|
|
1,773
|
|
|
(476)
|
|
|
Increase (decrease) in interest payable
|
|
1,844
|
|
|
1,929
|
|
|
Increase (decrease) in payables from unsettled transactions
|
|
10,110
|
|
|
(52,424)
|
|
|
Increase (decrease) in director fees payable
|
|
(90)
|
|
|
—
|
|
|
Net cash provided by (used in) operating activities
|
|
(35,863)
|
|
|
(207,729)
|
|
|
Financing activities:
|
|
|
|
|
|
Distributions paid in cash
|
|
(54,309)
|
|
|
(38,797)
|
|
|
Borrowings under credit facilities
|
|
325,000
|
|
|
286,000
|
|
|
Repayments of borrowings under credit facilities
|
|
(515,525)
|
|
|
(134,000)
|
|
|
Repayments of unsecured notes
|
|
—
|
|
|
(161,250)
|
|
|
Issuance of unsecured notes
|
|
349,020
|
|
|
297,459
|
|
|
Repayments of secured borrowings
|
|
(9,341)
|
|
|
—
|
|
|
Repurchases of common stock under dividend reinvestment plan
|
|
(1,559)
|
|
|
(1,377)
|
|
|
Deferred financing costs paid
|
|
(7,844)
|
|
|
(4,835)
|
|
|
Deferred offering costs paid
|
|
—
|
|
|
(67)
|
|
|
Net cash provided by (used in) financing activities
|
|
85,442
|
|
|
243,133
|
|
|
Effect of exchange rate changes on foreign currency
|
|
(1,146)
|
|
|
(82)
|
|
|
Net increase (decrease) in cash and cash equivalents and restricted cash
|
|
48,433
|
|
|
35,322
|
|
|
Cash and cash equivalents and restricted cash, beginning of period
|
|
39,096
|
|
|
15,406
|
|
|
Cash and cash equivalents and restricted cash, end of period
|
|
$
|
87,529
|
|
|
$
|
50,728
|
|
|
Supplemental information:
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
15,583
|
|
|
$
|
16,487
|
|
|
Non-cash financing activities:
|
|
|
|
|
|
Issuance of shares of common stock under dividend reinvestment plan
|
|
$
|
1,560
|
|
|
$
|
1,377
|
|
|
Deferred financing costs
|
|
(592)
|
|
|
—
|
|
|
Issuance of shares in connection with the Mergers
|
|
242,704
|
|
|
—
|
|
|
Reconciliation to the Consolidated Statements of Assets and Liabilities
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Cash and cash equivalents
|
|
$
|
84,689
|
|
|
$
|
39,096
|
|
|
Restricted cash
|
|
2,840
|
|
|
—
|
|
|
Total cash and cash equivalents and restricted cash
|
|
$
|
87,529
|
|
|
$
|
39,096
|
|
See notes to Consolidated Financial Statements.
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Control Investments
|
|
|
|
|
|
|
|
|
(8)(9)
|
|
C5 Technology Holdings, LLC
|
|
Data Processing & Outsourced Services
|
|
|
|
|
|
|
|
|
829 Common Units
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(15)
|
|
34,984,460.37 Preferred Units
|
|
|
|
|
34,984
|
|
|
27,638
|
|
|
(15)
|
|
|
|
|
|
|
34,984
|
|
|
27,638
|
|
|
|
|
Dominion Diagnostics, LLC
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024
|
6.00
|
%
|
|
$
|
27,451
|
|
|
27,451
|
|
|
27,451
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+5.00% cash due 2/28/2024
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6)(15)(19)
|
|
30,030.8 Common Units in DD Healthcare Services Holdings, LLC
|
|
|
|
|
18,626
|
|
|
18,065
|
|
|
(12)(15)
|
|
|
|
|
|
|
46,077
|
|
|
45,516
|
|
|
|
|
First Star Speir Aviation Limited
|
|
Airlines
|
|
|
|
|
|
|
(10)
|
|
First Lien Term Loan, 9.00% cash due 12/15/2025
|
|
|
7,500
|
|
|
—
|
|
|
7,500
|
|
|
(11)(15)
|
|
100% equity interest
|
|
|
|
|
6,339
|
|
|
482
|
|
|
(11)(12)(15)
|
|
|
|
|
|
|
6,339
|
|
|
7,982
|
|
|
|
|
OCSI Glick JV LLC
|
|
Multi-Sector Holdings
|
|
|
|
|
|
|
(14)
|
|
Subordinated Debt, LIBOR+4.50% cash due 10/20/2028
|
4.70
|
%
|
|
62,296
|
|
|
50,735
|
|
|
55,397
|
|
|
(6)(11)(15)
|
|
87.5% equity interest
|
|
|
|
|
—
|
|
|
—
|
|
|
(11)(16)(19)
|
|
|
|
|
|
|
50,735
|
|
|
55,397
|
|
|
|
|
Senior Loan Fund JV I, LLC
|
|
Multi-Sector Holdings
|
|
|
|
|
|
|
(14)
|
|
Subordinated Debt, LIBOR+7.00% cash due 12/29/2028
|
8.00
|
%
|
|
96,250
|
|
|
96,250
|
|
|
96,250
|
|
|
(6)(11)(15)(19)
|
|
87.5% LLC equity interest
|
|
|
|
|
49,322
|
|
|
36,695
|
|
|
(11)(12)(16)(19)
|
|
|
|
|
|
|
145,572
|
|
|
132,945
|
|
|
|
|
Total Control Investments (20.7% of net assets)
|
|
|
|
|
$
|
283,707
|
|
|
$
|
269,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate Investments
|
|
|
|
|
|
|
|
|
(17)
|
|
Assembled Brands Capital LLC
|
|
Specialized Finance
|
|
|
|
|
|
|
|
|
First Lien Revolver, LIBOR+6.00% cash due 10/17/2023
|
7.00
|
%
|
|
$
|
11,924
|
|
|
$
|
11,925
|
|
|
$
|
11,680
|
|
|
(6)(15)(19)
|
|
1,609,201 Class A Units
|
|
|
|
|
764
|
|
|
579
|
|
|
(15)
|
|
1,019,168.80 Preferred Units, 6%
|
|
|
|
|
1,019
|
|
|
1,131
|
|
|
(15)
|
|
70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029
|
|
|
|
|
—
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
13,708
|
|
|
13,390
|
|
|
|
|
Caregiver Services, Inc.
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
1,080,399 shares of Series A Preferred Stock, 10%
|
|
|
|
|
1,080
|
|
|
569
|
|
|
(15)
|
|
|
|
|
|
|
1,080
|
|
|
569
|
|
|
|
|
Total Affiliate Investments (1.1% of net assets)
|
|
|
|
|
$
|
14,788
|
|
|
$
|
13,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Control/Non-Affiliate Investments
|
|
|
|
|
|
|
|
|
(18)
|
|
4 Over International, LLC
|
|
Commercial Printing
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.00% cash due 6/7/2022
|
7.00
|
%
|
|
$
|
10,987
|
|
|
$
|
10,433
|
|
|
$
|
10,240
|
|
|
(6)(15)
|
|
First Lien Revolver, PRIME+5.00% cash due 6/7/2022
|
8.25
|
%
|
|
460
|
|
|
441
|
|
|
348
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
10,874
|
|
|
10,588
|
|
|
|
|
109 Montgomery Owner LLC
|
|
Real Estate Operating Companies
|
|
|
|
|
|
|
|
|
First Lien Delayed Draw Term Loan, LIBOR+7.00% cash due 2/2/2023
|
7.50
|
%
|
|
4,746
|
|
|
4,550
|
|
|
4,766
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
4,550
|
|
|
4,766
|
|
|
|
|
A.T. Holdings II SÀRL
|
|
Biotechnology
|
|
|
|
|
|
|
|
|
First Lien Term Loan, 9.50% cash due 12/22/2022
|
|
|
37,158
|
|
|
36,884
|
|
|
36,972
|
|
|
(11)(15)
|
|
|
|
|
|
|
36,884
|
|
|
36,972
|
|
|
|
|
Access CIG, LLC
|
|
Diversified Support Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025
|
3.84
|
%
|
|
5,365
|
|
|
5,010
|
|
|
5,340
|
|
|
(6)
|
|
Second Lien Term Loan, LIBOR+7.75% cash due 2/27/2026
|
7.84
|
%
|
|
15,000
|
|
|
14,921
|
|
|
14,972
|
|
|
(6)
|
|
|
|
|
|
|
19,931
|
|
|
20,312
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Accupac, Inc.
|
|
Personal Products
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.00% cash due 1/17/2026
|
7.00
|
%
|
|
$
|
16,181
|
|
|
$
|
15,775
|
|
|
$
|
16,181
|
|
|
(6)(15)
|
|
First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 1/17/2026
|
|
|
—
|
|
|
(31)
|
|
|
—
|
|
|
(6)(15)(19)
|
|
First Lien Revolver, LIBOR+6.00% cash due 1/17/2026
|
7.00
|
%
|
|
2,042
|
|
|
1,991
|
|
|
2,042
|
|
|
(6)(15)
|
|
|
|
|
|
|
17,735
|
|
|
18,223
|
|
|
|
|
Acquia Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 10/31/2025
|
8.00
|
%
|
|
20,950
|
|
|
20,646
|
|
|
20,929
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+7.00% cash due 10/31/2025
|
8.00
|
%
|
|
179
|
|
|
146
|
|
|
177
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
20,792
|
|
|
21,106
|
|
|
|
|
ADB Companies, LLC
|
|
Construction & Engineering
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.25% cash due 12/18/2025
|
7.25
|
%
|
|
15,663
|
|
|
14,969
|
|
|
15,422
|
|
|
(6)(15)
|
|
|
|
|
|
|
14,969
|
|
|
15,422
|
|
|
|
|
Aden & Anais Merger Sub, Inc.
|
|
Apparel, Accessories & Luxury Goods
|
|
|
|
|
|
|
|
|
51,645 Common Units in Aden & Anais Holdings, Inc.
|
|
|
|
|
5,165
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
5,165
|
|
|
—
|
|
|
|
|
AI Ladder (Luxembourg) Subco S.a.r.l.
|
|
Electrical Components & Equipment
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025
|
4.58
|
%
|
|
14,555
|
|
|
14,122
|
|
|
14,568
|
|
|
(6)(11)
|
|
|
|
|
|
|
14,122
|
|
|
14,568
|
|
|
|
|
AI Sirona (Luxembourg) Acquisition S.a.r.l.
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, EURIBOR+7.25% cash due 9/28/2026
|
7.25
|
%
|
|
€
|
24,838
|
|
|
27,708
|
|
|
29,382
|
|
|
(6)(11)(15)
|
|
|
|
|
|
|
27,708
|
|
|
29,382
|
|
|
|
|
AirStrip Technologies, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
5,715 Common Stock Warrants (exercise price $139.99) expiration date 5/11/2025
|
|
|
|
|
90
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
90
|
|
|
—
|
|
|
|
|
All Web Leads, Inc.
|
|
Advertising
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 12/29/2023
|
7.50
|
%
|
|
$
|
24,157
|
|
|
21,473
|
|
|
22,970
|
|
|
(6)(15)
|
|
|
|
|
|
|
21,473
|
|
|
22,970
|
|
|
|
|
Alvotech Holdings S.A.
|
|
Biotechnology
|
|
|
|
|
|
|
(13)
|
|
Fixed Rate Bond 15% PIK Tranche A due 6/24/2025
|
|
|
20,967
|
|
|
20,556
|
|
|
20,967
|
|
|
(11)(15)
|
|
Fixed Rate Bond 15% PIK Tranche B due 6/24/2025
|
|
|
20,512
|
|
|
20,151
|
|
|
20,512
|
|
|
(11)(15)
|
|
27,308 Common Shares
|
|
|
|
|
6,322
|
|
|
6,322
|
|
|
(15)
|
|
|
|
|
|
|
47,029
|
|
|
47,801
|
|
|
|
|
Amplify Finco Pty Ltd.
|
|
Movies & Entertainment
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.25% cash due 11/26/2026
|
5.00
|
%
|
|
15,415
|
|
|
13,772
|
|
|
15,145
|
|
|
(6)(11)(15)
|
|
Second Lien Term Loan, LIBOR+8.00% cash due 11/26/2027
|
8.75
|
%
|
|
12,500
|
|
|
12,188
|
|
|
12,125
|
|
|
(6)(11)(15)
|
|
|
|
|
|
|
25,960
|
|
|
27,270
|
|
|
|
|
Ankura Consulting Group LLC
|
|
Research & Consulting Services
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+8.00% cash due 3/19/2029
|
8.75
|
%
|
|
7,466
|
|
|
7,354
|
|
|
7,578
|
|
|
(6)(15)
|
|
|
|
|
|
|
7,354
|
|
|
7,578
|
|
|
|
|
Apptio, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025
|
8.25
|
%
|
|
34,458
|
|
|
33,341
|
|
|
33,842
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+7.25% cash due 1/10/2025
|
8.25
|
%
|
|
892
|
|
|
846
|
|
|
852
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
34,187
|
|
|
34,694
|
|
|
|
|
Ardonagh Midco 3 PLC
|
|
Insurance Brokers
|
|
|
|
|
|
|
|
|
First Lien Term Loan, EURIBOR+5.4375% cash 2.26875% PIK due 7/14/2026
|
6.44
|
%
|
|
€
|
1,942
|
|
|
2,154
|
|
|
2,294
|
|
|
(6)(11)(15)
|
|
First Lien Term Loan, UK LIBOR+5.4375% cash 2.26875% PIK due 7/14/2026
|
6.19
|
%
|
|
£
|
18,449
|
|
|
23,139
|
|
|
25,486
|
|
|
(6)(11)(15)
|
|
Fixed Rate Bond, 11.50% cash due 1/15/2027
|
|
|
$
|
1,182
|
|
|
1,171
|
|
|
1,300
|
|
|
(11)
|
|
|
|
|
|
|
26,464
|
|
|
29,080
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
Associated Asphalt Partners, LLC
|
|
Construction Materials
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.25% cash due 4/5/2024
|
6.25
|
%
|
|
$
|
2,531
|
|
|
$
|
2,216
|
|
|
$
|
2,391
|
|
|
(6)
|
|
|
|
|
|
|
2,216
|
|
|
2,391
|
|
|
|
|
Athenex, Inc.
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
First Lien Term Loan, 11.00% cash due 6/19/2026
|
|
|
42,145
|
|
|
40,386
|
|
|
41,829
|
|
|
(11)(15)
|
|
First Lien Delayed Draw Term Loan, 11.00% cash due 6/19/2026
|
|
|
—
|
|
|
(274)
|
|
|
(158)
|
|
|
(11)(15)(19)
|
|
328,149 Common Stock Warrants (exercise price $12.63) expiration date 6/19/2027
|
|
|
|
|
973
|
|
|
302
|
|
|
(11)(15)
|
|
|
|
|
|
|
41,085
|
|
|
41,973
|
|
|
|
|
Aurora Lux Finco S.À.R.L.
|
|
Airport Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026
|
7.00
|
%
|
|
22,713
|
|
|
22,268
|
|
|
21,372
|
|
|
(6)(11)(15)
|
|
|
|
|
|
|
22,268
|
|
|
21,372
|
|
|
|
|
The Avery
|
|
Real Estate Operating Companies
|
|
|
|
|
|
|
|
|
First Lien Delayed Draw Term Loan in T8 Urban Condo Owner, LLC, LIBOR+7.30% cash due 2/17/2023
|
7.55
|
%
|
|
21,760
|
|
|
21,293
|
|
|
21,959
|
|
|
(6)(15)(19)
|
|
Subordinated Delayed Draw Debt in T8 Senior Mezz LLC, LIBOR+12.50% cash due 2/17/2023
|
12.75
|
%
|
|
4,954
|
|
|
4,851
|
|
|
4,959
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
26,144
|
|
|
26,918
|
|
|
|
|
BAART Programs, Inc.
|
|
Health Care Equipment
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+8.50% cash due 6/11/2028
|
9.50
|
%
|
|
7,166
|
|
|
7,059
|
|
|
7,130
|
|
|
(6)(15)
|
|
Second Lien Delayed Draw Term Loan, LIBOR+8.50% cash due 6/11/2028
|
9.50
|
%
|
|
3,583
|
|
|
3,529
|
|
|
3,565
|
|
|
(6)(15)
|
|
|
|
|
|
|
10,588
|
|
|
10,695
|
|
|
|
|
Blackhawk Network Holdings, Inc.
|
|
Data Processing & Outsourced Services
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.00% cash due 6/15/2026
|
7.13
|
%
|
|
30,625
|
|
|
30,158
|
|
|
30,548
|
|
|
(6)
|
|
|
|
|
|
|
30,158
|
|
|
30,548
|
|
|
|
|
Blumenthal Temecula, LLC
|
|
Automotive Retail
|
|
|
|
|
|
|
|
|
First Lien Term Loan, 9.00% cash due 9/24/2023
|
|
|
3,979
|
|
|
3,980
|
|
|
3,979
|
|
|
(15)
|
|
1,293,324 Preferred Units in Unstoppable Automotive AMV, LLC
|
|
|
|
|
1,293
|
|
|
1,293
|
|
|
(15)
|
|
298,460 Preferred Units in Unstoppable Automotive VMV, LLC
|
|
|
|
|
298
|
|
|
298
|
|
|
(15)
|
|
298,460 Common Units in Unstoppable Automotive AMV, LLC
|
|
|
|
|
298
|
|
|
298
|
|
|
(15)
|
|
99,486 Common Units in Unstoppable Automotive VMV, LLC
|
|
|
|
|
100
|
|
|
99
|
|
|
(15)
|
|
|
|
|
|
|
5,969
|
|
|
5,967
|
|
|
|
|
Cadence Aerospace, LLC
|
|
Aerospace & Defense
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+3.25% cash 5.25% PIK due 11/14/2023
|
4.25
|
%
|
|
14,105
|
|
|
12,342
|
|
|
12,954
|
|
|
(6)(15)
|
|
|
|
|
|
|
12,342
|
|
|
12,954
|
|
|
|
|
Chief Power Finance II, LLC
|
|
Independent Power Producers & Energy Traders
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 12/31/2022
|
7.50
|
%
|
|
24,181
|
|
|
23,704
|
|
|
23,637
|
|
|
(6)(15)
|
|
|
|
|
|
|
23,704
|
|
|
23,637
|
|
|
|
|
CircusTrix Holdings, LLC
|
|
Leisure Facilities
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash 2.50% PIK due 7/16/2023
|
6.50
|
%
|
|
10,571
|
|
|
8,611
|
|
|
7,879
|
|
|
(6)(15)
|
|
|
|
|
|
|
8,611
|
|
|
7,879
|
|
|
|
|
CITGO Holding, Inc.
|
|
Oil & Gas Refining & Marketing
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 8/1/2023
|
8.00
|
%
|
|
11,664
|
|
|
11,531
|
|
|
11,621
|
|
|
(6)
|
|
Fixed Rate Bond, 9.25% cash due 8/1/2024
|
|
|
10,672
|
|
|
10,672
|
|
|
10,899
|
|
|
|
|
|
|
|
|
|
22,203
|
|
|
22,520
|
|
|
|
|
CITGO Petroleum Corp.
|
|
Oil & Gas Refining & Marketing
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.25% cash due 3/28/2024
|
7.25
|
%
|
|
14,258
|
|
|
13,862
|
|
|
14,374
|
|
|
(6)
|
|
|
|
|
|
|
13,862
|
|
|
14,374
|
|
|
|
|
Clear Channel Outdoor Holdings Inc.
|
|
Advertising
|
|
|
|
|
|
|
|
|
Fixed Rate Bond, 7.50% cash due 6/1/2029
|
|
|
7,137
|
|
|
7,137
|
|
|
7,398
|
|
|
(11)
|
|
|
|
|
|
|
7,137
|
|
|
7,398
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Continental Intermodal Group LP
|
|
Oil & Gas Storage & Transportation
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+9.50% PIK due 1/28/2025
|
|
|
$
|
37,851
|
|
|
$
|
35,476
|
|
|
$
|
31,795
|
|
|
(6)(15)
|
|
Common Stock Warrants expiration date 7/28/2025
|
|
|
|
|
648
|
|
|
1,917
|
|
|
(15)
|
|
|
|
|
|
|
36,124
|
|
|
33,712
|
|
|
|
|
Convergeone Holdings, Inc.
|
|
IT Consulting & Other Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 1/4/2026
|
5.10
|
%
|
|
9,535
|
|
|
9,282
|
|
|
9,451
|
|
|
(6)
|
|
|
|
|
|
|
9,282
|
|
|
9,451
|
|
|
|
|
Conviva Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
517,851 Shares of Series D Preferred Stock
|
|
|
|
|
605
|
|
|
894
|
|
|
(15)
|
|
|
|
|
|
|
605
|
|
|
894
|
|
|
|
|
CorEvitas, LLC
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash due 12/13/2025
|
6.50
|
%
|
|
10,222
|
|
|
10,089
|
|
|
10,130
|
|
|
(6)(15)
|
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 12/13/2025
|
6.50
|
%
|
|
1,215
|
|
|
1,172
|
|
|
1,182
|
|
|
(6)(15)(19)
|
|
First Lien Revolver, PRIME+4.50% cash due 12/13/2025
|
7.75
|
%
|
|
305
|
|
|
281
|
|
|
289
|
|
|
(6)(15)(19)
|
|
1,099 Class A2 Common Units in CorEvitas Holdings, L.P.
|
|
|
|
|
1,038
|
|
|
1,177
|
|
|
(15)
|
|
|
|
|
|
|
12,580
|
|
|
12,778
|
|
|
|
|
Coty Inc.
|
|
Personal Products
|
|
|
|
|
|
|
|
|
First Lien Revolver, LIBOR+1.75% cash due 4/5/2023
|
|
|
—
|
|
|
(712)
|
|
|
(395)
|
|
|
(6)(11)(15)(19)
|
|
|
|
|
|
|
(712)
|
|
|
(395)
|
|
|
|
|
Coyote Buyer, LLC
|
|
Specialty Chemicals
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.00% cash due 2/6/2026
|
7.00
|
%
|
|
18,433
|
|
|
17,911
|
|
|
18,249
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+6.00% cash due 2/6/2025
|
|
|
—
|
|
|
(13)
|
|
|
(13)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
17,898
|
|
|
18,236
|
|
|
|
|
Curium Bidco S.à.r.l.
|
|
Biotechnology
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.75% cash due 10/27/2028
|
8.50
|
%
|
|
16,787
|
|
|
16,535
|
|
|
17,123
|
|
|
(6)(11)(15)
|
|
|
|
|
|
|
16,535
|
|
|
17,123
|
|
|
|
|
Delta Topco, Inc.
|
|
Systems Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.25% cash due 12/1/2028
|
8.00
|
%
|
|
6,680
|
|
|
6,647
|
|
|
6,789
|
|
|
(6)
|
|
|
|
|
|
|
6,647
|
|
|
6,789
|
|
|
|
|
Digital.AI Software Holdings, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 2/10/2027
|
8.00
|
%
|
|
10,028
|
|
|
9,633
|
|
|
9,857
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+7.00% cash due 2/10/2027
|
|
|
—
|
|
|
(30)
|
|
|
(18)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
9,603
|
|
|
9,839
|
|
|
|
|
Eagleview Technology Corporation
|
|
Application Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.50% cash due 8/14/2026
|
8.50
|
%
|
|
8,974
|
|
|
8,884
|
|
|
8,869
|
|
|
(6)(15)
|
|
|
|
|
|
|
8,884
|
|
|
8,869
|
|
|
|
|
EHR Canada, LLC
|
|
Food Retail
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.00% cash due 12/31/2021
|
9.00
|
%
|
|
3,750
|
|
|
3,739
|
|
|
3,746
|
|
|
(6)(15)
|
|
|
|
|
|
|
3,739
|
|
|
3,746
|
|
|
|
|
EOS Fitness Opco Holdings, LLC
|
|
Leisure Facilities
|
|
|
|
|
|
|
|
|
487.5 Class A Preferred Units, 12%
|
|
|
|
|
488
|
|
|
274
|
|
|
(15)
|
|
12,500 Class B Common Units
|
|
|
|
|
—
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
488
|
|
|
274
|
|
|
|
|
Firstlight Holdco, Inc.
|
|
Alternative Carriers
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+3.50% cash due 7/23/2025
|
3.60
|
%
|
|
7,030
|
|
|
6,566
|
|
|
6,984
|
|
|
(6)
|
|
|
|
|
|
|
6,566
|
|
|
6,984
|
|
|
|
|
Fortress Biotech, Inc.
|
|
Biotechnology
|
|
|
|
|
|
|
|
|
First Lien Term Loan, 11.00% cash due 8/27/2025
|
|
|
11,359
|
|
|
10,680
|
|
|
11,075
|
|
|
(11)(15)
|
|
331,200 Common Stock Warrants (exercise price $3.20) expiration date 8/27/2030
|
|
|
|
|
405
|
|
|
434
|
|
|
(11)(15)
|
|
|
|
|
|
|
11,085
|
|
|
11,509
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
GI Chill Acquisition LLC
|
|
Managed Health Care
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.00% cash due 8/6/2025
|
4.15
|
%
|
|
$
|
16,721
|
|
|
$
|
16,479
|
|
|
$
|
16,716
|
|
|
(6)(15)
|
|
Second Lien Term Loan, LIBOR+7.50% cash due 8/6/2026
|
7.65
|
%
|
|
6,250
|
|
|
6,210
|
|
|
6,219
|
|
|
(6)(15)
|
|
|
|
|
|
|
22,689
|
|
|
22,935
|
|
|
|
|
GKD Index Partners, LLC
|
|
Specialized Finance
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+9.00% cash due 6/29/2023
|
10.00
|
%
|
|
26,668
|
|
|
26,062
|
|
|
26,188
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+9.00% cash due 6/29/2023
|
10.00
|
%
|
|
1,280
|
|
|
1,247
|
|
|
1,251
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
27,309
|
|
|
27,439
|
|
|
|
|
Global Medical Response
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.25% cash due 3/14/2025
|
5.25
|
%
|
|
8,652
|
|
|
8,404
|
|
|
8,686
|
|
|
(6)
|
|
|
|
|
|
|
8,404
|
|
|
8,686
|
|
|
|
|
Gulf Operating, LLC
|
|
Oil & Gas Storage & Transportation
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.25% cash due 8/25/2023
|
6.25
|
%
|
|
2,839
|
|
|
2,016
|
|
|
2,418
|
|
|
(6)
|
|
First Lien Revolver, LIBOR+4.00% cash due 12/27/2021
|
|
|
—
|
|
|
(704)
|
|
|
(377)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
1,312
|
|
|
2,041
|
|
|
|
|
Houghton Mifflin Harcourt Publishers Inc.
|
|
Education Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.25% cash due 11/22/2024
|
7.25
|
%
|
|
1,007
|
|
|
979
|
|
|
1,011
|
|
|
(6)(11)
|
|
|
|
|
|
|
979
|
|
|
1,011
|
|
|
|
|
IBG Borrower LLC
|
|
Apparel, Accessories & Luxury Goods
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 8/2/2022
|
7.19
|
%
|
|
6,096
|
|
|
5,902
|
|
|
6,096
|
|
|
(6)(15)
|
|
|
|
|
|
|
5,902
|
|
|
6,096
|
|
|
|
|
iCIMs, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 9/12/2024
|
7.50
|
%
|
|
25,635
|
|
|
24,972
|
|
|
25,489
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+6.50% cash due 9/12/2024
|
7.50
|
%
|
|
1,176
|
|
|
1,144
|
|
|
1,170
|
|
|
(6)(15)
|
|
|
|
|
|
|
26,116
|
|
|
26,659
|
|
|
|
|
Immucor, Inc.
|
|
Health Care Supplies
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.75% cash due 7/2/2025
|
6.75
|
%
|
|
8,679
|
|
|
8,431
|
|
|
8,592
|
|
|
(6)(15)
|
|
Second Lien Term Loan, LIBOR+8.00% cash 3.50% PIK due 10/2/2025
|
9.00
|
%
|
|
21,640
|
|
|
20,993
|
|
|
21,424
|
|
|
(6)(15)
|
|
|
|
|
|
|
29,424
|
|
|
30,016
|
|
|
|
|
Integral Development Corporation
|
|
Other Diversified Financial Services
|
|
|
|
|
|
|
|
|
1,078,284 Common Stock Warrants (exercise price $0.9274) expiration date 7/10/2024
|
|
|
|
|
113
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
113
|
|
|
—
|
|
|
|
|
Inventus Power, Inc.
|
|
Electrical Components & Equipment
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 3/29/2024
|
6.00
|
%
|
|
18,897
|
|
|
18,724
|
|
|
18,708
|
|
|
(6)(15)
|
|
Second Lien Term Loan, LIBOR+8.50% cash due 9/29/2024
|
9.50
|
%
|
|
11,366
|
|
|
11,155
|
|
|
11,139
|
|
|
(6)(15)
|
|
|
|
|
|
|
29,879
|
|
|
29,847
|
|
|
|
|
INW Manufacturing, LLC
|
|
Personal Products
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.75% cash due 5/7/2027
|
6.50
|
%
|
|
37,266
|
|
|
36,169
|
|
|
36,520
|
|
|
(6)(15)
|
|
|
|
|
|
|
36,169
|
|
|
36,520
|
|
|
|
|
Ivanti Software, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+8.50% cash due 12/1/2028
|
9.50
|
%
|
|
17,346
|
|
|
16,847
|
|
|
17,346
|
|
|
(6)(15)
|
|
|
|
|
|
|
16,847
|
|
|
17,346
|
|
|
|
|
Jazz Acquisition, Inc.
|
|
Aerospace & Defense
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.50% cash due 1/29/2027
|
8.50
|
%
|
|
22,870
|
|
|
21,686
|
|
|
22,802
|
|
|
(6)(15)
|
|
First Lien Delayed Draw Term Loan, LIBOR+7.50% cash due 1/29/2027
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
21,686
|
|
|
22,802
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Lanai Holdings III, Inc.
|
|
Health Care Distributors
|
|
|
|
|
|
|
|
|
First Lien Term Loan, PRIME+3.75% cash due 8/29/2022
|
7.00
|
%
|
|
$
|
12,846
|
|
|
$
|
12,763
|
|
|
$
|
12,823
|
|
|
(6)
|
|
|
|
|
|
|
12,763
|
|
|
12,823
|
|
|
|
|
Latam Airlines Group S.A.
|
|
Airlines
|
|
|
|
|
|
|
|
|
First Lien Delayed Draw Term Loan, LIBOR+11.00% PIK due 3/29/2022
|
|
|
15,739
|
|
|
15,506
|
|
|
15,786
|
|
|
(6)(11)(15)(19)
|
|
|
|
|
|
|
15,506
|
|
|
15,786
|
|
|
|
|
Lift Brands Holdings, Inc.
|
|
Leisure Facilities
|
|
|
|
|
|
|
|
|
2,000,000 Class A Common Units in Snap Investments, LLC
|
|
|
|
|
1,399
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
1,399
|
|
|
—
|
|
|
|
|
Lightbox Intermediate, L.P.
|
|
Real Estate Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026
|
5.15
|
%
|
|
41,538
|
|
|
40,494
|
|
|
41,330
|
|
|
(6)(15)
|
|
|
|
|
|
|
40,494
|
|
|
41,330
|
|
|
|
|
LogMeIn, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027
|
4.83
|
%
|
|
3,980
|
|
|
3,719
|
|
|
3,978
|
|
|
(6)
|
|
|
|
|
|
|
3,719
|
|
|
3,978
|
|
|
|
|
LTI Holdings, Inc.
|
|
Electronic Components
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+6.75% cash due 9/6/2026
|
6.85
|
%
|
|
10,140
|
|
|
10,077
|
|
|
10,140
|
|
|
(6)
|
|
|
|
|
|
|
10,077
|
|
|
10,140
|
|
|
|
|
Maravai Intermediate Holdings, LLC
|
|
Biotechnology
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+3.75% cash due 10/19/2027
|
4.75
|
%
|
|
2,735
|
|
|
2,566
|
|
|
2,750
|
|
|
(6)
|
|
|
|
|
|
|
2,566
|
|
|
2,750
|
|
|
|
|
Marinus Pharmaceuticals, Inc.
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
First Lien Term Loan, 11.50% cash due 5/11/2026
|
|
|
3,441
|
|
|
3,374
|
|
|
3,372
|
|
|
(11)(15)
|
|
First Lien Delayed Draw Term Loan, 11.50% cash due 5/11/2026
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11)(15)(19)
|
|
|
|
|
|
|
3,374
|
|
|
3,372
|
|
|
|
|
Mayfield Agency Borrower Inc.
|
|
Property & Casualty Insurance
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.50% cash due 2/28/2025
|
4.60
|
%
|
|
28,602
|
|
|
27,961
|
|
|
28,584
|
|
|
(6)
|
|
|
|
|
|
|
27,961
|
|
|
28,584
|
|
|
|
|
MedAssets Software Intermediate Holdings, Inc.
|
|
Health Care Technology
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.75% cash due 1/29/2029
|
8.50
|
%
|
|
14,137
|
|
|
13,868
|
|
|
13,960
|
|
|
(6)(15)
|
|
|
|
|
|
|
13,868
|
|
|
13,960
|
|
|
|
|
MHE Intermediate Holdings, LLC
|
|
Diversified Support Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024
|
6.00
|
%
|
|
16,526
|
|
|
15,357
|
|
|
16,161
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+5.00% cash due 3/10/2023
|
|
|
—
|
|
|
(126)
|
|
|
(116)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
15,231
|
|
|
16,045
|
|
|
|
|
Mindbody, Inc.
|
|
Internet Services & Infrastructure
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash 1.50% PIK due 2/14/2025
|
8.00
|
%
|
|
38,626
|
|
|
37,270
|
|
|
36,734
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025
|
|
|
—
|
|
|
(82)
|
|
|
(196)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
37,188
|
|
|
36,538
|
|
|
|
|
Ministry Brands, LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Revolver, LIBOR+5.00% cash due 12/2/2022
|
|
|
—
|
|
|
(9)
|
|
|
(9)
|
|
|
(6)(15)(19)
|
|
Second Lien Term Loan, LIBOR+9.25% cash due 6/2/2023
|
10.25
|
%
|
|
11,000
|
|
|
10,821
|
|
|
10,906
|
|
|
(6)(15)
|
|
|
|
|
|
|
10,812
|
|
|
10,897
|
|
|
|
|
MRI Software LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026
|
6.50
|
%
|
|
25,398
|
|
|
24,835
|
|
|
25,429
|
|
|
(6)(15)
|
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026
|
|
|
—
|
|
|
(42)
|
|
|
4
|
|
|
(6)(15)(19)
|
|
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026
|
|
|
—
|
|
|
(13)
|
|
|
2
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
24,780
|
|
|
25,435
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Navisite, LLC
|
|
Data Processing & Outsourced Services
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+8.50% cash due 12/30/2026
|
9.50
|
%
|
|
$
|
22,560
|
|
|
$
|
22,146
|
|
|
$
|
22,334
|
|
|
(6)(15)
|
|
|
|
|
|
|
22,146
|
|
|
22,334
|
|
|
|
|
NeuAG, LLC
|
|
Fertilizers & Agricultural Chemicals
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024
|
7.00
|
%
|
|
46,204
|
|
|
44,303
|
|
|
45,095
|
|
|
(6)(15)
|
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024
|
|
|
—
|
|
|
(204)
|
|
|
(131)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
44,099
|
|
|
44,964
|
|
|
|
|
NN, Inc.
|
|
Industrial Machinery
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.88% cash due 9/19/2026
|
7.88
|
%
|
|
59,458
|
|
|
58,048
|
|
|
57,972
|
|
|
(6)(11)(15)
|
|
|
|
|
|
|
58,048
|
|
|
57,972
|
|
|
|
|
OEConnection LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026
|
4.10
|
%
|
|
8,364
|
|
|
7,830
|
|
|
8,364
|
|
|
(6)
|
|
|
|
|
|
|
7,830
|
|
|
8,364
|
|
|
|
|
Olaplex, Inc.
|
|
Personal Products
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026
|
7.50
|
%
|
|
52,460
|
|
|
51,169
|
|
|
52,460
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025
|
|
|
—
|
|
|
(61)
|
|
|
(39)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
51,108
|
|
|
52,421
|
|
|
|
|
OmniSYS Acquisition Corporation
|
|
Diversified Support Services
|
|
|
|
|
|
|
|
|
100,000 Common Units in OSYS Holdings, LLC
|
|
|
|
|
1,000
|
|
|
617
|
|
|
(15)
|
|
|
|
|
|
|
1,000
|
|
|
617
|
|
|
|
|
Onvoy, LLC
|
|
Integrated Telecommunication Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.50% cash due 2/10/2024
|
5.50
|
%
|
|
3,611
|
|
|
3,398
|
|
|
3,613
|
|
|
(6)
|
|
Second Lien Term Loan, LIBOR+10.50% cash due 2/10/2025
|
11.50
|
%
|
|
12,498
|
|
|
12,498
|
|
|
12,477
|
|
|
(6)(15)
|
|
19,666.67 Class A Units in GTCR Onvoy Holdings, LLC
|
|
|
|
|
1,967
|
|
|
2,060
|
|
|
(15)
|
|
13,664.73 Series 3 Class B Units in GTCR Onvoy Holdings, LLC
|
|
|
|
|
—
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
17,863
|
|
|
18,150
|
|
|
|
|
P & L Development, LLC
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
Fixed Rate Bond, 7.75% cash due 11/15/2025
|
|
|
9,123
|
|
|
9,123
|
|
|
9,613
|
|
|
|
|
|
|
|
|
|
9,123
|
|
|
9,613
|
|
|
|
|
Park Place Technologies, LLC
|
|
Internet Services & Infrastructure
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 11/10/2027
|
6.00
|
%
|
|
9,975
|
|
|
9,484
|
|
|
10,022
|
|
|
(6)
|
|
|
|
|
|
|
9,484
|
|
|
10,022
|
|
|
|
|
PaySimple, Inc.
|
|
Data Processing & Outsourced Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025
|
5.61
|
%
|
|
51,530
|
|
|
50,297
|
|
|
51,272
|
|
|
(6)(15)
|
|
|
|
|
|
|
50,297
|
|
|
51,272
|
|
|
|
|
Pingora MSR Opportunity Fund I-A, LP
|
|
Thrifts & Mortgage Finance
|
|
|
|
|
|
|
|
|
1.86% limited partnership interest
|
|
|
|
|
752
|
|
|
114
|
|
|
(11)(16)(19)
|
|
|
|
|
|
|
752
|
|
|
114
|
|
|
|
|
Planview Parent, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.25% cash due 12/18/2028
|
8.00
|
%
|
|
28,627
|
|
|
28,198
|
|
|
28,699
|
|
|
(6)(15)
|
|
|
|
|
|
|
28,198
|
|
|
28,699
|
|
|
|
|
PLNTF Holdings, LLC
|
|
Leisure Facilities
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.00% cash due 3/12/2026
|
9.00
|
%
|
|
13,764
|
|
|
13,502
|
|
|
13,901
|
|
|
(6)(15)
|
|
|
|
|
|
|
13,502
|
|
|
13,901
|
|
|
|
|
Pluralsight, LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.00% cash due 4/6/2027
|
9.00
|
%
|
|
41,502
|
|
|
40,705
|
|
|
40,672
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+8.00% cash due 4/6/2027
|
|
|
—
|
|
|
(68)
|
|
|
(71)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
40,637
|
|
|
40,601
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
PRGX Global, Inc.
|
|
Data Processing & Outsourced Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.75% cash due 3/3/2026
|
7.75
|
%
|
|
$
|
34,204
|
|
|
$
|
33,036
|
|
|
$
|
33,520
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+6.75% cash due 3/3/2026
|
|
|
—
|
|
|
(46)
|
|
|
(50)
|
|
|
(6)(15)(19)
|
|
80,515 Class B Common Units
|
|
|
|
|
79
|
|
|
81
|
|
|
(15)
|
|
|
|
|
|
|
33,069
|
|
|
33,551
|
|
|
|
|
ProFrac Services, LLC
|
|
Industrial Machinery
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.50% cash due 9/15/2023
|
9.75
|
%
|
|
22,193
|
|
|
20,295
|
|
|
21,749
|
|
|
(6)(15)
|
|
|
|
|
|
|
20,295
|
|
|
21,749
|
|
|
|
|
Project Boost Purchaser, LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+8.00% cash due 5/31/2027
|
8.10
|
%
|
|
5,250
|
|
|
5,147
|
|
|
5,250
|
|
|
(6)(15)
|
|
|
|
|
|
|
5,147
|
|
|
5,250
|
|
|
|
|
Pug LLC
|
|
Internet & Direct Marketing Retail
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.00% cash due 2/12/2027
|
8.75
|
%
|
|
21,283
|
|
|
20,223
|
|
|
21,629
|
|
|
(6)
|
|
|
|
|
|
|
20,223
|
|
|
21,629
|
|
|
|
|
Quantum Bidco Limited
|
|
Food Distributors
|
|
|
|
|
|
|
|
|
First Lien Term Loan, UK LIBOR+6.00% cash due 1/29/2028
|
6.11
|
%
|
|
£
|
3,501
|
|
|
4,618
|
|
|
4,734
|
|
|
(6)(11)
|
|
|
|
|
|
|
4,618
|
|
|
4,734
|
|
|
|
|
QuorumLabs, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
64,887,669 Junior-2 Preferred Stock
|
|
|
|
|
375
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
375
|
|
|
—
|
|
|
|
|
Refac Optical Group
|
|
Specialty Stores
|
|
|
|
|
|
|
|
|
1,550.9435 Shares of Common Stock in Refac Holdings, Inc.
|
|
|
|
|
1
|
|
|
—
|
|
|
(15)
|
|
550.9435 Series A-2 Preferred Stock in Refac Holdings, Inc., 10%
|
|
|
|
|
305
|
|
|
—
|
|
|
(15)
|
|
1,000 Series A-1 Preferred Stock in Refac Holdings, Inc., 10%
|
|
|
|
|
999
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
1,305
|
|
|
—
|
|
|
|
|
Relativity ODA LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.50% PIK due 5/12/2027
|
|
|
$
|
22,356
|
|
|
21,814
|
|
|
21,842
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+6.50% cash due 5/12/2027
|
|
|
—
|
|
|
(54)
|
|
|
(51)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
21,760
|
|
|
21,791
|
|
|
|
|
Renaissance Holding Corp.
|
|
Diversified Banks
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.00% cash due 5/29/2026
|
7.10
|
%
|
|
3,542
|
|
|
3,515
|
|
|
3,554
|
|
|
(6)
|
|
|
|
|
|
|
3,515
|
|
|
3,554
|
|
|
|
|
RevSpring, Inc.
|
|
Commercial Printing
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.00% cash due 10/11/2025
|
4.15
|
%
|
|
9,750
|
|
|
9,175
|
|
|
9,735
|
|
|
(6)(15)
|
|
|
|
|
|
|
9,175
|
|
|
9,735
|
|
|
|
|
RS Ivy Holdco, Inc.
|
|
Oil & Gas Exploration & Production
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash due 12/23/2027
|
6.50
|
%
|
|
2,488
|
|
|
2,335
|
|
|
2,489
|
|
|
(6)(15)
|
|
|
|
|
|
|
2,335
|
|
|
2,489
|
|
|
|
|
Sabert Corporation
|
|
Metal & Glass Containers
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026
|
5.50
|
%
|
|
1,823
|
|
|
1,710
|
|
|
1,825
|
|
|
(6)
|
|
|
|
|
|
|
1,710
|
|
|
1,825
|
|
|
|
|
Salient CRGT, Inc.
|
|
Aerospace & Defense
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022
|
7.50
|
%
|
|
5,326
|
|
|
5,028
|
|
|
5,292
|
|
|
(6)(15)
|
|
|
|
|
|
|
5,028
|
|
|
5,292
|
|
|
|
|
Scilex Pharmaceuticals Inc.
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
Fixed Rate Zero Coupon Bond due 8/15/2026
|
|
|
7,817
|
|
|
6,475
|
|
|
6,988
|
|
|
(15)
|
|
|
|
|
|
|
6,475
|
|
|
6,988
|
|
|
|
|
ShareThis, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
345,452 Series C Preferred Stock Warrants (exercise price $3.0395) expiration date 3/4/2024
|
|
|
|
|
367
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
367
|
|
|
—
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Sirva Worldwide, Inc.
|
|
Diversified Support Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025
|
5.60
|
%
|
|
$
|
5,911
|
|
|
$
|
5,241
|
|
|
$
|
5,584
|
|
|
(6)
|
|
|
|
|
|
|
5,241
|
|
|
5,584
|
|
|
|
|
SM Wellness Holdings, Inc.
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+8.00% cash due 4/15/2029
|
8.75
|
%
|
|
9,109
|
|
|
8,972
|
|
|
9,200
|
|
|
(6)(15)
|
|
|
|
|
|
|
8,972
|
|
|
9,200
|
|
|
|
|
Sorrento Therapeutics, Inc.
|
|
Biotechnology
|
|
|
|
|
|
|
|
|
50,000 Common Stock Units
|
|
|
|
|
197
|
|
|
485
|
|
|
(11)
|
|
|
|
|
|
|
197
|
|
|
485
|
|
|
|
|
Star US Bidco LLC
|
|
Industrial Machinery
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027
|
5.25
|
%
|
|
1,197
|
|
|
1,113
|
|
|
1,198
|
|
|
(6)
|
|
|
|
|
|
|
1,113
|
|
|
1,198
|
|
|
|
|
SumUp Holdings Luxembourg S.À.R.L.
|
|
Other Diversified Financial Services
|
|
|
|
|
|
|
|
|
First Lien Delayed Draw Term Loan, EURIBOR+8.50% cash due 3/10/2026
|
10.00
|
%
|
|
€
|
12,401
|
|
|
14,121
|
|
|
14,406
|
|
|
(6)(11)(15)(19)
|
|
|
|
|
|
|
14,121
|
|
|
14,406
|
|
|
|
|
Sunland Asphalt & Construction, LLC
|
|
Construction & Engineering
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.00% cash due 1/13/2026
|
7.00
|
%
|
|
$
|
43,160
|
|
|
41,813
|
|
|
42,427
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+6.00% cash due 1/13/2022
|
7.00
|
%
|
|
5,437
|
|
|
5,337
|
|
|
5,330
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
47,150
|
|
|
47,757
|
|
|
|
|
Supermoose Borrower, LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025
|
3.90
|
%
|
|
8,598
|
|
|
7,536
|
|
|
8,060
|
|
|
(6)
|
|
|
|
|
|
|
7,536
|
|
|
8,060
|
|
|
|
|
Swordfish Merger Sub LLC
|
|
Auto Parts & Equipment
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+6.75% cash due 2/2/2026
|
7.75
|
%
|
|
12,500
|
|
|
12,464
|
|
|
12,256
|
|
|
(6)(15)
|
|
|
|
|
|
|
12,464
|
|
|
12,256
|
|
|
|
|
Tacala, LLC
|
|
Restaurants
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.50% cash due 2/4/2028
|
8.25
|
%
|
|
9,448
|
|
|
9,312
|
|
|
9,489
|
|
|
(6)
|
|
|
|
|
|
|
9,312
|
|
|
9,489
|
|
|
|
|
Tecta America Corp.
|
|
Construction & Engineering
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+8.50% cash due 4/9/2029
|
9.25
|
%
|
|
5,203
|
|
|
5,125
|
|
|
5,203
|
|
|
(6)(15)
|
|
|
|
|
|
|
5,125
|
|
|
5,203
|
|
|
|
|
Telestream Holdings Corporation
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.75% cash due 10/15/2025
|
9.75
|
%
|
|
18,556
|
|
|
18,031
|
|
|
18,278
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+8.75% cash due 10/15/2025
|
|
|
—
|
|
|
(30)
|
|
|
(26)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
18,001
|
|
|
18,252
|
|
|
|
|
TerSera Therapeutics LLC
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+9.50% cash due 3/30/2024
|
10.50
|
%
|
|
29,663
|
|
|
29,328
|
|
|
29,371
|
|
|
(6)(15)
|
|
668,879 Common Units of TerSera Holdings LLC
|
|
|
|
|
2,192
|
|
|
3,487
|
|
|
(15)
|
|
|
|
|
|
|
31,520
|
|
|
32,858
|
|
|
|
|
TGNR HoldCo LLC
|
|
Integrated Oil & Gas
|
|
|
|
|
|
|
|
|
Subordinated Debt, 11.50% cash due 5/14/2026
|
|
|
4,984
|
|
|
4,836
|
|
|
4,834
|
|
|
(11)(15)(20)
|
|
|
|
|
|
|
4,836
|
|
|
4,834
|
|
|
|
|
Thermacell Repellents, Inc.
|
|
Leisure Products
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.00% cash due 12/4/2026
|
7.00
|
%
|
|
6,651
|
|
|
6,618
|
|
|
6,618
|
|
|
(6)(15)
|
|
First Lien Revolver, LIBOR+6.00% cash due 12/4/2026
|
7.00
|
%
|
|
396
|
|
|
392
|
|
|
392
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
7,010
|
|
|
7,010
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Thrasio, LLC
|
|
Internet & Direct Marketing Retail
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 12/18/2026
|
8.00
|
%
|
|
$
|
22,831
|
|
|
$
|
22,018
|
|
|
$
|
22,603
|
|
|
(6)(15)
|
|
First Lien Delayed Draw Term Loan, LIBOR+7.00% cash due 12/18/2026
|
8.00
|
%
|
|
4,588
|
|
|
4,354
|
|
|
4,436
|
|
|
(6)(15)(19)
|
|
8,434 Shares of Series C-3 Preferred Stock in Thrasio Holdings, Inc.
|
|
|
|
|
101
|
|
|
103
|
|
|
(15)
|
|
284,650.32 Shares of Series C-2 Preferred Stock in Thrasio Holdings, Inc.
|
|
|
|
|
2,409
|
|
|
3,478
|
|
|
(15)
|
|
15,468 Shares of Series X Preferred Stock in Thrasio Holdings, Inc.
|
|
|
|
|
15,252
|
|
|
16,342
|
|
|
(15)(19)
|
|
|
|
|
|
|
44,134
|
|
|
46,962
|
|
|
|
|
TIBCO Software Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.25% cash due 3/3/2028
|
7.36
|
%
|
|
16,788
|
|
|
16,680
|
|
|
17,079
|
|
|
(6)
|
|
|
|
|
|
|
16,680
|
|
|
17,079
|
|
|
|
|
TigerConnect, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
299,110 Series B Preferred Stock Warrants (exercise price $1.3373) expiration date 12/8/2024
|
|
|
|
|
60
|
|
|
525
|
|
|
(15)
|
|
|
|
|
|
|
60
|
|
|
525
|
|
|
|
|
Transact Holdings Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.75% cash due 4/30/2026
|
4.85
|
%
|
|
6,878
|
|
|
6,774
|
|
|
6,843
|
|
|
(6)(15)
|
|
|
|
|
|
|
6,774
|
|
|
6,843
|
|
|
|
|
Velocity Commercial Capital, LLC
|
|
Thrifts & Mortgage Finance
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.00% cash due 2/5/2026
|
9.00
|
%
|
|
16,010
|
|
|
15,391
|
|
|
15,930
|
|
|
(6)(15)
|
|
|
|
|
|
|
15,391
|
|
|
15,930
|
|
|
|
|
Veritas US Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 9/1/2025
|
6.00
|
%
|
|
5,955
|
|
|
5,591
|
|
|
6,001
|
|
|
(6)
|
|
|
|
|
|
|
5,591
|
|
|
6,001
|
|
|
|
|
Verscend Holding Corp.
|
|
Health Care Technology
|
|
|
|
|
|
|
|
|
Fixed Rate Bond, 9.75% cash due 8/15/2026
|
|
|
2,756
|
|
|
2,774
|
|
|
2,908
|
|
|
|
|
|
|
|
|
|
2,774
|
|
|
2,908
|
|
|
|
|
Vitalyst Holdings, Inc.
|
|
IT Consulting & Other Services
|
|
|
|
|
|
|
|
|
675 Series A Preferred Stock Units
|
|
|
|
|
675
|
|
|
440
|
|
|
(15)
|
|
7,500 Class A Common Stock Units
|
|
|
|
|
75
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
750
|
|
|
440
|
|
|
|
|
Win Brands Group LLC
|
|
Housewares & Specialties
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+9.00% cash 5.00% PIK due 1/22/2026
|
10.00
|
%
|
|
1,881
|
|
|
1,863
|
|
|
1,872
|
|
|
(6)(15)
|
|
139 Class F Warrants in Brand Value Growth LLC (exercise price $0.01) expiration date 1/25/2027
|
|
|
|
|
—
|
|
|
—
|
|
|
(15)
|
|
|
|
|
|
|
1,863
|
|
|
1,872
|
|
|
|
|
Windstream Services II, LLC
|
|
Integrated Telecommunication Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027
|
7.25
|
%
|
|
31,679
|
|
|
30,372
|
|
|
31,826
|
|
|
(6)
|
|
18,032 Shares of Common Stock in Windstream Holdings II, LLC
|
|
|
|
|
216
|
|
|
298
|
|
|
(15)
|
|
109,420 Warrants in Windstream Holdings II, LLC
|
|
|
|
|
1,842
|
|
|
1,805
|
|
|
(15)
|
|
|
|
|
|
|
32,430
|
|
|
33,929
|
|
|
|
|
WP CPP Holdings, LLC
|
|
Aerospace & Defense
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+3.75% cash due 4/30/2025
|
4.75
|
%
|
|
4,380
|
|
|
3,990
|
|
|
4,299
|
|
|
(6)
|
|
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026
|
8.75
|
%
|
|
16,000
|
|
|
15,744
|
|
|
15,653
|
|
|
(6)(15)
|
|
|
|
|
|
|
19,734
|
|
|
19,952
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
WPEngine, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 3/27/2026
|
7.50
|
%
|
|
$
|
14,188
|
|
|
$
|
13,908
|
|
|
$
|
13,982
|
|
|
(6)(15)
|
|
First Lien Delayed Draw Term Loan, LIBOR+6.50% cash due 3/27/2026
|
|
|
—
|
|
|
(519)
|
|
|
(382)
|
|
|
(6)(15)(19)
|
|
|
|
|
|
|
13,389
|
|
|
13,600
|
|
|
|
|
Zep Inc.
|
|
Specialty Chemicals
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.00% cash due 8/12/2024
|
5.00
|
%
|
|
6,511
|
|
|
6,152
|
|
|
6,438
|
|
|
(6)
|
|
Second Lien Term Loan, LIBOR+8.25% cash due 8/11/2025
|
9.25
|
%
|
|
22,748
|
|
|
22,690
|
|
|
22,248
|
|
|
(6)(15)
|
|
|
|
|
|
|
28,842
|
|
|
28,686
|
|
|
|
|
Zephyr Bidco Limited
|
|
Specialized Finance
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, UK LIBOR+7.50% cash due 7/23/2026
|
7.55
|
%
|
|
£
|
18,000
|
|
|
23,770
|
|
|
24,711
|
|
|
(6)(11)
|
|
|
|
|
|
|
23,770
|
|
|
24,711
|
|
|
|
|
Total Non-Control/Non-Affiliate Investments (157.9% of net assets)
|
|
|
|
|
$
|
2,021,729
|
|
|
$
|
2,055,864
|
|
|
|
|
Total Portfolio Investments (179.6% of net assets)
|
|
|
|
|
$
|
2,320,224
|
|
|
$
|
2,339,301
|
|
|
|
|
Cash and Cash Equivalents and Restricted Cash
|
|
|
|
|
|
|
|
|
|
|
JP Morgan Prime Money Market Fund, Institutional Shares
|
|
|
|
|
$
|
72,407
|
|
|
$
|
72,407
|
|
|
|
|
Other cash accounts
|
|
|
|
|
15,122
|
|
|
15,122
|
|
|
|
|
Total Cash and Cash Equivalents and Restricted Cash (6.7% of net assets)
|
|
|
|
|
$
|
87,529
|
|
|
$
|
87,529
|
|
|
|
|
Total Portfolio Investments and Cash and Cash Equivalents and Restricted Cash (186.3% of net assets)
|
|
|
|
|
$
|
2,407,753
|
|
|
$
|
2,426,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Instrument
|
|
Notional Amount to be Purchased
|
|
Notional Amount to be Sold
|
|
Maturity Date
|
|
Counterparty
|
|
Cumulative Unrealized Appreciation /(Depreciation)
|
|
Foreign currency forward contract
|
|
$
|
53,390
|
|
|
£
|
37,709
|
|
|
8/12/2021
|
|
JPMorgan Chase Bank, N.A.
|
|
$
|
1,292
|
|
|
Foreign currency forward contract
|
|
$
|
46,457
|
|
|
€
|
38,165
|
|
|
8/12/2021
|
|
JPMorgan Chase Bank, N.A.
|
|
1,157
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Instrument
|
|
Company Receives
|
|
Company Pays
|
|
Counterparty
|
|
Maturity Date
|
|
Notional Amount
|
|
Fair Value
|
|
Interest rate swap
|
|
Fixed 2.7%
|
|
Floating 3-month LIBOR +1.658%
|
|
Royal Bank of Canada
|
|
1/15/2027
|
|
$350,000
|
|
$(267)
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
June 30, 2021
(dollar amounts in thousands)
(unaudited)
(1)
All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted.
(2)
See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region.
(3)
Equity ownership may be held in shares or units of companies related to the portfolio companies.
(4)
Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents.
(5)
Each of the Company's investments is pledged as collateral under one or more of its credit facilities. A single investment may be divided into parts that are individually pledged as collateral to separate credit facilities.
(6)
The interest rate on the principal balance outstanding for all floating rate loans is indexed to the London Interbank Offered Rate ("LIBOR") and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of June 30, 2021, the reference rates for the Company's variable rate loans were the 30-day LIBOR at 0.10%, the 60-day LIBOR at 0.13%, the 90-day LIBOR at 0.15%, the 180-day LIBOR at 0.17%, the 360-day LIBOR at 0.25%, the PRIME at 3.25%, the 30-day UK LIBOR at 0.05%, the 180-day UK LIBOR at 0.04%, the 30-day EURIBOR at (0.58)%, the 90-day EURIBOR at (0.55)% and the 180-day EURIBOR at (0.54)%. Most loans include an interest floor, which generally ranges from 0% to 1%.
(7)
Principal includes accumulated payment in kind ("PIK") interest and is net of repayments, if any. “£” signifies the investment is denominated in British Pounds. "€" signifies the investment is denominated in Euros. All other investments are denominated in U.S. dollars.
(8)
Control Investments generally are defined by the Investment Company Act of 1940, as amended (the "Investment Company Act"), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.
(9)
As defined in the Investment Company Act, the Company is deemed to be both an "Affiliated Person" of and to "Control" these portfolio companies as the Company owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). See Schedule 12-14 in the accompanying notes to the Consolidated Financial Statements for transactions during the nine months ended June 30, 2021 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to control.
(10)
First Star Speir Aviation 1 Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with Accounting Standards Update ("ASU") 2013-08, the Company has deemed the holding company to be an investment company under accounting principles generally accepted in the United States ("GAAP") and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities.
(11)
Investment is not a "qualifying asset" as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of June 30, 2021, qualifying assets represented 75.2% of the Company's total assets and non-qualifying assets represented 24.8% of the Company's total assets.
(12)
Income producing through payment of dividends or distributions.
(13)
PIK interest income for this investment accrues at an annualized rate of 15%, however, the PIK interest is not contractually capitalized on the investment subsequent to a restructure that occurred during the three months ended June 30, 2021. As a result, the principal amount of the investment does not increase over time for accumulated PIK interest. As of June 30, 2021, the accumulated PIK interest balance for each of the A notes and the B notes was $0.1 million.
(14)
See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition.
(15)
As of June 30, 2021, these investments were categorized as Level 3 within the fair value hierarchy established by Financial Accounting Standards Board ("FASB") guidance under Accounting Standards Codification ("ASC") Topic 820,
Fair Value Measurements and Disclosures
("ASC 820").
(16)
This investment was valued using net asset value as a practical expedient for fair value. Consistent with ASC 820, these investments are excluded from the hierarchical levels.
(17)
Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities.
(18)
Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments.
(19)
Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
(20)
This investment represents a participation interest in the underlying securities shown.
See notes to Consolidated Financial Statements.
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Control Investments
|
|
|
|
|
|
|
|
|
(8)(9)
|
|
C5 Technology Holdings, LLC
|
|
Data Processing & Outsourced Services
|
|
|
|
|
|
|
|
|
829 Common Units
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(20)
|
|
34,984,460.37 Preferred Units
|
|
|
|
|
34,984
|
|
|
27,638
|
|
|
(20)
|
|
|
|
|
|
|
34,984
|
|
|
27,638
|
|
|
|
|
Dominion Diagnostics, LLC
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024
|
6.00
|
%
|
|
$
|
27,660
|
|
|
27,660
|
|
|
27,660
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+5.00% cash due 2/28/2024
|
6.00
|
%
|
|
5,260
|
|
|
5,260
|
|
|
5,260
|
|
|
(6)(19)(20)
|
|
30,030.8 Common Units in DD Healthcare Services Holdings, LLC
|
|
|
|
|
18,626
|
|
|
7,667
|
|
|
(20)
|
|
|
|
|
|
|
51,546
|
|
|
40,587
|
|
|
|
|
First Star Speir Aviation Limited
|
|
Airlines
|
|
|
|
|
|
|
(10)
|
|
First Lien Term Loan, 9.00% cash due 12/15/2020
|
|
|
11,510
|
|
|
2,035
|
|
|
11,510
|
|
|
(11)(20)
|
|
100% equity interest
|
|
|
|
|
8,500
|
|
|
1,622
|
|
|
(11)(12)(20)
|
|
|
|
|
|
|
10,535
|
|
|
13,132
|
|
|
|
|
New IPT, Inc.
|
|
Oil & Gas Equipment & Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021
|
6.00
|
%
|
|
2,304
|
|
|
2,304
|
|
|
1,800
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+5.00% cash due 3/17/2021
|
6.00
|
%
|
|
1,009
|
|
|
1,009
|
|
|
788
|
|
|
(6)(19)(20)
|
|
50.087 Class A Common Units in New IPT Holdings, LLC
|
|
|
|
|
—
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
3,313
|
|
|
2,588
|
|
|
|
|
Senior Loan Fund JV I, LLC
|
|
Multi-Sector Holdings
|
|
|
|
|
|
|
(14)
|
|
Subordinated Debt, LIBOR+7.00% cash due 12/29/2028
|
7.17
|
%
|
|
96,250
|
|
|
96,250
|
|
|
96,250
|
|
|
(6)(11)(20)
|
|
87.5% LLC equity interest
|
|
|
|
|
49,322
|
|
|
21,190
|
|
|
(11)(16)(19)
|
|
|
|
|
|
|
145,572
|
|
|
117,440
|
|
|
|
|
Total Control Investments (22.0% of net assets)
|
|
|
|
|
$
|
245,950
|
|
|
$
|
201,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate Investments
|
|
|
|
|
|
|
|
|
(17)
|
|
Assembled Brands Capital LLC
|
|
Specialized Finance
|
|
|
|
|
|
|
|
|
First Lien Revolver, LIBOR+6.00% cash due 10/17/2023
|
7.00
|
%
|
|
$
|
4,688
|
|
|
$
|
4,688
|
|
|
$
|
4,194
|
|
|
(6)(19)(20)
|
|
1,609,201 Class A Units
|
|
|
|
|
764
|
|
|
483
|
|
|
(20)
|
|
1,019,168.80 Preferred Units, 6%
|
|
|
|
|
1,019
|
|
|
1,091
|
|
|
(20)
|
|
70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029
|
|
|
|
|
—
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
6,471
|
|
|
5,768
|
|
|
|
|
Caregiver Services, Inc.
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
1,080,399 shares of Series A Preferred Stock, 10%
|
|
|
|
|
1,080
|
|
|
741
|
|
|
(20)
|
|
|
|
|
|
|
1,080
|
|
|
741
|
|
|
|
|
Total Affiliate Investments (0.7% of net assets)
|
|
|
|
|
$
|
7,551
|
|
|
$
|
6,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Control/Non-Affiliate Investments
|
|
|
|
|
|
|
|
|
(18)
|
|
4 Over International, LLC
|
|
Commercial Printing
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.00% cash due 6/7/2022
|
7.00
|
%
|
|
$
|
5,676
|
|
|
$
|
5,654
|
|
|
$
|
5,264
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+6.00% cash due 6/7/2021
|
7.00
|
%
|
|
2,232
|
|
|
2,214
|
|
|
2,070
|
|
|
(6)(20)
|
|
|
|
|
|
|
7,868
|
|
|
7,334
|
|
|
|
|
99 Cents Only Stores LLC
|
|
General Merchandise Stores
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash 1.50% PIK due 1/13/2022
|
6.00
|
%
|
|
19,431
|
|
|
19,220
|
|
|
17,877
|
|
|
(6)
|
|
|
|
|
|
|
19,220
|
|
|
17,877
|
|
|
|
|
A.T. Holdings II SÀRL
|
|
Biotechnology
|
|
|
|
|
|
|
|
|
First Lien Term Loan, 12.00% cash due 4/27/2023
|
|
|
22,619
|
|
|
22,619
|
|
|
26,464
|
|
|
(11)(20)
|
|
First Lien Delayed Draw Term Loan, 12.00% cash due 4/27/2023
|
|
|
1,508
|
|
|
1,508
|
|
|
1,780
|
|
|
(11)(19)(20)
|
|
|
|
|
|
|
24,127
|
|
|
28,244
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Access CIG, LLC
|
|
Diversified Support Services
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.75% cash due 2/27/2026
|
7.91
|
%
|
|
$
|
15,000
|
|
|
$
|
14,909
|
|
|
$
|
14,250
|
|
|
(6)
|
|
|
|
|
|
|
14,909
|
|
|
14,250
|
|
|
|
|
Accupac, Inc.
|
|
Personal Products
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.00% cash due 1/17/2026
|
7.00
|
%
|
|
12,487
|
|
|
12,294
|
|
|
12,487
|
|
|
(6)(20)
|
|
First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 1/17/2026
|
|
|
—
|
|
|
(36)
|
|
|
—
|
|
|
(6)(19)(20)
|
|
First Lien Revolver, LIBOR+6.00% cash due 1/17/2026
|
7.00
|
%
|
|
1,564
|
|
|
1,540
|
|
|
1,564
|
|
|
(6)(20)
|
|
|
|
|
|
|
13,798
|
|
|
14,051
|
|
|
|
|
Acquia Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 10/31/2025
|
8.00
|
%
|
|
20,950
|
|
|
20,594
|
|
|
20,499
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+7.00% cash due 10/31/2025
|
|
|
—
|
|
|
(39)
|
|
|
(48)
|
|
|
(6)(19)(20)
|
|
|
|
|
|
|
20,555
|
|
|
20,451
|
|
|
|
|
Aden & Anais Merger Sub, Inc.
|
|
Apparel, Accessories & Luxury Goods
|
|
|
|
|
|
|
|
|
51,645 Common Units in Aden & Anais Holdings, Inc.
|
|
|
|
|
5,165
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
5,165
|
|
|
—
|
|
|
|
|
AdVenture Interactive, Corp.
|
|
Advertising
|
|
|
|
|
|
|
|
|
9,073 shares of common stock
|
|
|
|
|
13,611
|
|
|
13,440
|
|
|
(20)
|
|
|
|
|
|
|
13,611
|
|
|
13,440
|
|
|
|
|
AI Ladder (Luxembourg) Subco S.a.r.l.
|
|
Electrical Components & Equipment
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025
|
4.65
|
%
|
|
21,374
|
|
|
20,934
|
|
|
20,465
|
|
|
(6)(11)
|
|
|
|
|
|
|
20,934
|
|
|
20,465
|
|
|
|
|
AI Sirona (Luxembourg) Acquisition S.a.r.l.
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, EURIBOR+7.25% cash due 9/28/2026
|
7.25
|
%
|
|
€
|
24,838
|
|
|
27,668
|
|
|
28,435
|
|
|
(6)(11)(20)
|
|
|
|
|
|
|
27,668
|
|
|
28,435
|
|
|
|
|
Airbnb, Inc.
|
|
Hotels, Resorts & Cruise Lines
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025
|
8.50
|
%
|
|
$
|
15,743
|
|
|
15,378
|
|
|
17,081
|
|
|
(6)
|
|
|
|
|
|
|
15,378
|
|
|
17,081
|
|
|
|
|
AirStrip Technologies, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
5,715 Common Stock Warrants (exercise price $139.99) expiration date 5/11/2025
|
|
|
|
|
90
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
90
|
|
|
—
|
|
|
|
|
Aldevron, L.L.C.
|
|
Biotechnology
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.25% cash due 10/12/2026
|
5.25
|
%
|
|
7,960
|
|
|
7,880
|
|
|
7,977
|
|
|
(6)
|
|
|
|
|
|
|
7,880
|
|
|
7,977
|
|
|
|
|
Algeco Scotsman Global Finance Plc
|
|
Construction & Engineering
|
|
|
|
|
|
|
|
|
Fixed Rate Bond, 8.00% cash due 2/15/2023
|
|
|
13,524
|
|
|
13,277
|
|
|
13,465
|
|
|
(11)
|
|
|
|
|
|
|
13,277
|
|
|
13,465
|
|
|
|
|
Alvotech Holdings S.A.
|
|
Biotechnology
|
|
|
|
|
|
|
(13)
|
|
Fixed Rate Bond 15% PIK Note A due 12/13/2023
|
|
|
14,800
|
|
|
18,849
|
|
|
19,968
|
|
|
(11)(20)
|
|
Fixed Rate Bond 15% PIK Note B due 12/13/2023
|
|
|
14,800
|
|
|
18,849
|
|
|
19,196
|
|
|
(11)(20)
|
|
|
|
|
|
|
37,698
|
|
|
39,164
|
|
|
|
|
Amplify Finco Pty Ltd.
|
|
Movies & Entertainment
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026
|
4.75
|
%
|
|
995
|
|
|
909
|
|
|
856
|
|
|
(6)(11)(20)
|
|
Second Lien Term Loan, LIBOR+8.00% cash due 11/26/2027
|
8.75
|
%
|
|
12,500
|
|
|
12,188
|
|
|
9,438
|
|
|
(6)(11)(20)
|
|
|
|
|
|
|
13,097
|
|
|
10,294
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Ancile Solutions, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 6/30/2021
|
8.00
|
%
|
|
$
|
8,181
|
|
|
$
|
8,150
|
|
|
$
|
8,124
|
|
|
(6)(20)
|
|
|
|
|
|
|
8,150
|
|
|
8,124
|
|
|
|
|
Apptio, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025
|
8.25
|
%
|
|
23,764
|
|
|
23,420
|
|
|
23,297
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+7.25% cash due 1/10/2025
|
|
|
—
|
|
|
(22)
|
|
|
(30)
|
|
|
(6)(19)(20)
|
|
|
|
|
|
|
23,398
|
|
|
23,267
|
|
|
|
|
Ardonagh Midco 3 PLC
|
|
Insurance Brokers
|
|
|
|
|
|
|
|
|
First Lien Term Loan, EURIBOR+7.50% cash due 7/14/2026
|
8.50
|
%
|
|
€
|
1,440
|
|
|
1,594
|
|
|
1,640
|
|
|
(6)(11)(20)
|
|
First Lien Term Loan, UK LIBOR+7.50% cash due 7/14/2026
|
8.25
|
%
|
|
£
|
11,303
|
|
|
13,752
|
|
|
14,188
|
|
|
(6)(11)(20)
|
|
First Lien Delayed Draw Term Loan, UK LIBOR+7.50% cash due 7/14/2026
|
|
|
£
|
—
|
|
|
—
|
|
|
—
|
|
|
(6)(11)(19)(20)
|
|
Fixed Rate Bond, 11.50% cash due 1/15/2027
|
|
|
$
|
2,222
|
|
|
2,200
|
|
|
2,255
|
|
|
(11)
|
|
|
|
|
|
|
17,546
|
|
|
18,083
|
|
|
|
|
Associated Asphalt Partners, LLC
|
|
Construction Materials
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.25% cash due 4/5/2024
|
6.25
|
%
|
|
2,554
|
|
|
2,150
|
|
|
2,073
|
|
|
(6)
|
|
|
|
|
|
|
2,150
|
|
|
2,073
|
|
|
|
|
Asurion, LLC
|
|
Property & Casualty Insurance
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+6.50% cash due 8/4/2025
|
6.65
|
%
|
|
19,985
|
|
|
19,950
|
|
|
20,058
|
|
|
(6)
|
|
|
|
|
|
|
19,950
|
|
|
20,058
|
|
|
|
|
Athenex, Inc.
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
First Lien Term Loan, 11.00% cash due 6/19/2026
|
|
|
28,475
|
|
|
27,252
|
|
|
28,261
|
|
|
(11)(20)
|
|
First Lien Delayed Draw Term Loan, 11.00% cash due 6/19/2026
|
|
|
—
|
|
|
(321)
|
|
|
(171)
|
|
|
(11)(19)(20)
|
|
266,052 Common Stock Warrants (exercise price $12.63) expiration date 6/19/2027
|
|
|
|
|
915
|
|
|
785
|
|
|
(11)(20)
|
|
|
|
|
|
|
27,846
|
|
|
28,875
|
|
|
|
|
Aurora Lux Finco S.À.R.L.
|
|
Airport Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026
|
7.00
|
%
|
|
22,885
|
|
|
22,376
|
|
|
21,283
|
|
|
(6)(11)(20)
|
|
|
|
|
|
|
22,376
|
|
|
21,283
|
|
|
|
|
Blackhawk Network Holdings, Inc.
|
|
Data Processing & Outsourced Services
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.00% cash due 6/15/2026
|
7.19
|
%
|
|
26,250
|
|
|
26,049
|
|
|
24,150
|
|
|
(6)
|
|
|
|
|
|
|
26,049
|
|
|
24,150
|
|
|
|
|
Boxer Parent Company Inc.
|
|
Systems Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025
|
4.40
|
%
|
|
13,775
|
|
|
13,666
|
|
|
13,407
|
|
|
(6)
|
|
|
|
|
|
|
13,666
|
|
|
13,407
|
|
|
|
|
BX Commercial Mortgage Trust 2020-VIVA
|
|
Diversified Real Estate Activities
|
|
|
|
|
|
|
|
|
Class D Variable Notes due 3/9/2044
|
3.67
|
%
|
|
12,556
|
|
|
10,482
|
|
|
11,451
|
|
|
(6)(11)(20)
|
|
Class E Variable Notes due 3/9/2044
|
3.67
|
%
|
|
6,221
|
|
|
4,806
|
|
|
5,395
|
|
|
(6)(11)(20)
|
|
|
|
|
|
|
15,288
|
|
|
16,846
|
|
|
|
|
California Pizza Kitchen, Inc.
|
|
Restaurants
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.00% cash due 8/23/2022
|
|
|
3,222
|
|
|
3,081
|
|
|
983
|
|
|
(6)(21)
|
|
|
|
|
|
|
3,081
|
|
|
983
|
|
|
|
|
Chief Power Finance II, LLC
|
|
Independent Power Producers & Energy Traders
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 12/31/2022
|
7.50
|
%
|
|
21,850
|
|
|
21,462
|
|
|
20,812
|
|
|
(6)(20)
|
|
|
|
|
|
|
21,462
|
|
|
20,812
|
|
|
|
|
CITGO Holding, Inc.
|
|
Oil & Gas Refining & Marketing
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 8/1/2023
|
8.00
|
%
|
|
11,753
|
|
|
11,570
|
|
|
11,081
|
|
|
(6)
|
|
Fixed Rate Bond, 9.25% cash due 8/1/2024
|
|
|
10,672
|
|
|
10,672
|
|
|
10,192
|
|
|
|
|
|
|
|
|
|
22,242
|
|
|
21,273
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
CITGO Petroleum Corp.
|
|
Oil & Gas Refining & Marketing
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024
|
6.00
|
%
|
|
$
|
8,979
|
|
|
$
|
8,890
|
|
|
$
|
8,553
|
|
|
(6)
|
|
|
|
|
|
|
8,890
|
|
|
8,553
|
|
|
|
|
Continental Intermodal Group LP
|
|
Oil & Gas Storage & Transportation
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+9.50% PIK due 1/28/2025
|
|
|
24,741
|
|
|
24,741
|
|
|
21,753
|
|
|
(6)(20)
|
|
Common Stock Warrants expiration date 7/28/2025
|
|
|
|
|
—
|
|
|
1,672
|
|
|
(20)
|
|
|
|
|
|
|
24,741
|
|
|
23,425
|
|
|
|
|
Convergeone Holdings, Inc.
|
|
IT Consulting & Other Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 1/4/2026
|
5.15
|
%
|
|
14,621
|
|
|
14,169
|
|
|
13,465
|
|
|
(6)
|
|
|
|
|
|
|
14,169
|
|
|
13,465
|
|
|
|
|
Conviva Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
417,851 Series D Preferred Stock Warrants (exercise price $1.1966) expiration date 2/28/2021
|
|
|
|
|
105
|
|
|
395
|
|
|
(20)
|
|
|
|
|
|
|
105
|
|
|
395
|
|
|
|
|
Corrona, LLC
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash due 12/13/2025
|
6.50
|
%
|
|
10,300
|
|
|
10,144
|
|
|
10,152
|
|
|
(6)(20)
|
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 12/13/2025
|
|
|
—
|
|
|
(32)
|
|
|
(52)
|
|
|
(6)(19)(20)
|
|
First Lien Revolver, PRIME+4.50% cash due 12/13/2025
|
7.75
|
%
|
|
305
|
|
|
277
|
|
|
279
|
|
|
(6)(19)(20)
|
|
1,099 Class A2 Common Units in Corrona Group Holdings, L.P.
|
|
|
|
|
1,038
|
|
|
1,038
|
|
|
(20)
|
|
|
|
|
|
|
11,427
|
|
|
11,417
|
|
|
|
|
Coyote Buyer, LLC
|
|
Specialty Chemicals
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.00% cash due 2/6/2026
|
7.00
|
%
|
|
13,123
|
|
|
12,992
|
|
|
12,992
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+6.00% cash due 2/6/2025
|
|
|
—
|
|
|
(9)
|
|
|
(9)
|
|
|
(6)(19)(20)
|
|
|
|
|
|
|
12,983
|
|
|
12,983
|
|
|
|
|
CTOS, LLC
|
|
Trading Companies & Distributors
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.25% cash due 4/18/2025
|
4.40
|
%
|
|
10,139
|
|
|
10,228
|
|
|
10,069
|
|
|
(6)
|
|
|
|
|
|
|
10,228
|
|
|
10,069
|
|
|
|
|
Eagleview Technology Corporation
|
|
Application Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.50% cash due 8/14/2026
|
8.50
|
%
|
|
12,000
|
|
|
11,880
|
|
|
10,440
|
|
|
(6)(20)
|
|
|
|
|
|
|
11,880
|
|
|
10,440
|
|
|
|
|
EHR Canada, LLC
|
|
Food Retail
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.00% cash due 12/4/2020
|
9.00
|
%
|
|
6,861
|
|
|
6,851
|
|
|
6,998
|
|
|
(6)(20)
|
|
|
|
|
|
|
6,851
|
|
|
6,998
|
|
|
|
|
EOS Fitness Opco Holdings, LLC
|
|
Leisure Facilities
|
|
|
|
|
|
|
|
|
487.5 Class A Preferred Units, 12%
|
|
|
|
|
488
|
|
|
49
|
|
|
(20)
|
|
12,500 Class B Common Units
|
|
|
|
|
—
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
488
|
|
|
49
|
|
|
|
|
ExamSoft Worldwide, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
180,707 Class C Units in ExamSoft Investor LLC
|
|
|
|
|
181
|
|
|
500
|
|
|
(20)
|
|
|
|
|
|
|
181
|
|
|
500
|
|
|
|
|
Fortress Biotech, Inc.
|
|
Biotechnology
|
|
|
|
|
|
|
|
|
First Lien Term Loan, 11.00% cash due 8/27/2025
|
|
|
8,346
|
|
|
7,842
|
|
|
7,908
|
|
|
(11)(20)
|
|
243,348 Common Stock Warrants (exercise price $3.20) expiration date 8/27/2030
|
|
|
|
|
258
|
|
|
419
|
|
|
(11)(20)
|
|
|
|
|
|
|
8,100
|
|
|
8,327
|
|
|
|
|
GI Chill Acquisition LLC
|
|
Managed Health Care
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.00% cash due 8/6/2025
|
4.22
|
%
|
|
17,640
|
|
|
17,552
|
|
|
17,331
|
|
|
(6)(20)
|
|
Second Lien Term Loan, LIBOR+7.50% cash due 8/6/2026
|
7.72
|
%
|
|
10,000
|
|
|
9,927
|
|
|
9,350
|
|
|
(6)(20)
|
|
|
|
|
|
|
27,479
|
|
|
26,681
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
GKD Index Partners, LLC
|
|
Specialized Finance
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 6/29/2023
|
8.00
|
%
|
|
$
|
20,933
|
|
|
$
|
20,818
|
|
|
$
|
20,577
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+7.00% cash due 6/29/2023
|
8.00
|
%
|
|
924
|
|
|
915
|
|
|
904
|
|
|
(6)(19)(20)
|
|
|
|
|
|
|
21,733
|
|
|
21,481
|
|
|
|
|
Global Medical Response
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.25% cash due 3/14/2025
|
5.25
|
%
|
|
6,256
|
|
|
6,152
|
|
|
6,084
|
|
|
(6)
|
|
|
|
|
|
|
6,152
|
|
|
6,084
|
|
|
|
|
Guidehouse LLP
|
|
Research & Consulting Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.50% cash due 5/1/2025
|
4.65
|
%
|
|
4,949
|
|
|
4,907
|
|
|
4,912
|
|
|
(6)
|
|
Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026
|
8.15
|
%
|
|
20,000
|
|
|
19,930
|
|
|
19,300
|
|
|
(6)(20)
|
|
|
|
|
|
|
24,837
|
|
|
24,212
|
|
|
|
|
Gulf Operating, LLC
|
|
Oil & Gas Storage & Transportation
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.25% cash due 8/25/2023
|
6.25
|
%
|
|
3,275
|
|
|
1,874
|
|
|
2,324
|
|
|
(6)
|
|
|
|
|
|
|
1,874
|
|
|
2,324
|
|
|
|
|
Houghton Mifflin Harcourt Publishers Inc.
|
|
Education Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.25% cash due 11/22/2024
|
7.25
|
%
|
|
6,738
|
|
|
6,508
|
|
|
6,300
|
|
|
(6)(11)
|
|
|
|
|
|
|
6,508
|
|
|
6,300
|
|
|
|
|
I Drive Safely, LLC
|
|
Education Services
|
|
|
|
|
|
|
|
|
125,079 Class A Common Units of IDS Investments, LLC
|
|
|
|
|
1,000
|
|
|
200
|
|
|
(20)
|
|
|
|
|
|
|
1,000
|
|
|
200
|
|
|
|
|
IBG Borrower LLC
|
|
Apparel, Accessories & Luxury Goods
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 8/2/2022
|
7.25
|
%
|
|
9,056
|
|
|
8,569
|
|
|
7,856
|
|
|
(6)(20)
|
|
|
|
|
|
|
8,569
|
|
|
7,856
|
|
|
|
|
iCIMs, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 9/12/2024
|
7.50
|
%
|
|
16,718
|
|
|
16,493
|
|
|
16,584
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+6.50% cash due 9/12/2024
|
|
|
—
|
|
|
(15)
|
|
|
(7)
|
|
|
(6)(19)(20)
|
|
|
|
|
|
|
16,478
|
|
|
16,577
|
|
|
|
|
Immucor, Inc.
|
|
Health Care Supplies
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.75% cash due 7/2/2025
|
6.75
|
%
|
|
6,477
|
|
|
6,354
|
|
|
6,347
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+5.75% cash due 7/2/2025
|
|
|
—
|
|
|
(10)
|
|
|
(11)
|
|
|
(6)(19)(20)
|
|
Second Lien Term Loan, LIBOR+8.00% cash 3.50% PIK due 10/2/2025
|
9.00
|
%
|
|
15,611
|
|
|
15,316
|
|
|
15,298
|
|
|
(6)(20)
|
|
|
|
|
|
|
21,660
|
|
|
21,634
|
|
|
|
|
Integral Development Corporation
|
|
Other Diversified Financial Services
|
|
|
|
|
|
|
|
|
1,078,284 Common Stock Warrants (exercise price $0.9274) expiration date 7/10/2024
|
|
|
|
|
113
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
113
|
|
|
—
|
|
|
|
|
L Squared Capital Partners LLC
|
|
Multi-Sector Holdings
|
|
|
|
|
|
|
|
|
2.00% limited partnership interest
|
|
|
|
|
887
|
|
|
2,192
|
|
|
(11)(16)
|
|
|
|
|
|
|
887
|
|
|
2,192
|
|
|
|
|
Lanai Holdings III, Inc.
|
|
Health Care Distributors
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.75% cash due 8/29/2022
|
5.75
|
%
|
|
12,948
|
|
|
12,810
|
|
|
12,260
|
|
|
(6)
|
|
|
|
|
|
|
12,810
|
|
|
12,260
|
|
|
|
|
Lannett Company, Inc.
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 11/25/2020
|
6.00
|
%
|
|
460
|
|
|
460
|
|
|
456
|
|
|
(6)(11)
|
|
|
|
|
|
|
460
|
|
|
456
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Lift Brands Holdings, Inc.
|
|
Leisure Facilities
|
|
|
|
|
|
|
|
|
2,000,000 Class A Common Units in Snap Investments, LLC
|
|
|
|
|
$
|
1,399
|
|
|
$
|
—
|
|
|
(20)
|
|
|
|
|
|
|
1,399
|
|
|
—
|
|
|
|
|
Lightbox Intermediate, L.P.
|
|
Real Estate Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026
|
5.15
|
%
|
|
$
|
39,500
|
|
|
39,023
|
|
|
37,723
|
|
|
(6)(20)
|
|
|
|
|
|
|
39,023
|
|
|
37,723
|
|
|
|
|
LogMeIn, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+9.00% cash due 8/31/2028
|
9.16
|
%
|
|
9,293
|
|
|
8,831
|
|
|
9,247
|
|
|
(6)
|
|
|
|
|
|
|
8,831
|
|
|
9,247
|
|
|
|
|
LTI Holdings, Inc.
|
|
Electronic Components
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.75% cash due 7/24/2026
|
4.90
|
%
|
|
1,794
|
|
|
1,513
|
|
|
1,685
|
|
|
(6)
|
|
First Lien Term Loan, LIBOR+3.50% cash due 9/6/2025
|
3.65
|
%
|
|
18,082
|
|
|
15,087
|
|
|
16,884
|
|
|
(6)
|
|
Second Lien Term Loan, LIBOR+6.75% cash due 9/6/2026
|
6.90
|
%
|
|
9,000
|
|
|
9,000
|
|
|
7,983
|
|
|
(6)
|
|
|
|
|
|
|
25,600
|
|
|
26,552
|
|
|
|
|
Maravai Intermediate Holdings, LLC
|
|
Biotechnology
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.25% cash due 8/1/2025
|
5.25
|
%
|
|
11,760
|
|
|
11,642
|
|
|
11,789
|
|
|
(6)(20)
|
|
|
|
|
|
|
11,642
|
|
|
11,789
|
|
|
|
|
Mauser Packaging Solutions Holding Company
|
|
Metal & Glass Containers
|
|
|
|
|
|
|
|
|
Fixed Rate Bond, 8.50% cash due 4/15/2024
|
|
|
11,378
|
|
|
11,273
|
|
|
11,833
|
|
|
|
|
|
|
|
|
|
11,273
|
|
|
11,833
|
|
|
|
|
Mayfield Agency Borrower Inc.
|
|
Property & Casualty Insurance
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.50% cash due 2/28/2025
|
4.65
|
%
|
|
28,823
|
|
|
28,045
|
|
|
26,679
|
|
|
(6)
|
|
|
|
|
|
|
28,045
|
|
|
26,679
|
|
|
|
|
McAfee, LLC
|
|
Systems Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+8.50% cash due 9/29/2025
|
9.50
|
%
|
|
7,000
|
|
|
7,028
|
|
|
7,074
|
|
|
(6)
|
|
|
|
|
|
|
7,028
|
|
|
7,074
|
|
|
|
|
MHE Intermediate Holdings, LLC
|
|
Diversified Support Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024
|
6.00
|
%
|
|
2,910
|
|
|
2,888
|
|
|
2,832
|
|
|
(6)(20)
|
|
|
|
|
|
|
2,888
|
|
|
2,832
|
|
|
|
|
Mindbody, Inc.
|
|
Internet Services & Infrastructure
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025
|
8.00
|
%
|
|
29,097
|
|
|
28,675
|
|
|
26,828
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025
|
|
|
—
|
|
|
(44)
|
|
|
(241)
|
|
|
(6)(19)(20)
|
|
|
|
|
|
|
28,631
|
|
|
26,587
|
|
|
|
|
Ministry Brands, LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Revolver, LIBOR+5.00% cash due 12/2/2022
|
6.00
|
%
|
|
575
|
|
|
566
|
|
|
566
|
|
|
(6)(19)(20)
|
|
Second Lien Term Loan, LIBOR+9.25% cash due 6/2/2023
|
10.25
|
%
|
|
9,000
|
|
|
8,934
|
|
|
8,923
|
|
|
(6)(20)
|
|
|
|
|
|
|
9,500
|
|
|
9,489
|
|
|
|
|
MRI Software LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026
|
6.50
|
%
|
|
14,369
|
|
|
14,242
|
|
|
14,022
|
|
|
(6)(20)
|
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026
|
|
|
—
|
|
|
(59)
|
|
|
(144)
|
|
|
(6)(19)(20)
|
|
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026
|
|
|
—
|
|
|
(13)
|
|
|
(31)
|
|
|
(6)(19)(20)
|
|
|
|
|
|
|
14,170
|
|
|
13,847
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
NeuAG, LLC
|
|
Fertilizers & Agricultural Chemicals
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024
|
7.00
|
%
|
|
$
|
35,306
|
|
|
$
|
33,918
|
|
|
$
|
33,894
|
|
|
(6)(20)
|
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash 7.00% PIK due 9/11/2024
|
|
|
—
|
|
|
(175)
|
|
|
(175)
|
|
|
(6)(19)(20)
|
|
|
|
|
|
|
33,743
|
|
|
33,719
|
|
|
|
|
NuStar Logistics, L.P.
|
|
Oil & Gas Refining & Marketing
|
|
|
|
|
|
|
|
|
Unsecured Delayed Draw Term Loan, 12.00% cash due 4/19/2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19)(20)
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
Olaplex, Inc.
|
|
Personal Products
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026
|
7.50
|
%
|
|
35,056
|
|
|
34,441
|
|
|
35,056
|
|
|
(6)(20)
|
|
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025
|
7.50
|
%
|
|
1,917
|
|
|
1,852
|
|
|
1,917
|
|
|
(6)(19)(20)
|
|
|
|
|
|
|
36,293
|
|
|
36,973
|
|
|
|
|
OmniSYS Acquisition Corporation
|
|
Diversified Support Services
|
|
|
|
|
|
|
|
|
100,000 Common Units in OSYS Holdings, LLC
|
|
|
|
|
1,000
|
|
|
607
|
|
|
(20)
|
|
|
|
|
|
|
1,000
|
|
|
607
|
|
|
|
|
Onvoy, LLC
|
|
Integrated Telecommunication Services
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+10.50% cash due 2/10/2025
|
11.50
|
%
|
|
16,750
|
|
|
16,750
|
|
|
15,142
|
|
|
(6)(20)
|
|
19,666.67 Class A Units in GTCR Onvoy Holdings, LLC
|
|
|
|
|
1,967
|
|
|
268
|
|
|
(20)
|
|
13,664.73 Series 3 Class B Units in GTCR Onvoy Holdings, LLC
|
|
|
|
|
—
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
18,717
|
|
|
15,410
|
|
|
|
|
OZLM Funding III, Ltd.
|
|
Multi-Sector Holdings
|
|
|
|
|
|
|
|
|
Class DR Notes, LIBOR+7.77% cash due 1/22/2029
|
8.03
|
%
|
|
2,312
|
|
|
1,657
|
|
|
2,119
|
|
|
(6)(11)
|
|
|
|
|
|
|
1,657
|
|
|
2,119
|
|
|
|
|
PaySimple, Inc.
|
|
Data Processing & Outsourced Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025
|
5.65
|
%
|
|
49,535
|
|
|
48,711
|
|
|
47,801
|
|
|
(6)(20)
|
|
|
|
|
|
|
48,711
|
|
|
47,801
|
|
|
|
|
Pingora MSR Opportunity Fund I-A, LP
|
|
Thrifts & Mortgage Finance
|
|
|
|
|
|
|
|
|
1.86% limited partnership interest
|
|
|
|
|
938
|
|
|
353
|
|
|
(11)(16)(19)
|
|
|
|
|
|
|
938
|
|
|
353
|
|
|
|
|
PLATO Learning Inc.
|
|
Education Services
|
|
|
|
|
|
|
|
|
Unsecured Senior PIK Note, 8.50% PIK due 12/9/2021
|
|
|
3,099
|
|
|
2,434
|
|
|
—
|
|
|
(15)(20)
|
|
Unsecured Junior PIK Note, 10.00% PIK due 12/9/2021
|
|
|
15,010
|
|
|
10,227
|
|
|
—
|
|
|
(15)(20)
|
|
Unsecured Revolver, 5.00% cash due 12/9/2021
|
|
|
2,938
|
|
|
2,631
|
|
|
588
|
|
|
(20)(21)
|
|
126,127.80 Class A Common Units of Edmentum
|
|
|
|
|
126
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
15,418
|
|
|
588
|
|
|
|
|
ProFrac Services, LLC
|
|
Industrial Machinery
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.50% cash due 9/15/2023
|
8.75
|
%
|
|
15,170
|
|
|
15,081
|
|
|
11,643
|
|
|
(6)(20)
|
|
|
|
|
|
|
15,081
|
|
|
11,643
|
|
|
|
|
Project Boost Purchaser, LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+8.00% cash due 5/9/2027
|
8.15
|
%
|
|
3,750
|
|
|
3,750
|
|
|
3,375
|
|
|
(6)(20)
|
|
|
|
|
|
|
3,750
|
|
|
3,375
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Pug LLC
|
|
Internet & Direct Marketing Retail
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.00% cash due 2/12/2027
|
8.75
|
%
|
|
$
|
15,740
|
|
|
$
|
14,802
|
|
|
$
|
15,307
|
|
|
(6)
|
|
|
|
|
|
|
14,802
|
|
|
15,307
|
|
|
|
|
QuorumLabs, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
64,887,669 Junior-2 Preferred Stock
|
|
|
|
|
375
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
375
|
|
|
—
|
|
|
|
|
Refac Optical Group
|
|
Specialty Stores
|
|
|
|
|
|
|
|
|
1,550.9435 Shares of Common Stock in Refac Holdings, Inc.
|
|
|
|
|
1
|
|
|
—
|
|
|
(20)
|
|
550.9435 Series A-2 Preferred Stock in Refac Holdings, Inc., 10%
|
|
|
|
|
305
|
|
|
—
|
|
|
(20)
|
|
1,000 Series A-1 Preferred Stock in Refac Holdings, Inc., 10%
|
|
|
|
|
999
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
1,305
|
|
|
—
|
|
|
|
|
Salient CRGT, Inc.
|
|
Aerospace & Defense
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022
|
7.50
|
%
|
|
2,955
|
|
|
2,938
|
|
|
2,748
|
|
|
(6)(20)
|
|
|
|
|
|
|
2,938
|
|
|
2,748
|
|
|
|
|
Scilex Pharmaceuticals Inc.
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
Fixed Rate Zero Coupon Bond due 8/15/2026
|
|
|
15,585
|
|
|
12,069
|
|
|
12,468
|
|
|
(20)
|
|
|
|
|
|
|
12,069
|
|
|
12,468
|
|
|
|
|
ShareThis, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
345,452 Series C Preferred Stock Warrants (exercise price $3.0395) expiration date 3/4/2024
|
|
|
|
|
367
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
367
|
|
|
—
|
|
|
|
|
Sorrento Therapeutics, Inc.
|
|
Biotechnology
|
|
|
|
|
|
|
|
|
125,000 Common Stock Warrants (exercise price $3.94) expiration date 11/3/2029
|
|
|
|
|
—
|
|
|
1,123
|
|
|
(11)(20)
|
|
|
|
|
|
|
—
|
|
|
1,123
|
|
|
|
|
Supermoose Borrower, LLC
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025
|
3.90
|
%
|
|
10,196
|
|
|
8,925
|
|
|
9,193
|
|
|
(6)
|
|
|
|
|
|
|
8,925
|
|
|
9,193
|
|
|
|
|
Surgery Center Holdings, Inc.
|
|
Health Care Facilities
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024
|
4.25
|
%
|
|
3,850
|
|
|
3,133
|
|
|
3,640
|
|
|
(6)(11)
|
|
|
|
|
|
|
3,133
|
|
|
3,640
|
|
|
|
|
Swordfish Merger Sub LLC
|
|
Auto Parts & Equipment
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+6.75% cash due 2/2/2026
|
7.75
|
%
|
|
12,500
|
|
|
12,458
|
|
|
10,563
|
|
|
(6)(20)
|
|
|
|
|
|
|
12,458
|
|
|
10,563
|
|
|
|
|
Tacala, LLC
|
|
Restaurants
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.50% cash due 2/4/2028
|
7.65
|
%
|
|
7,276
|
|
|
7,167
|
|
|
6,903
|
|
|
(6)
|
|
|
|
|
|
|
7,167
|
|
|
6,903
|
|
|
|
|
TerSera Therapeutics LLC
|
|
Pharmaceuticals
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+9.50% cash due 3/30/2024
|
10.50
|
%
|
|
29,663
|
|
|
29,236
|
|
|
29,371
|
|
|
(6)(20)
|
|
668,879 Common Units of TerSera Holdings LLC
|
|
|
|
|
2,192
|
|
|
3,487
|
|
|
(20)
|
|
|
|
|
|
|
31,428
|
|
|
32,858
|
|
|
|
|
TIBCO Software Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.25% cash due 3/3/2028
|
7.40
|
%
|
|
15,000
|
|
|
14,925
|
|
|
14,766
|
|
|
(6)
|
|
|
|
|
|
|
14,925
|
|
|
14,766
|
|
|
|
|
TigerConnect, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
299,110 Series B Preferred Stock Warrants (exercise price $1.3373) expiration date 12/8/2024
|
|
|
|
|
60
|
|
|
525
|
|
|
(20)
|
|
|
|
|
|
|
60
|
|
|
525
|
|
|
|
|
Transact Holdings Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.75% cash due 4/30/2026
|
4.90
|
%
|
|
6,930
|
|
|
6,826
|
|
|
6,553
|
|
|
(6)(20)
|
|
|
|
|
|
|
6,826
|
|
|
6,553
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Truck Hero, Inc.
|
|
Auto Parts & Equipment
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+8.25% cash due 4/21/2025
|
9.25
|
%
|
|
$
|
21,500
|
|
|
$
|
21,191
|
|
|
$
|
20,819
|
|
|
(6)(20)
|
|
|
|
|
|
|
21,191
|
|
|
20,819
|
|
|
|
|
U.S. Renal Care, Inc.
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 6/26/2026
|
5.15
|
%
|
|
1,122
|
|
|
934
|
|
|
1,096
|
|
|
(6)
|
|
|
|
|
|
|
934
|
|
|
1,096
|
|
|
|
|
Uniti Group Inc.
|
|
Specialized REITs
|
|
|
|
|
|
|
|
|
21,072 Common Units
|
|
|
—
|
|
|
133
|
|
|
222
|
|
|
(11)(12)
|
|
|
|
|
|
|
133
|
|
|
222
|
|
|
|
|
Verscend Holding Corp.
|
|
Health Care Technology
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025
|
4.65
|
%
|
|
14,525
|
|
|
14,479
|
|
|
14,429
|
|
|
(6)
|
|
Fixed Rate Bond, 9.75% cash due 8/15/2026
|
|
|
7,000
|
|
|
7,020
|
|
|
7,629
|
|
|
|
|
|
|
|
|
|
21,499
|
|
|
22,058
|
|
|
|
|
Vertex Aerospace Services Corp.
|
|
Aerospace & Defense
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.50% cash due 6/29/2025
|
4.65
|
%
|
|
10,168
|
|
|
10,133
|
|
|
10,073
|
|
|
(6)
|
|
|
|
|
|
|
10,133
|
|
|
10,073
|
|
|
|
|
Vitalyst Holdings, Inc.
|
|
IT Consulting & Other Services
|
|
|
|
|
|
|
|
|
675 Series A Preferred Stock Units
|
|
|
|
|
675
|
|
|
440
|
|
|
(20)
|
|
7,500 Class A Common Stock Units
|
|
|
|
|
75
|
|
|
—
|
|
|
(20)
|
|
|
|
|
|
|
750
|
|
|
440
|
|
|
|
|
William Morris Endeavor Entertainment, LLC
|
|
Movies & Entertainment
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+8.50% cash due 5/18/2025
|
9.50
|
%
|
|
33,298
|
|
|
31,594
|
|
|
33,298
|
|
|
(6)(20)
|
|
|
|
|
|
|
31,594
|
|
|
33,298
|
|
|
|
|
Windstream Services II, LLC
|
|
Integrated Telecommunication Services
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027
|
7.25
|
%
|
|
25,935
|
|
|
24,900
|
|
|
25,168
|
|
|
(6)
|
|
6,129 Shares of Common Stock in Windstream Holdings II, LLC
|
|
|
|
|
53
|
|
|
69
|
|
|
(20)
|
|
37,215 Warrants in Windstream Holdings II, LLC
|
|
|
|
|
913
|
|
|
444
|
|
|
(20)
|
|
|
|
|
|
|
25,866
|
|
|
25,681
|
|
|
|
|
WP CPP Holdings, LLC
|
|
Aerospace & Defense
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026
|
8.75
|
%
|
|
15,000
|
|
|
14,893
|
|
|
11,700
|
|
|
(6)(20)
|
|
|
|
|
|
|
14,893
|
|
|
11,700
|
|
|
|
|
WPEngine, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+6.50% cash due 3/27/2026
|
7.50
|
%
|
|
14,188
|
|
|
13,863
|
|
|
13,949
|
|
|
(6)(20)
|
|
First Lien Delayed Draw Term Loan, LIBOR+6.50% cash due 3/27/2026
|
|
|
—
|
|
|
(602)
|
|
|
(443)
|
|
|
(6)(19)(20)
|
|
|
|
|
|
|
13,261
|
|
|
13,506
|
|
|
|
|
xMatters, Inc.
|
|
Application Software
|
|
|
|
|
|
|
|
|
600,000 Common Stock Warrants (exercise price $0.593333) expiration date 2/26/2025
|
|
|
|
|
709
|
|
|
336
|
|
|
(20)
|
|
|
|
|
|
|
709
|
|
|
336
|
|
|
|
|
Zep Inc.
|
|
Specialty Chemicals
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+4.00% cash due 8/12/2024
|
5.00
|
%
|
|
1,955
|
|
|
1,895
|
|
|
1,845
|
|
|
(6)
|
|
Second Lien Term Loan, LIBOR+8.25% cash due 8/11/2025
|
9.25
|
%
|
|
30,000
|
|
|
29,908
|
|
|
24,180
|
|
|
(6)(20)
|
|
|
|
|
|
|
31,803
|
|
|
26,025
|
|
|
|
|
Zephyr Bidco Limited
|
|
Specialized Finance
|
|
|
|
|
|
|
|
|
Second Lien Term Loan, UK LIBOR+7.50% cash due 7/23/2026
|
7.55
|
%
|
|
£
|
18,000
|
|
|
23,705
|
|
|
21,176
|
|
|
(6)(11)
|
|
|
|
|
|
|
23,705
|
|
|
21,176
|
|
|
|
|
Total Non-Control/Non-Affiliate Investments (149.3% of net assets)
|
|
|
|
|
$
|
1,415,669
|
|
|
$
|
1,365,957
|
|
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)(2)(3)(4)(5)
|
Cash Interest Rate (6)
|
Industry
|
Principal (7)
|
|
Cost
|
|
Fair Value
|
|
Notes
|
|
Total Portfolio Investments (172.0% of net assets)
|
|
|
|
|
$
|
1,669,170
|
|
|
$
|
1,573,851
|
|
|
|
|
Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
JP Morgan Prime Money Market Fund, Institutional Shares
|
|
|
|
|
$
|
35,248
|
|
|
$
|
35,248
|
|
|
|
|
Other cash accounts
|
|
|
|
|
3,848
|
|
|
3,848
|
|
|
|
|
Total Cash and Cash Equivalents (4.3% of net assets)
|
|
|
|
|
$
|
39,096
|
|
|
$
|
39,096
|
|
|
|
|
Total Portfolio Investments and Cash and Cash Equivalents (176.3% of net assets)
|
|
|
|
|
$
|
1,708,266
|
|
|
$
|
1,612,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Instrument
|
|
Notional Amount to be Purchased
|
|
Notional Amount to be Sold
|
|
Maturity Date
|
|
Counterparty
|
|
Cumulative Unrealized Appreciation /(Depreciation)
|
|
Foreign currency forward contract
|
|
$
|
35,577
|
|
|
£
|
27,494
|
|
|
11/12/2020
|
|
JPMorgan Chase Bank, N.A.
|
|
$
|
25
|
|
|
Foreign currency forward contract
|
|
$
|
30,260
|
|
|
€
|
25,614
|
|
|
11/12/2020
|
|
JPMorgan Chase Bank, N.A.
|
|
198
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
223
|
|
Oaktree Specialty Lending Corporation
Consolidated Schedule of Investments
September 30, 2020
(dollar amounts in thousands)
(1)
All debt investments are income producing unless otherwise noted. All equity investments are non-income producing unless otherwise noted.
(2)
See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition by geographic region.
(3)
Equity ownership may be held in shares or units of companies related to the portfolio companies.
(4)
Interest rates may be adjusted from period to period on certain term loans and revolvers. These rate adjustments may be either temporary in nature due to tier pricing arrangements or financial or payment covenant violations in the original credit agreements or permanent in nature per loan amendment or waiver documents.
(5)
Each of the Company's investments is pledged as collateral under the Syndicated Facility (as defined in Note 6 to the accompanying notes to the Consolidated Financial Statements).
(6)
The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars unless otherwise noted. As of September 30, 2020, the reference rates for the Company's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22%, the 180-day LIBOR at 0.27%, the 360-day LIBOR at 0.37%, the PRIME at 3.25%, the 30-day UK LIBOR at 0.05%, the 180-day UK LIBOR at 0.22%, the 30-day EURIBOR at (0.57)% and the 180-day EURIBOR at (0.36)%. Most loans include an interest floor, which generally ranges from 0% to 1%.
(7)
Principal includes accumulated PIK interest and is net of repayments, if any. “£” signifies the investment is denominated in British Pounds. "€" signifies the investment is denominated in Euros. All other investments are denominated in U.S. dollars.
(8)
Control Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.
(9)
As defined in the Investment Company Act, the Company is deemed to be both an "Affiliated Person" of and to "Control" these portfolio companies as the Company owns more than 25% of the portfolio company's outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). See Schedule 12-14 in the Company's annual report on Form 10-K for the year ended September 30, 2020 for transactions during the year ended September 30, 2020 in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to control.
(10)
First Star Speir Aviation 1 Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be an investment company under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities.
(11)
Investment is not a "qualifying asset" as defined under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company's total assets. As of September 30, 2020, qualifying assets represented 75.4% of the Company's total assets and non-qualifying assets represented 24.6% of the Company's total assets.
(12)
Income producing through payment of dividends or distributions.
(13)
PIK interest income for this investment accrues at an annualized rate of 15%, however, the PIK interest is not contractually capitalized on the investment. As a result, the principal amount of the investment does not increase over time for accumulated PIK interest. As of September 30, 2020, the accumulated PIK interest balance for each of the A notes and the B notes was $4.3 million. The fair value of this investment is inclusive of PIK.
(14)
See Note 3 in the accompanying notes to the Consolidated Financial Statements for portfolio composition.
(15)
This investment was on PIK non-accrual status as of September 30, 2020. PIK non-accrual status is inclusive of other non-cash income, where applicable.
(16)
This investment was valued using net asset value as a practical expedient for fair value. Consistent with ASC 820, these investments are excluded from the hierarchical levels.
(17)
Affiliate Investments generally are defined by the Investment Company Act as investments in companies in which the Company owns between 5% and 25% of the voting securities.
(18)
Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments.
(19)
Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
(20)
As of September 30, 2020, these investments were categorized as Level 3 within the fair value hierarchy established by ASC 820.
(21)
This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.
See notes to Consolidated Financial Statements.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Note 1. Organization
Oaktree Specialty Lending Corporation (together with its consolidated subsidiaries, the "Company") is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. The Company was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a Business Development Company under the Investment Company Act. The Company has qualified and elected to be treated as a regulated investment company ("RIC") under the Internal Revenue Code of 1986, as amended (the "Code"), for tax purposes.
The Company's investment objective is to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments. The Company may also seek to generate capital appreciation and income through secondary investments at discounts to par in either private or syndicated transactions.
The Company is externally managed by Oaktree Fund Advisors, LLC ("Oaktree"), a subsidiary of Oaktree Capital Group, LLC (“OCG”), pursuant to an investment advisory agreement between the Company and Oaktree (as amended and restated, the "Investment Advisory Agreement"). Oaktree is an affiliate of Oaktree Capital Management, L.P. ("OCM"), the Company's external investment adviser from October 17, 2017 through May 3, 2020 and also a subsidiary of OCG. Oaktree Fund Administration, LLC ("Oaktree Administrator"), a subsidiary of OCM, provides certain administrative and other services necessary for the Company to operate pursuant to an administration agreement between the Company and Oaktree Administrator (the "Administration Agreement"). See Note 11. In 2019, Brookfield Asset Management Inc. ("Brookfield") acquired a majority economic interest in OCG. OCG operates as an independent business within Brookfield, with its own product offerings and investment, marketing and support teams.
On March 19, 2021, the Company acquired Oaktree Strategic Income Corporation (“OCSI”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of October 28, 2020, by and among OCSI, the Company, Lion Merger Sub, Inc., a wholly-owned subsidiary of the Company (“Merger Sub”), and, solely for the limited purposes set forth therein, Oaktree. Pursuant to the Merger Agreement, Merger Sub was first merged with and into OCSI, with OCSI as the surviving corporation (the “Merger”), and, immediately following the Merger, OCSI was then merged with and into the Company, with the Company as the surviving company (together with the Merger, the “Mergers”). In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of OCSI’s common stock was converted into the right to receive 1.3371 shares of the Company’s common stock (with OCSI’s stockholders receiving cash in lieu of fractional shares of the Company’s common stock). As a result of the Mergers, the Company issued an aggregate of 39,400,011 shares of its common stock to former OCSI stockholders. See Note 15. "Merger with OCSI".
Note 2. Significant Accounting Policies
Basis of Presentation:
The Consolidated Financial Statements of the Company have been prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair presentation of the Consolidated Financial Statements have been made. All intercompany balances and transactions have been eliminated. The Company is an investment company following the accounting and reporting guidance in ASC Topic 946,
Financial Services - Investment Companies
("ASC 946").
Use of Estimates:
The preparation of the financial statements in conformity with GAAP requires management to make certain estimates and assumptions affecting amounts reported in the financial statements and accompanying notes. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Changes in the economic and political environments, financial markets and any other parameters used in determining these estimates could cause actual results to differ and such differences could be material. Significant estimates include the valuation of investments and revenue recognition.
Consolidation:
The accompanying Consolidated Financial Statements include the accounts of Oaktree Specialty Lending Corporation and its consolidated subsidiaries. Each consolidated subsidiary is wholly-owned and, as such, consolidated into the Consolidated Financial Statements. Certain subsidiaries that hold investments are treated as pass through entities for tax purposes. The assets of certain of the consolidated subsidiaries are not directly available to satisfy the claims of the creditors of Oaktree Specialty Lending Corporation or any of its other subsidiaries.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
As an investment company, portfolio investments held by the Company are not consolidated into the Consolidated Financial Statements but rather are included on the Statements of Assets and Liabilities as investments at fair value.
Fair Value Measurements:
The Company values its investments in accordance with ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. ASC 820 prioritizes the use of observable market prices over entity-specific inputs. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments' complexity.
Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:
•
Level 1 — Unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date.
•
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.
•
Level 3 — Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
If inputs used to measure fair value fall into different levels of the fair value hierarchy, an investment's level is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. This includes investment securities that are valued using "bid" and "ask" prices obtained from independent third party pricing services or directly from brokers. These investments may be classified as Level 3 because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities or may require adjustments for investment-specific factors or restrictions.
Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. As such, Oaktree obtains and analyzes readily available market quotations provided by pricing vendors and brokers for all of the Company's investments for which quotations are available. In determining the fair value of a particular investment, pricing vendors and brokers use observable market information, including both binding and non-binding indicative quotations.
The Company seeks to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If the Company is unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within the Company's set threshold, the Company seeks to obtain a quote directly from a broker making a market for the asset. Oaktree evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Oaktree also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, Oaktree performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the valuation process. Generally, the Company does not adjust any of the prices received from these sources.
If the quotations obtained from pricing vendors or brokers are determined to not be reliable or are not readily available, the Company values such investments using any of three different valuation techniques. The first valuation technique is the transaction precedent technique, which utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable. The second valuation technique is an analysis of the enterprise value ("EV") of the portfolio company. EV means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The EV analysis is typically performed to determine (i) the value of equity investments, (ii) whether there is credit impairment for debt investments and (iii) the value for debt investments that the Company is deemed to control under the Investment Company Act. To estimate the EV of a portfolio company, Oaktree analyzes various factors, including the portfolio company’s historical and projected financial results, macroeconomic impacts on the company and competitive dynamics in the company’s industry. Oaktree also utilizes some or all of the following information based on the individual circumstances of the portfolio company: (i) valuations of comparable public companies, (ii) recent sales of private and public comparable companies in similar industries or having similar business or earnings characteristics, (iii) purchase prices as a multiple of their earnings or cash flow, (iv) the portfolio company’s ability to meet its
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
forecasts and its business prospects, (v) a discounted cash flow analysis, (vi) estimated liquidation or collateral value of the portfolio company's assets and (vii) offers from third parties to buy the portfolio company. The Company may probability weight potential sale outcomes with respect to a portfolio company when uncertainty exists as of the valuation date. The third valuation technique is a market yield technique, which is typically performed for non-credit impaired debt investments. In the market yield technique, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk, and the Company considers the current contractual interest rate, the capital structure and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the EV of the portfolio company. As debt investments held by the Company are substantially illiquid with no active transaction market, the Company depends on primary market data, including newly funded transactions and industry specific market movements, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.
In accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value. Consistent with FASB guidance under ASC 820, these investments are excluded from the hierarchical levels. These investments are generally not redeemable.
The Company estimates the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an EV analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk free rate. Changes in the subjective input assumptions can materially affect the fair value estimates.
The Company's Board of Directors undertakes a multi-step valuation process each quarter in connection with determining the fair value of the Company's investments:
•
The quarterly valuation process begins with each portfolio company or investment being initially valued by Oaktree's valuation team in conjunction with Oaktree's portfolio management team and investment professionals responsible for each portfolio investment;
•
Preliminary valuations are then reviewed and discussed with management of Oaktree;
•
Separately, independent valuation firms engaged by the Board of Directors prepare valuations of the Company's investments, on a selected basis, for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment, and submit the reports to the Company and provide such reports to Oaktree and the Audit Committee of the Board of Directors;
•
Oaktree compares and contrasts its preliminary valuations to the valuations of the independent valuation firms and prepares a valuation report for the Audit Committee;
•
The Audit Committee reviews the preliminary valuations with Oaktree, and Oaktree responds and supplements the preliminary valuations to reflect any discussions between Oaktree and the Audit Committee;
•
The Audit Committee makes a recommendation to the full Board of Directors regarding the fair value of the investments in the Company's portfolio; and
•
The Board of Directors discusses valuations and determines the fair value of each investment in the Company's portfolio.
The fair value of the Company's investments as of June 30, 2021 and September 30, 2020 was determined in good faith by the Board of Directors. The Board of Directors has and will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of a portion of the Company's portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Board of Directors may reasonably rely on that assistance. However, the Board of Directors is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to the Company's valuation policy and a consistently applied valuation process.
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. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.
With the exception of the line items entitled "deferred financing costs," "deferred offering costs," "other assets," "deferred tax asset, net," "credit facilities payable" and "unsecured notes payable," which are reported at amortized cost, all assets and liabilities approximate fair value on the Consolidated Statements of Assets and Liabilities. The carrying value of the line items titled "interest, dividends and fees receivable," "due from portfolio companies," "receivables from unsettled transactions," "due
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
from broker," "accounts payable, accrued expenses and other liabilities," "base management fee and incentive fee payable," "due to affiliate," "interest payable" and "payables from unsettled transactions" approximate fair value due to their short maturities.
Foreign Currency Translation:
The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the prevailing foreign exchange rate on the reporting date. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. The Company’s investments in foreign securities may involve certain risks, including foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company.
Derivative Instruments:
Foreign Currency Forward Contracts
The Company uses foreign currency forward contracts to reduce the Company's exposure to fluctuations in the value of foreign currencies. In a foreign currency forward contract, the Company agrees to receive or deliver a fixed quantity of one currency for another at a pre-determined price at a future date. Foreign currency forward contracts are marked-to-market at the applicable forward rate. Unrealized appreciation (depreciation) on foreign currency forward contracts are recorded within derivative assets or derivative liabilities on the Consolidated Statements of Assets and Liabilities by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable. Purchases and settlements of foreign currency forward contracts having the same settlement date and counterparty are generally settled net and any realized gains or losses are recognized on the settlement date. The Company does not utilize hedge accounting with respect to foreign currency forward contracts and as such, the Company recognizes its foreign currency forward contracts at fair value with changes included in the net unrealized appreciation (depreciation) on the Consolidated Statements of Operations.
Interest Rate Swaps
The Company uses an interest rate swap to hedge some of the Company's fixed rate debt. The Company designated the interest rate swap as the hedging instrument in an effective hedge accounting relationship, and therefore the periodic payments are recognized as components of interest expense in the 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 derivative asset or derivative liability 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 fixed rate debt. Any amounts paid to the counterparty to cover collateral obligations under the terms of the interest rate swap agreement are included in due from broker on the Company's Consolidated Statements of Assets and Liabilities.
Secured Borrowings:
Securities sold and simultaneously repurchased at a premium are reported as financing transactions in accordance with FASB ASC Topic 860,
Transfers and Servicing
("ASC 860"). Amounts payable to the counterparty are due on the repurchase settlement date and, excluding accrued interest, such amounts are presented in the accompanying Statements of Assets and Liabilities as secured borrowings. Premiums payable are separately reported as accrued interest.
Investment Income:
Interest Income
Interest income, adjusted for accretion of original issue discount ("OID"), is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management’s judgment.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash and the portfolio company, in management’s judgment, is likely to continue timely payment of its remaining obligations.
In connection with its investment in a portfolio company, the Company sometimes receives nominal cost equity that is valued as part of the negotiation process with the portfolio company. When the Company receives nominal cost equity, the Company allocates its cost basis in the investment between debt securities and the nominal cost equity at the time of origination. Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan.
For the Company's secured borrowings, the interest earned on the entire loan balance is recorded within interest income and the interest earned by the counterparty is recorded within interest expense in the Consolidated Statements of Operations.
PIK Interest Income
The Company's investments in debt securities may contain PIK interest provisions. PIK interest, which generally represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. The Company generally ceases accruing PIK interest if there is insufficient value to support the accrual or if the Company does not expect the portfolio company to be able to pay all principal and interest due. The Company's decision to cease accruing PIK interest on a loan or debt security involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; the Company's assessment of the portfolio company's business development success; information obtained by the Company in connection with periodic formal update interviews with the portfolio company's management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. The Company's determination to cease accruing PIK interest is generally made well before the Company's full write-down of a loan or debt security. In addition, if it is subsequently determined that the Company will not be able to collect any previously accrued PIK interest, the fair value of the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on the Company’s debt investments increases the recorded cost bases of these investments in the Consolidated Financial Statements including for purposes of computing the capital gains incentive fee payable by the Company to Oaktree. To maintain its status as a RIC, certain income from PIK interest may be required to be distributed to the Company’s stockholders, even though the Company has not yet collected the cash and may never do so.
Fee Income
Oaktree or its affiliates may provide financial advisory services to portfolio companies and, in return, the Company may receive fees for capital structuring services. These fees are generally nonrecurring and are recognized by the Company upon the investment closing date. The Company may also receive additional fees in the ordinary course of business, including servicing, amendment and prepayment fees, which are classified as fee income and recognized as they are earned or the services are rendered.
The Company has also structured exit fees across certain of its portfolio investments to be received upon the future exit of those investments. These fees are typically paid to the Company upon the earliest to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. These fees are included in net investment income over the life of the loan.
Dividend Income
The Company generally recognizes dividend income on the ex-dividend date for public securities and the record date for private equity investments. Distributions received from private equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from private equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.
Cash and Cash Equivalents and Restricted Cash:
Cash and cash equivalents consist of demand deposits and highly liquid investments with maturities of three months or less when acquired. The Company places its cash and cash equivalents and restricted cash with financial institutions and, at times, cash held in bank accounts may exceed the Federal Deposit Insurance Corporation ("FDIC") insurance limit. Cash and
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
cash equivalents are included on the Company's Consolidated Schedule of Investments and cash equivalents are classified as Level 1 assets.
As of June 30, 2021, included in restricted cash was $2.8 million that was held at Wells Fargo Bank, N.A. in connection with the Company's Citibank Facility (as defined in Note 6. Borrowings). Pursuant to the terms of the Citibank Facility, the Company was restricted in terms of access to $2.8 million until
t
he occurrence of the periodic distribution dates and, in connection therewith, the Company’s submission of its required periodic reporting schedules and verifications of the Company’s compliance with the terms of the credit agreement.
Due from Portfolio Companies:
Due from portfolio companies consists of amounts payable to the Company from its portfolio companies, including proceeds from the sale of portfolio companies not yet received or being held in escrow and excluding those amounts attributable to interest, dividends or fees receivable. These amounts are recognized as they become payable to the Company (
e.g.
, principal payments on the scheduled amortization payment date).
Receivables/Payables from Unsettled Transactions:
Receivables/payables from unsettled transactions consist of amounts receivable to or payable by the Company for transactions that have not settled at the reporting date.
Deferred Financing Costs:
Deferred financing costs consist of fees and expenses paid in connection with the closing or amending of credit facilities and debt offerings. Deferred financing costs in connection with credit facilities are capitalized as an asset when incurred. Deferred financing costs in connection with all other debt arrangements are a direct deduction from the related debt liability when incurred. Deferred financing costs are amortized using the effective interest method over the term of the respective debt arrangement. This amortization expense is included in interest expense in the Company's Consolidated Statements of Operations. Upon early termination or modification of a credit facility, all or a portion of unamortized fees related to such facility may be accelerated into interest expense. For extinguishments of the Company’s unsecured notes payable, any unamortized deferred financing costs are deducted from the carrying amount of the debt in determining the gain or loss from the extinguishment.
Deferred Offering Costs:
Legal fees and other costs incurred in connection with the Company’s shelf registration statement are capitalized as deferred offering costs in the Consolidated Statements of Assets and Liabilities. To the extent any such costs relate to equity offerings, these costs are charged as a reduction of capital upon utilization. To the extent any such costs relate to debt offerings, these costs are treated as deferred financing costs and are amortized over the term of the respective debt arrangement. Any deferred offering costs that remain at the expiration of the shelf registration statement or when it becomes probable that an offering will not be completed are expensed.
Income Taxes:
The Company has elected to be subject to tax as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends to its stockholders of an amount generally at least equal to 90% of investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each taxable year. As a RIC, the Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently to stockholders as a dividend. Depending on the level of taxable income earned during a taxable year, the Company may choose to retain taxable income in excess of current year dividend distributions and would distribute such taxable income in the next taxable year. The Company would then incur a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income, determined on a calendar year basis, could exceed estimated current calendar year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. The Company anticipates timely distribution of its taxable income within the tax rules under Subchapter M of the Code. The Company did not incur a U.S. federal excise tax for calendar years 2019 and 2020 and does not expect to incur a U.S. federal excise tax for calendar year 2021.
The Company holds certain portfolio investments through taxable subsidiaries. The purpose of the Company's taxable subsidiaries is to permit the Company to hold equity investments in portfolio companies which are "pass through" entities for U.S. federal income tax purposes in order to comply with the RIC tax requirements. The taxable subsidiaries are consolidated
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
for financial reporting purposes, and portfolio investments held by them are included in the Company’s Consolidated Financial Statements as portfolio investments and recorded at fair value. The taxable subsidiaries are not consolidated with the Company for U.S. federal income tax purposes and may generate income tax expense, or benefit, and the related tax assets and liabilities, as a result of their ownership of certain portfolio investments. This income tax expense, if any, would be reflected in the Company's Consolidated Statements of Operations. The Company uses the liability method to account for its taxable subsidiaries' income taxes. Using this method, the Company recognizes deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences between financial reporting and tax bases of assets and liabilities. In addition, the Company recognizes deferred tax benefits associated with net operating loss carry forwards that it may use to offset future tax obligations. The Company measures deferred tax assets and liabilities using the enacted tax rates expected to apply to taxable income in the years in which it expects to recover or settle those temporary differences.
FASB ASC Topic 740,
Accounting for Uncertainty in Income Taxes
("ASC 740"), provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the Company's Consolidated Financial Statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Management's determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including an ongoing analysis of tax laws, regulations and interpretations thereof. The Company recognizes the tax benefits of uncertain tax positions only where the position is "more-likely-than-not" to be sustained assuming examination by tax authorities. Management has analyzed the Company's tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years 2018, 2019 and 2020. The Company identifies its major tax jurisdictions as U.S. Federal and California, and the Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
Note 3. Portfolio Investments
As of June 30, 2021, 179.6%
of net assets at fair value, or $2.3 billion, was invested in 135 portfolio companies, including (i) $132.9 million in subordinated notes and limited liability company ("LLC") equity interests of Senior Loan Fund JV I, LLC ("SLF JV I"), a joint venture through which the Company and Trinity Universal Insurance Company, a subsidiary of Kemper Corporation ("Kemper"), co-invest in senior secured loans of middle-market companies and other corporate debt securities and (ii) $55.4 million in subordinated notes and LLC equity interests of OCSI Glick JV LLC ("Glick JV" and, together with SLF JV I, the "JVs"), a joint venture through which the Company and GF Equity Funding 2014 LLC ("GF Equity Funding") co-invest primarily in senior secured loans of middle-market companies. As of June 30, 2021, 6.7% of net assets at fair value, or $87.5 million, was invested in cash and cash equivalents (including $2.8 million of restricted cash). In comparison, as of September 30, 2020, 172.0% of net assets at fair value, or $1.6 billion, was invested in 113 portfolio investments, including $117.4 million in subordinated notes and LLC equity interests of SLF JV I, and 4.3% of net assets at fair value, or $39.1 million, was invested in cash and cash equivalents. As of June 30, 2021, 86.7% of the Company's portfolio at fair value consisted of senior secured debt investments and 7.9% consisted of subordinated debt investments, including the debt investments in the JVs. As of September 30, 2020, 84.1% of the Company's portfolio at fair value consisted of senior secured debt investments and 10.3% consisted of subordinated debt investments, including the debt investment in SLF JV I.
The Company also held equity investments in certain of its portfolio companies consisting of common stock, preferred stock, warrants, limited partnership interests or LLC equity interests. These instruments generally do not produce a current return but are held for potential investment appreciation and capital gain.
During the three and nine months ended June 30, 2021, the Company recorded net realized gains of $8.6 million and $22.7 million, respectively. During the three and nine months ended June 30, 2020, the Company recorded net realized gains (losses) of $2.8 million and $(20.4) million, respectively. During the three and nine months ended June 30, 2021, the Company recorded net unrealized appreciation of $3.9 million and $116.6 million, respectively. During the three and nine months ended June 30, 2020, the Company recorded net unrealized appreciation (depreciation) of $100.6 million and $(60.1) million, respectively.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The composition of the Company's investments as of June 30, 2021 and September 30, 2020 at cost and fair value was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
|
|
Cost
|
|
Fair Value
|
|
Cost
|
|
Fair Value
|
|
Investments in debt securities
|
|
$
|
2,013,006
|
|
|
$
|
2,059,352
|
|
|
$
|
1,422,487
|
|
|
$
|
1,388,605
|
|
|
Investments in equity securities
|
|
110,911
|
|
|
91,607
|
|
|
101,111
|
|
|
67,806
|
|
|
Debt investments in the JVs
|
|
146,985
|
|
|
151,647
|
|
|
96,250
|
|
|
96,250
|
|
|
Equity investments in the JVs
|
|
49,322
|
|
|
36,695
|
|
|
49,322
|
|
|
21,190
|
|
|
Total
|
|
$
|
2,320,224
|
|
|
$
|
2,339,301
|
|
|
$
|
1,669,170
|
|
|
$
|
1,573,851
|
|
The following table presents the composition of the Company's debt investments as of June 30, 2021 and September 30, 2020 at fixed rates and floating rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
|
|
Fair Value
|
|
% of Debt
Portfolio
|
|
Fair Value
|
|
% of Debt
Portfolio
|
|
Floating rate debt securities, including the debt investments in the JVs
|
|
$
|
2,021,011
|
|
|
91.41
|
%
|
|
$
|
1,311,509
|
|
|
88.33
|
%
|
|
Fixed rate debt securities
|
|
189,988
|
|
|
8.59
|
|
|
173,346
|
|
|
11.67
|
|
|
Total
|
|
$
|
2,210,999
|
|
|
100.00
|
%
|
|
$
|
1,484,855
|
|
|
100.00
|
%
|
The following table presents the financial instruments carried at fair value as of June 30, 2021 on the Company's Consolidated Statement of Assets and Liabilities for each of the three levels of hierarchy established by ASC 820:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Measured at Net Asset Value (a)
|
|
Total
|
|
Investments in debt securities (senior secured)
|
|
$
|
—
|
|
|
$
|
365,467
|
|
|
$
|
1,661,587
|
|
|
$
|
—
|
|
|
$
|
2,027,054
|
|
|
Investments in debt securities (subordinated, including the debt investments in the JVs)
|
|
—
|
|
|
22,505
|
|
|
161,440
|
|
|
—
|
|
|
183,945
|
|
|
Investments in equity securities (preferred)
|
|
—
|
|
|
—
|
|
|
52,460
|
|
|
—
|
|
|
52,460
|
|
|
Investments in equity securities (common and warrants, including LLC equity interests of the JVs)
|
|
485
|
|
|
—
|
|
|
38,548
|
|
|
36,809
|
|
|
75,842
|
|
|
Total investments at fair value
|
|
485
|
|
|
387,972
|
|
|
1,914,035
|
|
|
36,809
|
|
|
2,339,301
|
|
|
Cash equivalents
|
|
72,407
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
72,407
|
|
|
Derivative assets
|
|
—
|
|
|
2,449
|
|
|
—
|
|
|
—
|
|
|
2,449
|
|
|
Total assets at fair value
|
|
$
|
72,892
|
|
|
$
|
390,421
|
|
|
$
|
1,914,035
|
|
|
$
|
36,809
|
|
|
$
|
2,414,157
|
|
|
Derivative liability
|
|
$
|
—
|
|
|
$
|
267
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
267
|
|
|
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
267
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
267
|
|
__________
(a)
In accordance with ASC 820-10, certain investments that are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. These investments are generally not redeemable. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The following table presents the financial instruments carried at fair value as of September 30, 2020 on the Company's Consolidated Statement of Assets and Liabilities for each of the three levels of hierarchy established by ASC 820:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Measured at Net Asset Value (a)
|
|
Total
|
|
Investments in debt securities (senior secured)
|
|
$
|
—
|
|
|
$
|
418,806
|
|
|
$
|
904,237
|
|
|
$
|
—
|
|
|
$
|
1,323,043
|
|
|
Investments in debt securities (subordinated, including the debt investment in SLF JV I)
|
|
—
|
|
|
35,660
|
|
|
126,152
|
|
|
—
|
|
|
161,812
|
|
|
Investments in equity securities (preferred)
|
|
—
|
|
|
—
|
|
|
29,959
|
|
|
—
|
|
|
29,959
|
|
|
Investments in equity securities (common and warrants, including LLC equity interests of SLF JV I)
|
|
222
|
|
|
—
|
|
|
35,080
|
|
|
23,735
|
|
|
59,037
|
|
|
Total investments at fair value
|
|
222
|
|
|
454,466
|
|
|
1,095,428
|
|
|
23,735
|
|
|
1,573,851
|
|
|
Cash equivalents
|
|
35,248
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,248
|
|
|
Derivative assets
|
|
—
|
|
|
223
|
|
|
—
|
|
|
—
|
|
|
223
|
|
|
Total assets at fair value
|
|
$
|
35,470
|
|
|
$
|
454,689
|
|
|
$
|
1,095,428
|
|
|
$
|
23,735
|
|
|
$
|
1,609,322
|
|
__________
(a)
In accordance with ASC 820-10, certain investments that are measured using the net asset value per share (or its equivalent) as a practical expedient for fair value have not been classified in the fair value hierarchy. These investments are generally not redeemable. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities.
When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the fact that the unobservable factors are significant to the overall fair value measurement. However, Level 3 financial instruments typically have both unobservable or Level 3 components and observable components (i.e. components that are actively quoted and can be validated by external sources). Accordingly, the appreciation (depreciation) in the tables below includes changes in fair value due in part to observable factors that are part of the valuation methodology. Transfers between levels are recognized at the beginning of the reporting period.
The following table provides a roll-forward in the changes in fair value from March 31, 2021 to June 30, 2021 for all investments for which the Company determined fair value using unobservable (Level 3) factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
Senior Secured Debt
|
|
Subordinated
Debt (including debt investments in the JVs)
|
|
Preferred
Equity
|
|
Common
Equity and Warrants
|
|
Total
|
|
Fair value as of March 31, 2021
|
|
$
|
1,590,290
|
|
|
$
|
157,954
|
|
|
$
|
51,796
|
|
|
$
|
50,339
|
|
|
$
|
1,850,379
|
|
|
Purchases
|
|
153,259
|
|
|
5,041
|
|
|
—
|
|
|
—
|
|
|
158,300
|
|
|
Sales and repayments
|
|
(91,799)
|
|
|
(2,977)
|
|
|
—
|
|
|
(22,422)
|
|
|
(117,198)
|
|
|
Transfers in (a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,322
|
|
|
6,322
|
|
|
Transfers out (a)
|
|
(6,322)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,322)
|
|
|
Capitalized PIK interest income
|
|
4,243
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,243
|
|
|
Accretion of OID
|
|
7,383
|
|
|
297
|
|
|
—
|
|
|
—
|
|
|
7,680
|
|
|
Net unrealized appreciation (depreciation)
|
|
4,585
|
|
|
781
|
|
|
664
|
|
|
(2,784)
|
|
|
3,246
|
|
|
Net realized gains (losses)
|
|
(52)
|
|
|
344
|
|
|
—
|
|
|
7,093
|
|
|
7,385
|
|
|
Fair value as of June 30, 2021
|
|
$
|
1,661,587
|
|
|
$
|
161,440
|
|
|
$
|
52,460
|
|
|
$
|
38,548
|
|
|
$
|
1,914,035
|
|
|
Net unrealized appreciation (depreciation) relating to Level 3 investments still held as of June 30, 2021 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the three months ended June 30, 2021
|
|
$
|
11,295
|
|
|
$
|
1,085
|
|
|
$
|
664
|
|
|
$
|
656
|
|
|
$
|
13,700
|
|
(a) There was one transfer from senior secured debt to common equity and warrants during the three months ended June 30, 2021 as a result of an investment restructuring, in which $6.3 million of senior secured debt was exchanged for $6.3 million of common equity.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The following table provides a roll-forward in the changes in fair value from March 31, 2020 to June 30, 2020 for all investments for which the Company determined fair value using unobservable (Level 3) factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
Senior Secured Debt
|
|
Subordinated
Debt (including debt investment in SLF JV I)
|
|
Preferred
Equity
|
|
Common
Equity and Warrants
|
|
Total
|
|
Fair value as of March 31, 2020
|
|
$
|
720,110
|
|
|
$
|
105,167
|
|
|
$
|
31,367
|
|
|
$
|
45,150
|
|
|
$
|
901,794
|
|
|
Purchases
|
|
95,154
|
|
|
48,663
|
|
|
—
|
|
|
80
|
|
|
143,897
|
|
|
Sales and repayments
|
|
(23,010)
|
|
|
(93)
|
|
|
—
|
|
|
(2,889)
|
|
|
(25,992)
|
|
|
Capitalized PIK interest income
|
|
1,316
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,316
|
|
|
Accretion of OID
|
|
1,524
|
|
|
473
|
|
|
—
|
|
|
—
|
|
|
1,997
|
|
|
Net unrealized appreciation (depreciation)
|
|
24,035
|
|
|
12,820
|
|
|
(1,429)
|
|
|
(1,805)
|
|
|
33,621
|
|
|
Net realized gains (losses)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,475
|
|
|
2,475
|
|
|
Fair value as of June 30, 2020
|
|
$
|
819,129
|
|
|
$
|
167,030
|
|
|
$
|
29,938
|
|
|
$
|
43,011
|
|
|
$
|
1,059,108
|
|
|
Net unrealized appreciation (depreciation) relating to Level 3 investments still held as of June 30, 2020 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the three months ended June 30, 2020
|
|
$
|
24,794
|
|
|
$
|
12,820
|
|
|
$
|
(1,429)
|
|
|
$
|
(127)
|
|
|
$
|
36,058
|
|
The following table provides a roll-forward in the changes in fair value from September 30, 2020 to June 30, 2021 for all investments for which the Company determined fair value using unobservable (Level 3) factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
Senior Secured Debt
|
|
Subordinated
Debt (including debt investment in the JVs)
|
|
Preferred
Equity
|
|
Common
Equity and Warrants
|
|
Total
|
|
Fair value as of September 30, 2020
|
|
$
|
904,237
|
|
|
$
|
126,152
|
|
|
$
|
29,959
|
|
|
$
|
35,080
|
|
|
$
|
1,095,428
|
|
|
Purchases (a)
|
|
923,185
|
|
|
51,327
|
|
|
19,958
|
|
|
2,377
|
|
|
996,847
|
|
|
Sales and repayments
|
|
(246,671)
|
|
|
(44,191)
|
|
|
(31)
|
|
|
(28,622)
|
|
|
(319,515)
|
|
|
Transfers in (b)(c)(d)
|
|
18,458
|
|
|
—
|
|
|
—
|
|
|
6,759
|
|
|
25,217
|
|
|
Transfers out (d)
|
|
(6,322)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,322)
|
|
|
Capitalized PIK interest income
|
|
10,991
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,991
|
|
|
Accretion of OID
|
|
11,806
|
|
|
1,328
|
|
|
—
|
|
|
—
|
|
|
13,134
|
|
|
Net unrealized appreciation (depreciation)
|
|
47,469
|
|
|
18,089
|
|
|
2,543
|
|
|
12,618
|
|
|
80,719
|
|
|
Net realized gains (losses)
|
|
(1,566)
|
|
|
8,735
|
|
|
31
|
|
|
10,336
|
|
|
17,536
|
|
|
Fair value as of June 30, 2021
|
|
$
|
1,661,587
|
|
|
$
|
161,440
|
|
|
$
|
52,460
|
|
|
$
|
38,548
|
|
|
$
|
1,914,035
|
|
|
Net unrealized appreciation (depreciation) relating to Level 3 investments still held as of June 30, 2021 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the nine months ended June 30, 2021
|
|
$
|
51,977
|
|
|
$
|
4,770
|
|
|
$
|
2,543
|
|
|
$
|
12,429
|
|
|
$
|
71,719
|
|
__________
(a) Includes the Level 3 investments acquired in connection with the Mergers during the nine months ended June 30, 2021.
(b) There were transfers into Level 3 from Level 2 for certain investments during the nine months ended June 30, 2021 as a result of a change in the number of market quotes available and/or a change in market liquidity.
(c) There was a transfer into Level 3 from Level 2 as a result of an investment restructuring in which Level 2 senior secured debt was exchanged for Level 3 senior secured debt and common equity.
(d) There was one transfer from senior secured debt to common equity and warrants during the nine months ended June 30, 2021 as a result of an investment restructuring, in which $6.3 million of senior secured debt was exchanged for $6.3 million of common equity.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The following table provides a roll-forward in the changes in fair value from September 30, 2019 to June 30, 2020 for all investments for which the Company determined fair value using unobservable (Level 3) factors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
|
Senior Secured Debt
|
|
Subordinated
Debt (including debt investment in SLF JV I)
|
|
Preferred
Equity
|
|
Common
Equity and Warrants
|
|
Total
|
|
Fair value as of September 30, 2019
|
|
$
|
653,334
|
|
|
$
|
110,309
|
|
|
$
|
40,578
|
|
|
$
|
41,006
|
|
|
$
|
845,227
|
|
|
Purchases
|
|
334,339
|
|
|
49,728
|
|
|
—
|
|
|
1,408
|
|
|
385,475
|
|
|
Sales and repayments
|
|
(177,958)
|
|
|
(3,956)
|
|
|
(1,388)
|
|
|
(9,463)
|
|
|
(192,765)
|
|
|
Transfers in (a)(b)
|
|
67,939
|
|
|
5,113
|
|
|
—
|
|
|
18,625
|
|
|
91,677
|
|
|
Transfers out (a)(b)
|
|
(33,625)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,625)
|
|
|
Capitalized PIK interest income
|
|
4,276
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,276
|
|
|
Accretion of OID
|
|
5,089
|
|
|
1,090
|
|
|
—
|
|
|
—
|
|
|
6,179
|
|
|
Net unrealized appreciation (depreciation)
|
|
(5,362)
|
|
|
19,088
|
|
|
(9,747)
|
|
|
(15,655)
|
|
|
(11,676)
|
|
|
Net realized gains (losses)
|
|
(28,903)
|
|
|
(14,342)
|
|
|
495
|
|
|
7,090
|
|
|
(35,660)
|
|
|
Fair value as of June 30, 2020
|
|
$
|
819,129
|
|
|
$
|
167,030
|
|
|
$
|
29,938
|
|
|
$
|
43,011
|
|
|
$
|
1,059,108
|
|
|
Net unrealized appreciation (depreciation) relating to Level 3 investments still held as of June 30, 2020 and reported within net unrealized appreciation (depreciation) in the Consolidated Statement of Operations for the nine months ended June 30, 2020
|
|
$
|
(33,050)
|
|
|
$
|
7,698
|
|
|
$
|
(9,145)
|
|
|
$
|
(13,658)
|
|
|
$
|
(48,155)
|
|
__________
(a) There were transfers into/out of Level 3 from/to Level 2 for certain investments during the nine months ended June 30, 2020 as a result of a change in the number of market quotes available and/or a change in market liquidity.
(b) There was one transfer from senior secured debt to common equity and warrants during the nine months ended June 30, 2020 as a result of an investment restructuring, in which $46.5 million of senior secured debt was exchanged for new senior secured debt of $27.9 million and common equity of $18.6 million.
Significant Unobservable Inputs for Level 3 Investments
The following table provides quantitative information related to the significant unobservable inputs for Level 3 investments, which are carried at fair value, as of June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
|
|
Fair Value
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Range
|
|
Weighted
Average (a)
|
|
Senior Secured Debt
|
|
$
|
1,134,429
|
|
|
Market Yield
|
|
Market Yield
|
|
(b)
|
6.9%
|
-
|
30.0%
|
|
10.5%
|
|
|
|
35,330
|
|
|
Enterprise Value
|
|
EBITDA Multiple
|
|
(c)
|
3.0x
|
-
|
8.0x
|
|
4.1x
|
|
|
|
7,500
|
|
|
Enterprise Value
|
|
Asset Multiple
|
|
(c)
|
0.9x
|
-
|
1.1x
|
|
1.0x
|
|
|
|
6,096
|
|
|
Transactions Precedent
|
|
Transaction Price
|
|
(d)
|
N/A
|
-
|
N/A
|
|
N/A
|
|
|
|
478,232
|
|
|
Broker Quotations
|
|
Broker Quoted Price
|
|
(e)
|
N/A
|
-
|
N/A
|
|
N/A
|
|
Subordinated Debt
|
|
9,793
|
|
|
Market Yield
|
|
Market Yield
|
|
(b)
|
13.0%
|
-
|
14.0%
|
|
13.5%
|
|
Debt Investments in the JVs
|
|
151,647
|
|
|
Enterprise Value
|
|
N/A
|
|
(f)
|
N/A
|
-
|
N/A
|
|
N/A
|
|
Preferred & Common Equity
|
|
5,782
|
|
|
Enterprise Value
|
|
Revenue Multiple
|
|
(c)
|
0.9x
|
-
|
13.8x
|
|
3.0x
|
|
|
|
78,422
|
|
|
Enterprise Value
|
|
EBITDA Multiple
|
|
(c)
|
3.0x
|
-
|
18.0x
|
|
8.7x
|
|
|
|
482
|
|
|
Enterprise Value
|
|
Asset Multiple
|
|
(c)
|
0.9x
|
-
|
1.1x
|
|
1.0x
|
|
|
|
6,322
|
|
|
Transactions Precedent
|
|
Transaction Price
|
|
(d)
|
N/A
|
-
|
N/A
|
|
N/A
|
|
Total
|
|
$
|
1,914,035
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
(a)
Weighted averages are calculated based on fair value of investments.
(b)
Used when market participants would take into account market yield when pricing the investment.
(c)
Used when market participants would use such multiples when pricing the investment.
(d)
Used when there is an observable transaction or pending event for the investment.
(e)
The Company generally uses prices provided by an independent pricing service which are non-binding indicative prices on or near the valuation date as the primary basis for the fair value determinations for quoted senior secured debt investments. Since these prices are non-binding, they may not be indicative of fair value. The Company evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Each quoted price is evaluated by the Audit Committee of the Company's Board of Directors in conjunction with additional information compiled by Oaktree.
(f)
The Company determined the value of its subordinated notes of the JVs based on the total assets less the total liabilities senior to the subordinated notes held at the JVs in an amount not exceeding par under the EV technique.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The following table provides quantitative information related to the significant unobservable inputs for Level 3 investments, which are carried at fair value, as of September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
|
|
Fair Value
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Range
|
|
Weighted
Average (a)
|
|
Senior Secured Debt
|
|
$
|
542,354
|
|
|
Market Yield
|
|
Market Yield
|
|
(b)
|
6.6%
|
-
|
30.0%
|
|
12.5%
|
|
|
|
35,508
|
|
|
Enterprise Value
|
|
EBITDA Multiple
|
|
(c)
|
0.6x
|
-
|
6.3x
|
|
5.9x
|
|
|
|
11,510
|
|
|
Enterprise Value
|
|
Asset Multiple
|
|
(c)
|
0.9x
|
-
|
1.1x
|
|
1.0x
|
|
|
|
314,865
|
|
|
Broker Quotations
|
|
Broker Quoted Price
|
|
(e)
|
N/A
|
-
|
N/A
|
|
N/A
|
|
Subordinated Debt
|
|
29,314
|
|
|
Market Yield
|
|
Market Yield
|
|
(b)
|
4.8%
|
-
|
15.0%
|
|
9.3%
|
|
|
|
588
|
|
|
Enterprise Value
|
|
EBITDA Multiple
|
|
(c)
|
7.6x
|
-
|
8.6x
|
|
8.1x
|
|
SLF JV I Debt Investment
|
|
96,250
|
|
|
Enterprise Value
|
|
N/A
|
|
(f)
|
N/A
|
-
|
N/A
|
|
N/A
|
|
Preferred & Common Equity
|
|
16,470
|
|
|
Enterprise Value
|
|
Revenue Multiple
|
|
(c)
|
0.9x
|
-
|
7.0x
|
|
3.1x
|
|
|
|
45,934
|
|
|
Enterprise Value
|
|
EBITDA Multiple
|
|
(c)
|
0.6x
|
-
|
15.0x
|
|
7.6x
|
|
|
|
1,622
|
|
|
Enterprise Value
|
|
Asset Multiple
|
|
(c)
|
0.9x
|
-
|
1.1x
|
|
1.0x
|
|
|
|
1,013
|
|
|
Transactions Precedent
|
|
Transaction Price
|
|
(d)
|
N/A
|
-
|
N/A
|
|
N/A
|
|
Total
|
|
$
|
1,095,428
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
(a)
Weighted averages are calculated based on fair value of investments.
(b)
Used when market participants would take into account market yield when pricing the investment.
(c)
Used when market participants would use such multiples when pricing the investment.
(d)
Used when there is an observable transaction or pending event for the investment.
(e)
The Company generally uses prices provided by an independent pricing service which are non-binding indicative prices on or near the valuation date as the primary basis for the fair value determinations for quoted senior secured debt investments. Since these prices are non-binding, they may not be indicative of fair value. The Company evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Each quoted price is evaluated by the Audit Committee of the Company's Board of Directors in conjunction with additional information compiled by Oaktree.
(f)
The Company determined the value of its subordinated notes of SLF JV I based on the total assets less the total liabilities senior to the subordinated notes held at SLF JV I in an amount not exceeding par under the EV technique.
Under the market yield technique, the significant unobservable input used in the fair value measurement of the Company's investments in debt securities is the market yield. Increases or decreases in the market yield may result in a lower or higher fair value measurement, respectively.
Under the EV technique, the significant unobservable input used in the fair value measurement of the Company's investments in debt or equity securities is the earnings before interest, taxes, depreciation and amortization ("EBITDA"), revenue or asset multiple, as applicable. Increases or decreases in the valuation multiples in isolation may result in a higher or lower fair value measurement, respectively.
Financial Instruments Disclosed, But Not Carried, At Fair Value
The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of June 30, 2021 and the level of each financial liability within the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Syndicated Facility payable
|
|
$
|
350,000
|
|
|
$
|
350,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
350,000
|
|
|
Citibank Facility payable
|
|
114,057
|
|
|
114,057
|
|
|
—
|
|
|
—
|
|
|
114,057
|
|
|
2025 Notes payable (net of unamortized financing costs and unaccreted discount)
|
|
295,427
|
|
|
315,159
|
|
|
—
|
|
|
315,159
|
|
|
—
|
|
|
2027 Notes payable (net of unamortized financing costs and unaccreted discount)
|
|
344,615
|
|
|
356,587
|
|
|
—
|
|
|
356,587
|
|
|
—
|
|
|
Total
|
|
$
|
1,104,099
|
|
|
$
|
1,135,803
|
|
|
$
|
—
|
|
|
$
|
671,746
|
|
|
$
|
464,057
|
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The following table presents the carrying value and fair value of the Company's financial liabilities disclosed, but not carried, at fair value as of September 30, 2020 and the level of each financial liability within the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
Value
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Syndicated Facility payable
|
|
$
|
414,825
|
|
|
$
|
414,825
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
414,825
|
|
|
2025 Notes payable (net of unamortized financing costs and unaccreted discount)
|
|
294,490
|
|
|
301,431
|
|
|
—
|
|
|
301,431
|
|
|
—
|
|
|
Total
|
|
$
|
709,315
|
|
|
$
|
716,256
|
|
|
$
|
—
|
|
|
$
|
301,431
|
|
|
$
|
414,825
|
|
The principal values of the credit facilities payable approximate fair value due to their variable interest rates and are included in Level 3 of the hierarchy. The Company used market quotes as of the valuation date to estimate the fair value of its 3.500% notes due 2025 ("2025 Notes") and 2.700% notes due 2027 ("2027 Notes"), which are included in Level 2 of the hierarchy.
Portfolio Composition
Summaries of the composition of the Company's portfolio at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets are shown in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Cost:
|
|
|
|
% of Total Investments
|
|
|
|
% of Total Investments
|
|
Senior secured debt
|
|
$
|
1,981,565
|
|
|
85.40
|
%
|
|
$
|
1,345,012
|
|
|
80.58
|
%
|
|
Debt investments in the JVs
|
|
146,985
|
|
|
6.33
|
%
|
|
96,250
|
|
|
5.77
|
%
|
|
Preferred equity
|
|
59,508
|
|
|
2.56
|
%
|
|
39,550
|
|
|
2.37
|
%
|
|
Common equity and warrants
|
|
51,403
|
|
|
2.22
|
%
|
|
61,561
|
|
|
3.69
|
%
|
|
LLC equity interests of the JVs
|
|
49,322
|
|
|
2.13
|
%
|
|
49,322
|
|
|
2.95
|
%
|
|
Subordinated debt
|
|
31,441
|
|
|
1.36
|
%
|
|
77,475
|
|
|
4.64
|
%
|
|
Total
|
|
$
|
2,320,224
|
|
|
100.00
|
%
|
|
$
|
1,669,170
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Fair Value:
|
|
|
|
% of Total Investments
|
|
% of Net Assets
|
|
|
|
% of Total Investments
|
|
% of Net Assets
|
|
Senior secured debt
|
|
$
|
2,027,054
|
|
|
86.66
|
%
|
|
155.63
|
%
|
|
$
|
1,323,043
|
|
|
84.06
|
%
|
|
144.61
|
%
|
|
Debt investments in the JVs
|
|
151,647
|
|
|
6.48
|
%
|
|
11.64
|
%
|
|
96,250
|
|
|
6.12
|
%
|
|
10.52
|
%
|
|
Preferred equity
|
|
52,460
|
|
|
2.24
|
%
|
|
4.03
|
%
|
|
29,959
|
|
|
1.90
|
%
|
|
3.27
|
%
|
|
Common equity and warrants
|
|
39,147
|
|
|
1.67
|
%
|
|
3.01
|
%
|
|
37,847
|
|
|
2.40
|
%
|
|
4.14
|
%
|
|
LLC equity interests of the JVs
|
|
36,695
|
|
|
1.57
|
%
|
|
2.82
|
%
|
|
21,190
|
|
|
1.35
|
%
|
|
2.32
|
%
|
|
Subordinated debt
|
|
32,298
|
|
|
1.38
|
%
|
|
2.48
|
%
|
|
65,562
|
|
|
4.17
|
%
|
|
7.17
|
%
|
|
Total
|
|
$
|
2,339,301
|
|
|
100.00
|
%
|
|
179.61
|
%
|
|
$
|
1,573,851
|
|
|
100.00
|
%
|
|
172.03
|
%
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company's business. The following tables show the composition of the Company's portfolio by geographic region at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Cost:
|
|
|
|
% of Total Investments
|
|
|
|
% of Total Investments
|
|
Northeast
|
|
$
|
637,468
|
|
|
27.48
|
%
|
|
$
|
495,440
|
|
|
29.69
|
%
|
|
West
|
|
411,321
|
|
|
17.73
|
%
|
|
330,468
|
|
|
19.80
|
%
|
|
Midwest
|
|
345,589
|
|
|
14.89
|
%
|
|
285,674
|
|
|
17.11
|
%
|
|
International
|
|
281,324
|
|
|
12.12
|
%
|
|
210,963
|
|
|
12.64
|
%
|
|
Southwest
|
|
260,065
|
|
|
11.21
|
%
|
|
67,867
|
|
|
4.07
|
%
|
|
Southeast
|
|
208,553
|
|
|
8.99
|
%
|
|
171,330
|
|
|
10.26
|
%
|
|
South
|
|
92,196
|
|
|
3.97
|
%
|
|
72,150
|
|
|
4.32
|
%
|
|
Northwest
|
|
83,708
|
|
|
3.61
|
%
|
|
35,278
|
|
|
2.11
|
%
|
|
Total
|
|
$
|
2,320,224
|
|
|
100.00
|
%
|
|
$
|
1,669,170
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Fair Value:
|
|
|
|
% of Total Investments
|
|
% of Net Assets
|
|
|
|
% of Total Investments
|
|
% of Net Assets
|
|
Northeast
|
|
$
|
633,580
|
|
|
27.08
|
%
|
|
48.64
|
%
|
|
$
|
446,499
|
|
|
28.38
|
%
|
|
48.81
|
%
|
|
West
|
|
418,713
|
|
|
17.90
|
%
|
|
32.15
|
%
|
|
325,708
|
|
|
20.69
|
%
|
|
35.60
|
%
|
|
Midwest
|
|
343,961
|
|
|
14.70
|
%
|
|
26.41
|
%
|
|
252,482
|
|
|
16.04
|
%
|
|
27.60
|
%
|
|
International
|
|
291,187
|
|
|
12.45
|
%
|
|
22.36
|
%
|
|
213,741
|
|
|
13.58
|
%
|
|
23.36
|
%
|
|
Southwest
|
|
262,777
|
|
|
11.23
|
%
|
|
20.18
|
%
|
|
65,647
|
|
|
4.17
|
%
|
|
7.18
|
%
|
|
Southeast
|
|
214,011
|
|
|
9.15
|
%
|
|
16.43
|
%
|
|
165,516
|
|
|
10.52
|
%
|
|
18.09
|
%
|
|
South
|
|
90,908
|
|
|
3.89
|
%
|
|
6.98
|
%
|
|
70,551
|
|
|
4.48
|
%
|
|
7.71
|
%
|
|
Northwest
|
|
84,164
|
|
|
3.60
|
%
|
|
6.46
|
%
|
|
33,707
|
|
|
2.14
|
%
|
|
3.68
|
%
|
|
Total
|
|
$
|
2,339,301
|
|
|
100.00
|
%
|
|
179.61
|
%
|
|
$
|
1,573,851
|
|
|
100.00
|
%
|
|
172.03
|
%
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The following tables show the composition of the Company's portfolio by industry at cost as a percentage of total investments and at fair value as a percentage of total investments and net assets as of June 30, 2021 and September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Cost:
|
|
|
|
% of Total Investments
|
|
|
|
% of Total Investments
|
|
Application Software
|
|
$
|
328,780
|
|
|
14.18
|
%
|
|
$
|
162,536
|
|
|
9.71
|
%
|
|
Multi-Sector Holdings (1)
|
|
196,307
|
|
|
8.46
|
|
|
148,116
|
|
|
8.87
|
|
|
Data Processing & Outsourced Services
|
|
170,654
|
|
|
7.36
|
|
|
109,744
|
|
|
6.57
|
|
|
Pharmaceuticals
|
|
119,285
|
|
|
5.14
|
|
|
99,471
|
|
|
5.96
|
|
|
Biotechnology
|
|
114,296
|
|
|
4.93
|
|
|
89,447
|
|
|
5.36
|
|
|
Personal Products
|
|
104,300
|
|
|
4.50
|
|
|
50,091
|
|
|
3.00
|
|
|
Industrial Machinery
|
|
79,456
|
|
|
3.42
|
|
|
15,081
|
|
|
0.90
|
|
|
Health Care Services
|
|
77,113
|
|
|
3.32
|
|
|
71,139
|
|
|
4.26
|
|
|
Construction & Engineering
|
|
67,244
|
|
|
2.90
|
|
|
13,277
|
|
|
0.80
|
|
|
Specialized Finance
|
|
64,787
|
|
|
2.79
|
|
|
51,909
|
|
|
3.11
|
|
|
Internet & Direct Marketing Retail
|
|
64,357
|
|
|
2.77
|
|
|
14,802
|
|
|
0.89
|
|
|
Aerospace & Defense
|
|
58,790
|
|
|
2.53
|
|
|
27,964
|
|
|
1.68
|
|
|
Integrated Telecommunication Services
|
|
50,293
|
|
|
2.17
|
|
|
44,583
|
|
|
2.67
|
|
|
Specialty Chemicals
|
|
46,740
|
|
|
2.01
|
|
|
44,786
|
|
|
2.68
|
|
|
Internet Services & Infrastructure
|
|
46,672
|
|
|
2.01
|
|
|
28,631
|
|
|
1.72
|
|
|
Fertilizers & Agricultural Chemicals
|
|
44,099
|
|
|
1.90
|
|
|
33,743
|
|
|
2.02
|
|
|
Electrical Components & Equipment
|
|
44,001
|
|
|
1.90
|
|
|
20,934
|
|
|
1.25
|
|
|
Diversified Support Services
|
|
41,403
|
|
|
1.78
|
|
|
18,797
|
|
|
1.13
|
|
|
Real Estate Services
|
|
40,494
|
|
|
1.75
|
|
|
39,023
|
|
|
2.34
|
|
|
Oil & Gas Storage & Transportation
|
|
37,436
|
|
|
1.61
|
|
|
26,615
|
|
|
1.59
|
|
|
Oil & Gas Refining & Marketing
|
|
36,065
|
|
|
1.55
|
|
|
31,132
|
|
|
1.87
|
|
|
Real Estate Operating Companies
|
|
30,694
|
|
|
1.32
|
|
|
—
|
|
|
—
|
|
|
Health Care Supplies
|
|
29,424
|
|
|
1.27
|
|
|
21,660
|
|
|
1.30
|
|
|
Advertising
|
|
28,610
|
|
|
1.23
|
|
|
13,611
|
|
|
0.82
|
|
|
Property & Casualty Insurance
|
|
27,961
|
|
|
1.21
|
|
|
47,995
|
|
|
2.88
|
|
|
Insurance Brokers
|
|
26,464
|
|
|
1.14
|
|
|
17,546
|
|
|
1.05
|
|
|
Movies & Entertainment
|
|
25,960
|
|
|
1.12
|
|
|
44,691
|
|
|
2.68
|
|
|
Leisure Facilities
|
|
24,000
|
|
|
1.03
|
|
|
1,887
|
|
|
0.11
|
|
|
Independent Power Producers & Energy Traders
|
|
23,704
|
|
|
1.02
|
|
|
21,462
|
|
|
1.29
|
|
|
Managed Health Care
|
|
22,689
|
|
|
0.98
|
|
|
27,479
|
|
|
1.65
|
|
|
Airport Services
|
|
22,268
|
|
|
0.96
|
|
|
22,376
|
|
|
1.34
|
|
|
Airlines
|
|
21,845
|
|
|
0.94
|
|
|
10,535
|
|
|
0.63
|
|
|
Commercial Printing
|
|
20,049
|
|
|
0.86
|
|
|
7,868
|
|
|
0.47
|
|
|
Health Care Technology
|
|
16,642
|
|
|
0.72
|
|
|
21,499
|
|
|
1.29
|
|
|
Thrifts & Mortgage Finance
|
|
16,143
|
|
|
0.70
|
|
|
938
|
|
|
0.06
|
|
|
Other Diversified Financial Services
|
|
14,234
|
|
|
0.61
|
|
|
113
|
|
|
0.01
|
|
|
Health Care Distributors
|
|
12,763
|
|
|
0.55
|
|
|
12,810
|
|
|
0.77
|
|
|
Auto Parts & Equipment
|
|
12,464
|
|
|
0.54
|
|
|
33,649
|
|
|
2.02
|
|
|
Apparel, Accessories & Luxury Goods
|
|
11,067
|
|
|
0.48
|
|
|
13,734
|
|
|
0.82
|
|
|
Health Care Equipment
|
|
10,588
|
|
|
0.46
|
|
|
—
|
|
|
—
|
|
|
Electronic Components
|
|
10,077
|
|
|
0.43
|
|
|
25,600
|
|
|
1.53
|
|
|
IT Consulting & Other Services
|
|
10,032
|
|
|
0.43
|
|
|
14,919
|
|
|
0.89
|
|
|
Restaurants
|
|
9,312
|
|
|
0.40
|
|
|
10,248
|
|
|
0.61
|
|
|
Research & Consulting Services
|
|
7,354
|
|
|
0.32
|
|
|
24,837
|
|
|
1.49
|
|
|
Leisure Products
|
|
7,010
|
|
|
0.30
|
|
|
—
|
|
|
—
|
|
|
Systems Software
|
|
6,647
|
|
|
0.29
|
|
|
20,694
|
|
|
1.24
|
|
|
Alternative Carriers
|
|
6,566
|
|
|
0.28
|
|
|
—
|
|
|
—
|
|
|
Automotive Retail
|
|
5,969
|
|
|
0.26
|
|
|
—
|
|
|
—
|
|
|
Integrated Oil & Gas
|
|
4,836
|
|
|
0.21
|
|
|
—
|
|
|
—
|
|
|
Food Distributors
|
|
4,618
|
|
|
0.20
|
|
|
—
|
|
|
—
|
|
|
Food Retail
|
|
3,739
|
|
|
0.16
|
|
|
6,851
|
|
|
0.41
|
|
|
Diversified Banks
|
|
3,515
|
|
|
0.15
|
|
|
—
|
|
|
—
|
|
|
Oil & Gas Exploration & Production
|
|
2,335
|
|
|
0.10
|
|
|
—
|
|
|
—
|
|
|
Construction Materials
|
|
2,216
|
|
|
0.10
|
|
|
2,150
|
|
|
0.13
|
|
|
Housewares & Specialties
|
|
1,863
|
|
|
0.08
|
|
|
—
|
|
|
—
|
|
|
Metal & Glass Containers
|
|
1,710
|
|
|
0.07
|
|
|
11,273
|
|
|
0.68
|
|
|
Specialty Stores
|
|
1,305
|
|
|
0.06
|
|
|
1,305
|
|
|
0.08
|
|
|
Education Services
|
|
979
|
|
|
0.04
|
|
|
22,926
|
|
|
1.37
|
|
|
General Merchandise Stores
|
|
—
|
|
|
—
|
|
|
19,220
|
|
|
1.15
|
|
|
Hotels, Resorts & Cruise Lines
|
|
—
|
|
|
—
|
|
|
15,378
|
|
|
0.92
|
|
|
Diversified Real Estate Activities
|
|
—
|
|
|
—
|
|
|
15,288
|
|
|
0.92
|
|
|
Trading Companies & Distributors
|
|
—
|
|
|
—
|
|
|
10,228
|
|
|
0.61
|
|
|
Oil & Gas Equipment & Services
|
|
—
|
|
|
—
|
|
|
3,313
|
|
|
0.20
|
|
|
Health Care Facilities
|
|
—
|
|
|
—
|
|
|
3,133
|
|
|
0.19
|
|
|
Specialized REITs
|
|
—
|
|
|
—
|
|
|
133
|
|
|
0.01
|
|
|
Total
|
|
$
|
2,320,224
|
|
|
100.00
|
%
|
|
$
|
1,669,170
|
|
|
100.00
|
%
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Fair Value:
|
|
|
|
% of Total Investments
|
|
% of Net Assets
|
|
|
|
% of Total Investments
|
|
% of Net Assets
|
|
Application Software
|
|
$
|
334,782
|
|
|
14.30
|
%
|
|
25.74
|
%
|
|
$
|
160,591
|
|
|
10.21
|
%
|
|
17.57
|
%
|
|
Multi-Sector Holdings (1)
|
|
188,342
|
|
|
8.05
|
|
|
14.46
|
|
|
121,751
|
|
|
7.74
|
|
|
13.31
|
|
|
Data Processing & Outsourced Services
|
|
165,343
|
|
|
7.07
|
|
|
12.70
|
|
|
99,589
|
|
|
6.33
|
|
|
10.89
|
|
|
Pharmaceuticals
|
|
124,186
|
|
|
5.31
|
|
|
9.54
|
|
|
103,092
|
|
|
6.55
|
|
|
11.27
|
|
|
Biotechnology
|
|
116,640
|
|
|
4.99
|
|
|
8.96
|
|
|
96,624
|
|
|
6.14
|
|
|
10.56
|
|
|
Personal Products
|
|
106,769
|
|
|
4.56
|
|
|
8.20
|
|
|
51,024
|
|
|
3.24
|
|
|
5.58
|
|
|
Industrial Machinery
|
|
80,919
|
|
|
3.46
|
|
|
6.21
|
|
|
11,643
|
|
|
0.74
|
|
|
1.27
|
|
|
Health Care Services
|
|
76,749
|
|
|
3.28
|
|
|
5.89
|
|
|
59,925
|
|
|
3.81
|
|
|
6.55
|
|
|
Internet & Direct Marketing Retail
|
|
68,591
|
|
|
2.93
|
|
|
5.27
|
|
|
15,307
|
|
|
0.97
|
|
|
1.67
|
|
|
Construction & Engineering
|
|
68,382
|
|
|
2.92
|
|
|
5.25
|
|
|
13,465
|
|
|
0.86
|
|
|
1.47
|
|
|
Specialized Finance
|
|
65,540
|
|
|
2.80
|
|
|
5.03
|
|
|
48,425
|
|
|
3.08
|
|
|
5.29
|
|
|
Aerospace & Defense
|
|
61,000
|
|
|
2.61
|
|
|
4.68
|
|
|
24,521
|
|
|
1.56
|
|
|
2.68
|
|
|
Integrated Telecommunication Services
|
|
52,079
|
|
|
2.23
|
|
|
4.00
|
|
|
41,091
|
|
|
2.61
|
|
|
4.49
|
|
|
Specialty Chemicals
|
|
46,922
|
|
|
2.01
|
|
|
3.60
|
|
|
39,008
|
|
|
2.48
|
|
|
4.26
|
|
|
Internet Services & Infrastructure
|
|
46,560
|
|
|
1.99
|
|
|
3.57
|
|
|
26,587
|
|
|
1.69
|
|
|
2.91
|
|
|
Fertilizers & Agricultural Chemicals
|
|
44,964
|
|
|
1.92
|
|
|
3.45
|
|
|
33,719
|
|
|
2.14
|
|
|
3.69
|
|
|
Electrical Components & Equipment
|
|
44,415
|
|
|
1.90
|
|
|
3.41
|
|
|
20,465
|
|
|
1.30
|
|
|
2.24
|
|
|
Diversified Support Services
|
|
42,558
|
|
|
1.82
|
|
|
3.27
|
|
|
17,689
|
|
|
1.12
|
|
|
1.93
|
|
|
Real Estate Services
|
|
41,330
|
|
|
1.77
|
|
|
3.17
|
|
|
37,723
|
|
|
2.40
|
|
|
4.12
|
|
|
Oil & Gas Refining & Marketing
|
|
36,894
|
|
|
1.58
|
|
|
2.83
|
|
|
29,826
|
|
|
1.90
|
|
|
3.26
|
|
|
Oil & Gas Storage & Transportation
|
|
35,753
|
|
|
1.53
|
|
|
2.75
|
|
|
25,749
|
|
|
1.64
|
|
|
2.81
|
|
|
Real Estate Operating Companies
|
|
31,684
|
|
|
1.35
|
|
|
2.43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Advertising
|
|
30,368
|
|
|
1.30
|
|
|
2.33
|
|
|
13,440
|
|
|
0.85
|
|
|
1.47
|
|
|
Health Care Supplies
|
|
30,016
|
|
|
1.28
|
|
|
2.30
|
|
|
21,634
|
|
|
1.37
|
|
|
2.36
|
|
|
Insurance Brokers
|
|
29,080
|
|
|
1.24
|
|
|
2.23
|
|
|
18,083
|
|
|
1.15
|
|
|
1.98
|
|
|
Property & Casualty Insurance
|
|
28,584
|
|
|
1.22
|
|
|
2.19
|
|
|
46,737
|
|
|
2.97
|
|
|
5.11
|
|
|
Movies & Entertainment
|
|
27,270
|
|
|
1.17
|
|
|
2.09
|
|
|
43,592
|
|
|
2.77
|
|
|
4.76
|
|
|
Airlines
|
|
23,768
|
|
|
1.02
|
|
|
1.82
|
|
|
13,132
|
|
|
0.83
|
|
|
1.44
|
|
|
Independent Power Producers & Energy Traders
|
|
23,637
|
|
|
1.01
|
|
|
1.81
|
|
|
20,812
|
|
|
1.32
|
|
|
2.27
|
|
|
Managed Health Care
|
|
22,935
|
|
|
0.98
|
|
|
1.76
|
|
|
26,681
|
|
|
1.70
|
|
|
2.92
|
|
|
Leisure Facilities
|
|
22,054
|
|
|
0.94
|
|
|
1.69
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Airport Services
|
|
21,372
|
|
|
0.91
|
|
|
1.64
|
|
|
21,283
|
|
|
1.35
|
|
|
2.33
|
|
|
Commercial Printing
|
|
20,323
|
|
|
0.87
|
|
|
1.56
|
|
|
7,334
|
|
|
0.47
|
|
|
0.80
|
|
|
Health Care Technology
|
|
16,868
|
|
|
0.72
|
|
|
1.30
|
|
|
22,058
|
|
|
1.40
|
|
|
2.41
|
|
|
Thrifts & Mortgage Finance
|
|
16,044
|
|
|
0.69
|
|
|
1.23
|
|
|
353
|
|
|
0.02
|
|
|
0.04
|
|
|
Other Diversified Financial Services
|
|
14,406
|
|
|
0.62
|
|
|
1.11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Health Care Distributors
|
|
12,823
|
|
|
0.55
|
|
|
0.98
|
|
|
12,260
|
|
|
0.78
|
|
|
1.34
|
|
|
Auto Parts & Equipment
|
|
12,256
|
|
|
0.52
|
|
|
0.94
|
|
|
31,382
|
|
|
1.99
|
|
|
3.43
|
|
|
Health Care Equipment
|
|
10,695
|
|
|
0.46
|
|
|
0.82
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Electronic Components
|
|
10,140
|
|
|
0.43
|
|
|
0.78
|
|
|
26,552
|
|
|
1.69
|
|
|
2.90
|
|
|
IT Consulting & Other Services
|
|
9,891
|
|
|
0.42
|
|
|
0.76
|
|
|
13,905
|
|
|
0.88
|
|
|
1.52
|
|
|
Restaurants
|
|
9,489
|
|
|
0.41
|
|
|
0.73
|
|
|
7,886
|
|
|
0.50
|
|
|
0.86
|
|
|
Research & Consulting Services
|
|
7,578
|
|
|
0.32
|
|
|
0.58
|
|
|
24,212
|
|
|
1.54
|
|
|
2.65
|
|
|
Leisure Products
|
|
7,010
|
|
|
0.30
|
|
|
0.54
|
|
|
49
|
|
|
—
|
|
|
0.01
|
|
|
Alternative Carriers
|
|
6,984
|
|
|
0.30
|
|
|
0.54
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Systems Software
|
|
6,789
|
|
|
0.29
|
|
|
0.52
|
|
|
20,481
|
|
|
1.30
|
|
|
2.24
|
|
|
Apparel, Accessories & Luxury Goods
|
|
6,096
|
|
|
0.26
|
|
|
0.47
|
|
|
7,856
|
|
|
0.50
|
|
|
0.86
|
|
|
Automotive Retail
|
|
5,967
|
|
|
0.26
|
|
|
0.46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Integrated Oil & Gas
|
|
4,834
|
|
|
0.21
|
|
|
0.37
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Food Distributors
|
|
4,734
|
|
|
0.20
|
|
|
0.36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Food Retail
|
|
3,746
|
|
|
0.16
|
|
|
0.29
|
|
|
6,998
|
|
|
0.44
|
|
|
0.76
|
|
|
Diversified Banks
|
|
3,554
|
|
|
0.15
|
|
|
0.27
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Oil & Gas Exploration & Production
|
|
2,489
|
|
|
0.11
|
|
|
0.19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Construction Materials
|
|
2,391
|
|
|
0.10
|
|
|
0.18
|
|
|
2,073
|
|
|
0.13
|
|
|
0.23
|
|
|
Housewares & Specialties
|
|
1,872
|
|
|
0.08
|
|
|
0.14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Metal & Glass Containers
|
|
1,825
|
|
|
0.08
|
|
|
0.14
|
|
|
11,833
|
|
|
0.75
|
|
|
1.29
|
|
|
Education Services
|
|
1,011
|
|
|
0.04
|
|
|
0.08
|
|
|
7,088
|
|
|
0.45
|
|
|
0.77
|
|
|
General Merchandise Stores
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,877
|
|
|
1.14
|
|
|
1.95
|
|
|
Hotels, Resorts & Cruise Lines
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,081
|
|
|
1.09
|
|
|
1.87
|
|
|
Diversified Real Estate Activities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,846
|
|
|
1.07
|
|
|
1.84
|
|
|
Trading Companies & Distributors
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,069
|
|
|
0.64
|
|
|
1.10
|
|
|
Health Care Facilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,640
|
|
|
0.23
|
|
|
0.40
|
|
|
Oil & Gas Equipment & Services
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,588
|
|
|
0.16
|
|
|
0.28
|
|
|
Specialized REITs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
222
|
|
|
0.01
|
|
|
0.02
|
|
|
Total
|
|
$
|
2,339,301
|
|
|
100.00
|
%
|
|
179.61
|
%
|
|
$
|
1,573,851
|
|
|
100.00
|
%
|
|
172.03
|
%
|
___________________
(1)
This industry includes the Company's investments in the JVs and certain limited partnership interests.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
As of June 30, 2021 and September 30, 2020, the Company had no single investment that represented greater than 10%
of the total investment portfolio at fair value. Income, consisting of interest, dividends, fees, other investment income and realization of gains or losses, may fluctuate and in any given period can be highly concentrated among several investments.
Senior Loan Fund JV I, LLC
In May 2014, the Company entered into an LLC agreement with Kemper to form SLF JV I. The Company co-invests in senior secured loans of middle-market companies and other corporate debt securities with Kemper through its investment in SLF JV I. SLF JV I is managed by a four person Board of Directors, two of whom are selected by the Company and two of whom are selected by Kemper. All portfolio decisions and investment decisions in respect of SLF JV I must be approved by the SLF JV I investment committee, which consists of one representative selected by the Company and one representative selected by Kemper (with approval from a representative of each required). Since the Company does not have a controlling financial interest in SLF JV I, the Company does not consolidate SLF JV I.
SLF JV I is capitalized pro rata with LLC equity interests as transactions are completed and may be capitalized with additional subordinated notes issued to the Company and Kemper by SLF JV I. The subordinated notes issued by SLF JV I are referred to as the SLF JV I Notes. The SLF JV I Notes are senior in right of payment to SLF JV I LLC equity interests and subordinated in right of payment to SLF JV I’s secured debt. As of June 30, 2021 and September 30, 2020, the Company and Kemper owned, in the aggregate, 87.5% and 12.5%, respectively, of the LLC equity interests of SLF JV I and the outstanding SLF JV I Notes.
SLF JV I has a senior revolving credit facility with Deutsche Bank AG, New York Branch (as amended, the "SLF JV I Deutsche Bank Facility"), which permitted up to $260.0 million and $250.0 million of borrowings (subject to borrowing base and other limitations) as of June 30, 2021 and September 30, 2020, respectively. Borrowings under the SLF JV I Deutsche Bank Facility are secured by all of the assets of SLF JV I Funding LLC, a special purpose financing subsidiary of SLF JV I. As of June 30, 2021, the reinvestment period of the SLF JV I Deutsche Bank Facility was scheduled to expire May 3, 2023 and the maturity date for the SLF JV I Deutsche Bank Facility was May 3, 2028. As of June 30, 2021, borrowings under the SLF JV I Deutsche Bank Facility accrued interest at a rate equal to 3-month LIBOR plus 2.00% per annum during the reinvestment period, 3-month LIBOR plus 2.15% per annum for the first year after the reinvestment period, plus 2.25% for the following year and plus 2.50% thereafter, in each case with a 0.125% LIBOR floor. Under the SLF JV I Deutsche Bank Facility, $209.6 million and $167.9 million of borrowings were outstanding as of June 30, 2021 and September 30, 2020, respectively.
As of June 30, 2021 and September 30, 2020, SLF JV I had total assets of $386.5 million and $313.5 million, respectively. SLF JV I's portfolio primarily consisted of senior secured loans to 57 and 56 portfolio companies as of June 30, 2021 and September 30, 2020, respectively. The portfolio companies in SLF JV I are in industries similar to those in which the Company may invest directly. As of June 30, 2021, the Company's investment in SLF JV I consisted of LLC equity interests and SLF JV I Notes of $132.9 million in aggregate, at fair value. As of September 30, 2020, the Company's investment in SLF JV I consisted of LLC equity interests and SLF JV I Notes of $117.4 million in aggregate, at fair value.
As of June 30, 2021 and September 30, 2020, the Company and Kemper had funded approximately $165.5 million to SLF JV I, of which $144.8 million was from the Company. As of June 30, 2021, the Company had aggregate commitments to fund SLF JV I of $35.0 million, of which approximately $26.2 million was to fund additional SLF JV I Notes and approximately $8.8 million was to fund LLC equity interests in SLF JV I. As of September 30, 2020, the Company had commitments to fund LLC equity interests in SLF JV I of $17.5 million, of which $1.3 million was unfunded.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Below is a summary of SLF JV I's portfolio, followed by a listing of the individual loans in SLF JV I's portfolio as of June 30, 2021 and September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Senior secured loans (1)
|
|
$359,079
|
|
$307,579
|
|
Weighted average interest rate on senior secured loans (2)
|
|
5.61%
|
|
5.44%
|
|
Number of borrowers in SLF JV I
|
|
57
|
|
56
|
|
Largest exposure to a single borrower (1)
|
|
$9,938
|
|
$10,487
|
|
Total of five largest loan exposures to borrowers (1)
|
|
$47,100
|
|
$49,097
|
__________
(1) At principal amount.
(2) Computed using the weighted average annual interest rate on accruing senior secured loans at fair value.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
SLF JV I Portfolio as of June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Access CIG, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025
|
3.84
|
%
|
Diversified Support Services
|
$
|
9,135
|
|
|
$
|
9,106
|
|
|
$
|
9,092
|
|
(4)
|
|
ADB Companies, LLC
|
First Lien Term Loan, LIBOR+6.25% cash due 12/18/2025
|
7.25
|
%
|
Construction & Engineering
|
7,832
|
|
|
7,654
|
|
|
7,711
|
|
(4)
|
|
AI Ladder (Luxembourg) Subco S.a.r.l.
|
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025
|
4.58
|
%
|
Electrical Components & Equipment
|
5,957
|
|
|
5,855
|
|
|
5,963
|
|
(4)
|
|
Altice France S.A.
|
First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026
|
4.15
|
%
|
Integrated Telecommunication Services
|
4,607
|
|
|
4,440
|
|
|
4,606
|
|
|
|
Alvogen Pharma US, Inc.
|
First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023
|
6.25
|
%
|
Pharmaceuticals
|
9,879
|
|
|
9,682
|
|
|
9,749
|
|
|
|
Amplify Finco Pty Ltd.
|
First Lien Term Loan, LIBOR+4.25% cash due 11/26/2026
|
5.00
|
%
|
Movies & Entertainment
|
7,900
|
|
|
7,821
|
|
|
7,762
|
|
(4)
|
|
Anastasia Parent, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025
|
3.90
|
%
|
Personal Products
|
2,806
|
|
|
2,216
|
|
|
2,257
|
|
|
|
Apptio, Inc.
|
First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025
|
8.25
|
%
|
Application Software
|
4,615
|
|
|
4,561
|
|
|
4,533
|
|
(4)
|
|
Apptio, Inc.
|
First Lien Revolver, LIBOR+7.25% cash due 1/10/2025
|
8.25
|
%
|
Application Software
|
154
|
|
|
149
|
|
|
147
|
|
(4)(5)
|
|
Total Apptio, Inc.
|
|
|
|
4,769
|
|
|
4,710
|
|
|
4,680
|
|
|
|
Aurora Lux Finco S.À.R.L.
|
First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026
|
7.00
|
%
|
Airport Services
|
6,419
|
|
|
6,293
|
|
|
6,040
|
|
(4)
|
|
BAART Programs, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 6/11/2027
|
6.00
|
%
|
Health Care Equipment
|
6,750
|
|
|
6,683
|
|
|
6,716
|
|
|
|
BAART Programs, Inc.
|
First Lien Delayed Draw Term Loan, LIBOR+5.00% cash due 6/11/2027
|
|
Health Care Equipment
|
—
|
|
|
(8)
|
|
|
(4)
|
|
(5)
|
|
Total BAART Programs, Inc.
|
|
|
|
6,750
|
|
|
6,675
|
|
|
6,712
|
|
|
|
Blackhawk Network Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025
|
3.10
|
%
|
Data Processing & Outsourced Services
|
9,700
|
|
|
9,686
|
|
|
9,604
|
|
|
|
Boxer Parent Company Inc.
|
First Lien Term Loan, LIBOR+3.75% cash due 10/2/2025
|
3.85
|
%
|
Systems Software
|
6,662
|
|
|
6,589
|
|
|
6,632
|
|
|
|
Brazos Delaware II, LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025
|
4.09
|
%
|
Oil & Gas Equipment & Services
|
7,272
|
|
|
7,252
|
|
|
7,112
|
|
|
|
C5 Technology Holdings, LLC
|
171 Common Units
|
|
Data Processing & Outsourced Services
|
|
|
—
|
|
|
—
|
|
(4)
|
|
C5 Technology Holdings, LLC
|
7,193,539.63 Preferred Units
|
|
Data Processing & Outsourced Services
|
|
|
7,194
|
|
|
5,683
|
|
(4)
|
|
Total C5 Technology Holdings, LLC
|
|
|
|
|
|
7,194
|
|
|
5,683
|
|
|
|
CITGO Petroleum Corp.
|
First Lien Term Loan, LIBOR+6.25% cash due 3/28/2024
|
7.25
|
%
|
Oil & Gas Refining & Marketing
|
7,129
|
|
|
7,058
|
|
|
7,187
|
|
(4)
|
|
Connect U.S. Finco LLC
|
First Lien Term Loan, LIBOR+3.50% cash due 12/11/2026
|
4.50
|
%
|
Alternative Carriers
|
7,381
|
|
|
7,220
|
|
|
7,400
|
|
|
|
Convergeone Holdings, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 1/4/2026
|
5.10
|
%
|
IT Consulting & Other Services
|
4,975
|
|
|
4,810
|
|
|
4,930
|
|
(4)
|
|
Curium Bidco S.à.r.l.
|
First Lien Term Loan, LIBOR+4.00% cash due 7/9/2026
|
4.15
|
%
|
Biotechnology
|
5,895
|
|
|
5,851
|
|
|
5,888
|
|
|
|
Dcert Buyer, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 10/16/2026
|
4.10
|
%
|
Internet Services & Infrastructure
|
7,900
|
|
|
7,880
|
|
|
7,920
|
|
|
|
Enviva Holdings, LP
|
First Lien Term Loan, LIBOR+5.50% cash due 2/17/2026
|
6.50
|
%
|
Forest Products
|
5,893
|
|
|
5,834
|
|
|
5,959
|
|
|
|
eResearch Technology, Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027
|
5.50
|
%
|
Application Software
|
7,425
|
|
|
7,351
|
|
|
7,468
|
|
|
|
Gibson Brands, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 6/25/2028
|
5.75
|
%
|
Leisure Products
|
7,500
|
|
|
7,425
|
|
|
7,500
|
|
|
|
GI Chill Acquisition LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 8/6/2025
|
4.15
|
%
|
Managed Health Care
|
3,731
|
|
|
3,748
|
|
|
3,730
|
|
(4)
|
|
GI Chill Acquisition LLC
|
Second Lien Term Loan, LIBOR+7.50% cash due 8/6/2026
|
7.65
|
%
|
Managed Health Care
|
3,750
|
|
|
3,670
|
|
|
3,731
|
|
(4)
|
|
Total GI Chill Acquisition LLC
|
|
|
|
7,481
|
|
|
7,418
|
|
|
7,461
|
|
|
|
Gigamon, Inc.
|
First Lien Term Loan, LIBOR+3.75% cash due 12/27/2024
|
4.50
|
%
|
Systems Software
|
7,619
|
|
|
7,581
|
|
|
7,648
|
|
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Global Medical Response, Inc.
|
First Lien Term Loan, LIBOR+4.75% cash due 10/2/2025
|
5.75
|
%
|
Health Care Services
|
$
|
2,220
|
|
|
$
|
2,181
|
|
|
$
|
2,233
|
|
|
|
Grab Holdings Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 1/29/2026
|
5.50
|
%
|
Interactive Media & Services
|
2,993
|
|
|
2,910
|
|
|
3,045
|
|
|
|
Indivior Finance S.À.R.L.
|
First Lien Term Loan, LIBOR+5.25% cash due 6/28/2026
|
6.00
|
%
|
Pharmaceuticals
|
7,500
|
|
|
7,350
|
|
|
7,350
|
|
|
|
Intelsat Jackson Holdings S.A.
|
First Lien Term Loan, PRIME+4.75% cash due 11/27/2023
|
8.00
|
%
|
Alternative Carriers
|
3,568
|
|
|
3,547
|
|
|
3,633
|
|
|
|
Intelsat Jackson Holdings S.A.
|
First Lien Term Loan, LIBOR+5.50% cash due 7/13/2022
|
6.50
|
%
|
Alternative Carriers
|
1,943
|
|
|
1,769
|
|
|
1,960
|
|
|
|
Total Intelsat Jackson Holdings S.A.
|
|
|
|
5,511
|
|
|
5,316
|
|
|
5,593
|
|
|
|
INW Manufacturing, LLC
|
First Lien Term Loan, LIBOR+5.75% cash due 5/7/2027
|
6.50
|
%
|
Personal Products
|
9,938
|
|
|
9,645
|
|
|
9,739
|
|
(4)
|
|
Lightbox Intermediate, L.P.
|
First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026
|
5.15
|
%
|
Real Estate Services
|
7,462
|
|
|
7,392
|
|
|
7,425
|
|
(4)
|
|
LogMeIn, Inc.
|
First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027
|
4.83
|
%
|
Application Software
|
7,960
|
|
|
7,827
|
|
|
7,957
|
|
(4)
|
|
LTI Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.50% cash due 9/6/2025
|
3.60
|
%
|
Electronic Components
|
7,462
|
|
|
7,341
|
|
|
7,373
|
|
|
|
Maravai Intermediate Holdings, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 10/19/2027
|
4.75
|
%
|
Biotechnology
|
6,838
|
|
|
6,769
|
|
|
6,874
|
|
(4)
|
|
Mindbody, Inc.
|
First Lien Term Loan, LIBOR+7.00% cash 1.50% PIK due 2/14/2025
|
8.00
|
%
|
Internet Services & Infrastructure
|
4,598
|
|
|
4,544
|
|
|
4,373
|
|
(4)
|
|
Mindbody, Inc.
|
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025
|
|
Internet Services & Infrastructure
|
—
|
|
|
(6)
|
|
|
(23)
|
|
(4)(5)
|
|
Total Mindbody, Inc.
|
|
|
|
4,598
|
|
|
4,538
|
|
|
4,350
|
|
|
|
MRI Software LLC
|
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026
|
6.50
|
%
|
Application Software
|
3,844
|
|
|
3,809
|
|
|
3,849
|
|
(4)
|
|
MRI Software LLC
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(6)
|
|
|
3
|
|
(4)(5)
|
|
MRI Software LLC
|
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(3)
|
|
|
—
|
|
(4)(5)
|
|
Total MRI Software LLC
|
|
|
|
3,844
|
|
|
3,800
|
|
|
3,852
|
|
|
|
Navicure, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026
|
4.10
|
%
|
Health Care Technology
|
5,925
|
|
|
5,894
|
|
|
5,944
|
|
|
|
Northern Star Industries Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 3/31/2025
|
5.50
|
%
|
Electrical Components & Equipment
|
6,773
|
|
|
6,754
|
|
|
6,756
|
|
|
|
Novetta Solutions, LLC
|
First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022
|
6.00
|
%
|
Application Software
|
5,884
|
|
|
5,871
|
|
|
5,891
|
|
|
|
OEConnection LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026
|
4.10
|
%
|
Application Software
|
7,871
|
|
|
7,836
|
|
|
7,872
|
|
(4)
|
|
Olaplex, Inc.
|
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026
|
7.50
|
%
|
Personal Products
|
6,313
|
|
|
6,226
|
|
|
6,313
|
|
(4)
|
|
Olaplex, Inc.
|
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025
|
|
Personal Products
|
—
|
|
|
(8)
|
|
|
(4)
|
|
(4)(5)
|
|
Total Olaplex, Inc.
|
|
|
|
6,313
|
|
|
6,218
|
|
|
6,309
|
|
|
|
Park Place Technologies, LLC
|
First Lien Term Loan, LIBOR+5.00% cash due 11/10/2027
|
6.00
|
%
|
Internet Services & Infrastructure
|
4,988
|
|
|
4,806
|
|
|
5,011
|
|
(4)
|
|
PaySimple, Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025
|
5.61
|
%
|
Data Processing & Outsourced Services
|
7,462
|
|
|
7,427
|
|
|
7,425
|
|
(4)
|
|
Planview Parent, Inc.
|
Second Lien Term Loan, LIBOR+7.25% cash due 12/18/2028
|
8.00
|
%
|
Application Software
|
4,503
|
|
|
4,435
|
|
|
4,514
|
|
(4)
|
|
Pluralsight, LLC
|
First Lien Term Loan, LIBOR+8.00% cash due 4/6/2027
|
9.00
|
%
|
Application Software
|
4,983
|
|
|
4,887
|
|
|
4,883
|
|
(4)
|
|
Pluralsight, LLC
|
First Lien Revolver, LIBOR+8.00% cash due 4/6/2027
|
|
Application Software
|
—
|
|
|
(8)
|
|
|
(8)
|
|
(4)(5)
|
|
Total Pluralsight, LLC
|
|
|
|
4,983
|
|
|
4,879
|
|
|
4,875
|
|
|
|
RS Ivy Holdco, Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 12/23/2027
|
6.50
|
%
|
Oil & Gas Exploration & Production
|
6,965
|
|
|
6,861
|
|
|
6,969
|
|
(4)
|
|
Sabert Corporation
|
First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026
|
5.50
|
%
|
Metal & Glass Containers
|
2,735
|
|
|
2,707
|
|
|
2,738
|
|
(4)
|
|
Salient CRGT, Inc.
|
First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022
|
7.50
|
%
|
Aerospace & Defense
|
4,916
|
|
|
4,881
|
|
|
4,885
|
|
(4)
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
SHO Holding I Corporation
|
First Lien Term Loan, LIBOR+5.25% cash due 4/27/2024
|
6.25
|
%
|
Footwear
|
$
|
8,310
|
|
|
$
|
8,297
|
|
|
$
|
7,812
|
|
|
|
SHO Holding I Corporation
|
First Lien Term Loan, LIBOR+5.23% cash due 4/27/2024
|
6.23
|
%
|
Footwear
|
138
|
|
|
138
|
|
|
129
|
|
|
|
Total SHO Holding I Corporation
|
|
|
|
8,448
|
|
|
8,435
|
|
|
7,941
|
|
|
|
Sirva Worldwide, Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025
|
5.60
|
%
|
Diversified Support Services
|
3,694
|
|
|
3,639
|
|
|
3,490
|
|
(4)
|
|
Sorenson Communications, LLC
|
First Lien Term Loan, LIBOR+5.50% cash due 3/17/2026
|
6.25
|
%
|
Communications Equipment
|
2,929
|
|
|
2,900
|
|
|
2,958
|
|
|
|
Star US Bidco LLC
|
First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027
|
5.25
|
%
|
Industrial Machinery
|
8,276
|
|
|
8,088
|
|
|
8,281
|
|
(4)
|
|
Supermoose Borrower, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025
|
3.90
|
%
|
Application Software
|
7,843
|
|
|
7,461
|
|
|
7,353
|
|
(4)
|
|
Surgery Center Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.75% cash due 8/31/2026
|
4.50
|
%
|
Health Care Facilities
|
4,924
|
|
|
4,908
|
|
|
4,950
|
|
|
|
Trench Plate Rental, Co.
|
First Lien Term Loan, LIBOR+4.75% cash due 12/3/2026
|
5.75
|
%
|
Construction Materials
|
3,951
|
|
|
3,892
|
|
|
3,891
|
|
|
|
Trench Plate Rental, Co.
|
First Lien Delayed Draw Term Loan, LIBOR+4.75% cash due 12/3/2026
|
|
Construction Materials
|
—
|
|
|
(11)
|
|
|
(11)
|
|
(5)
|
|
Trench Plate Rental, Co.
|
First Lien Revolver, LIBOR+4.75% cash due 12/3/2026
|
5.75
|
%
|
Construction Materials
|
24
|
|
|
15
|
|
|
15
|
|
(5)
|
|
Total Trench Plate Rental, Co.
|
|
|
|
3,975
|
|
|
3,896
|
|
|
3,895
|
|
|
|
Veritas US Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 9/1/2025
|
6.00
|
%
|
Application Software
|
6,450
|
|
|
6,343
|
|
|
6,501
|
|
(4)
|
|
Verscend Holding Corp.
|
First Lien Term Loan, LIBOR+4.00% cash due 8/27/2025
|
4.10
|
%
|
Health Care Technology
|
4,090
|
|
|
4,061
|
|
|
4,107
|
|
|
|
Windstream Services II, LLC
|
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027
|
7.25
|
%
|
Integrated Telecommunication Services
|
7,920
|
|
|
7,638
|
|
|
7,956
|
|
(4)
|
|
WP CPP Holdings, LLC
|
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026
|
8.75
|
%
|
Aerospace & Defense
|
6,000
|
|
|
5,962
|
|
|
5,870
|
|
(4)
|
|
Total Portfolio Investments
|
|
|
|
$
|
359,079
|
|
|
$
|
360,570
|
|
|
$
|
361,246
|
|
|
__________
(1) Represents the interest rate as of June 30, 2021. All interest rates are payable in cash, unless otherwise noted.
(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is in U.S. dollars. As of June 30, 2021, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.10%, the 60-day LIBOR at 0.13%, the 90-day LIBOR at 0.15%, the 180-day LIBOR at 0.17%, the 360-day LIBOR at 0.25% and the PRIME at 3.25%. Most loans include an interest floor, which generally ranges from 0% to 1%.
(3) Represents the current determination of fair value as of June 30, 2021 utilizing a similar technique as the Company in accordance with ASC 820. However, the determination of such fair value is not included in the Company's Board of Directors' valuation process described elsewhere herein.
(4) This investment was held by both the Company and SLF JV I as of June 30, 2021.
(5) Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
SLF JV I Portfolio as of September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Access CIG, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025
|
3.91
|
%
|
Diversified Support Services
|
$
|
9,206
|
|
|
$
|
9,170
|
|
|
$
|
9,029
|
|
|
|
AdVenture Interactive, Corp.
|
927 shares of common stock
|
|
Advertising
|
|
|
1,390
|
|
|
1,373
|
|
(4)
|
|
AI Ladder (Luxembourg) Subco S.a.r.l.
|
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025
|
4.65
|
%
|
Electrical Components & Equipment
|
6,038
|
|
|
5,914
|
|
|
5,781
|
|
(4)
|
|
Airbnb, Inc.
|
First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025
|
8.50
|
%
|
Hotels, Resorts & Cruise Lines
|
3,051
|
|
|
2,981
|
|
|
3,311
|
|
(4)
|
|
Altice France S.A.
|
First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026
|
4.15
|
%
|
Integrated Telecommunication Services
|
4,643
|
|
|
4,450
|
|
|
4,527
|
|
|
|
Alvogen Pharma US, Inc.
|
First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023
|
6.25
|
%
|
Pharmaceuticals
|
9,879
|
|
|
9,623
|
|
|
9,566
|
|
|
|
Amplify Finco Pty Ltd.
|
First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026
|
4.75
|
%
|
Movies & Entertainment
|
7,960
|
|
|
7,880
|
|
|
6,846
|
|
(4)
|
|
Anastasia Parent, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025
|
|
Personal Products
|
2,828
|
|
|
2,282
|
|
|
1,248
|
|
(6)
|
|
Apptio, Inc.
|
First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025
|
8.25
|
%
|
Application Software
|
4,615
|
|
|
4,550
|
|
|
4,526
|
|
(4)
|
|
Apptio, Inc.
|
First Lien Revolver, LIBOR+7.25% cash due 1/10/2025
|
|
Application Software
|
—
|
|
|
(5)
|
|
|
(8)
|
|
(4)(5)
|
|
Total Apptio, Inc.
|
|
|
|
4,615
|
|
|
4,545
|
|
|
4,518
|
|
|
|
Aurora Lux Finco S.À.R.L.
|
First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026
|
7.00
|
%
|
Airport Services
|
6,468
|
|
|
6,324
|
|
|
6,015
|
|
(4)
|
|
Blackhawk Network Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025
|
3.15
|
%
|
Data Processing & Outsourced Services
|
9,775
|
|
|
9,758
|
|
|
9,251
|
|
|
|
Boxer Parent Company Inc.
|
First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025
|
4.40
|
%
|
Systems Software
|
7,532
|
|
|
7,448
|
|
|
7,331
|
|
(4)
|
|
Brazos Delaware II, LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025
|
4.16
|
%
|
Oil & Gas Equipment & Services
|
7,331
|
|
|
7,306
|
|
|
5,600
|
|
|
|
C5 Technology Holdings, LLC
|
171 Common Units
|
|
Data Processing & Outsourced Services
|
|
|
—
|
|
|
—
|
|
(4)
|
|
C5 Technology Holdings, LLC
|
7,193,539.63 Preferred Units
|
|
Data Processing & Outsourced Services
|
|
|
7,194
|
|
|
5,683
|
|
(4)
|
|
Total C5 Technology Holdings, LLC
|
|
|
|
|
|
7,194
|
|
|
5,683
|
|
|
|
Carrols Restaurant Group, Inc.
|
First Lien Term Loan, LIBOR+6.25% cash due 4/30/2026
|
7.25
|
%
|
Restaurants
|
3,990
|
|
|
3,792
|
|
|
3,960
|
|
|
|
CITGO Petroleum Corp.
|
First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024
|
6.00
|
%
|
Oil & Gas Refining & Marketing
|
7,184
|
|
|
7,112
|
|
|
6,842
|
|
(4)
|
|
Clear Channel Outdoor Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.50% cash due 8/21/2026
|
3.76
|
%
|
Advertising
|
331
|
|
|
290
|
|
|
302
|
|
|
|
Connect U.S. Finco LLC
|
First Lien Term Loan, LIBOR+4.50% cash due 12/11/2026
|
5.50
|
%
|
Alternative Carriers
|
7,437
|
|
|
7,262
|
|
|
7,228
|
|
|
|
Curium Bidco S.à.r.l.
|
First Lien Term Loan, LIBOR+3.75% cash due 7/9/2026
|
3.97
|
%
|
Biotechnology
|
5,940
|
|
|
5,895
|
|
|
5,895
|
|
|
|
Dcert Buyer, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 10/16/2026
|
4.15
|
%
|
Internet Services & Infrastructure
|
7,960
|
|
|
7,940
|
|
|
7,879
|
|
|
|
Dealer Tire, LLC
|
First Lien Term Loan, LIBOR+4.25% cash due 12/12/2025
|
4.40
|
%
|
Distributors
|
943
|
|
|
902
|
|
|
924
|
|
|
|
eResearch Technology, Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027
|
5.50
|
%
|
Application Software
|
7,481
|
|
|
7,406
|
|
|
7,461
|
|
|
|
Frontier Communications Corporation
|
First Lien Term Loan, PRIME+2.75% cash due 6/15/2024
|
6.00
|
%
|
Integrated Telecommunication Services
|
3,939
|
|
|
3,901
|
|
|
3,887
|
|
|
|
Gigamon, Inc.
|
First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024
|
5.25
|
%
|
Systems Software
|
7,781
|
|
|
7,734
|
|
|
7,684
|
|
|
|
Global Medical Response, Inc.
|
First Lien Term Loan, LIBOR+4.75% cash due 10/2/2025
|
5.75
|
%
|
Health Care Services
|
2,231
|
|
|
2,187
|
|
|
2,185
|
|
|
|
Guidehouse LLP
|
Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026
|
8.15
|
%
|
Research & Consulting Services
|
6,000
|
|
|
5,979
|
|
|
5,790
|
|
(4)
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Helios Software Holdings, Inc.
|
First Lien Term Loan, LIBOR+4.25% cash due 10/24/2025
|
4.52
|
%
|
Systems Software
|
$
|
3,970
|
|
|
$
|
3,930
|
|
|
$
|
3,923
|
|
|
|
Intelsat Jackson Holdings S.A.
|
First Lien Term Loan, PRIME+4.75% cash due 11/27/2023
|
8.00
|
%
|
Alternative Carriers
|
3,568
|
|
|
3,541
|
|
|
3,598
|
|
|
|
Intelsat Jackson Holdings S.A.
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 7/13/2022
|
6.50
|
%
|
Alternative Carriers
|
971
|
|
|
801
|
|
|
1,011
|
|
(5)
|
|
Total Intelsat Jackson Holdings S.A.
|
|
|
|
4,539
|
|
|
4,342
|
|
|
4,609
|
|
|
|
KIK Custom Products Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023
|
5.00
|
%
|
Household Products
|
5,322
|
|
|
5,308
|
|
|
5,302
|
|
|
|
LogMeIn, Inc.
|
First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027
|
4.91
|
%
|
Application Software
|
5,000
|
|
|
4,876
|
|
|
4,842
|
|
|
|
Mindbody, Inc.
|
First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025
|
8.00
|
%
|
Internet Services & Infrastructure
|
4,546
|
|
|
4,481
|
|
|
4,192
|
|
(4)
|
|
Mindbody, Inc.
|
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025
|
|
Internet Services & Infrastructure
|
—
|
|
|
(7)
|
|
|
(38)
|
|
(4)(5)
|
|
Total Mindbody, Inc.
|
|
|
|
4,546
|
|
|
4,474
|
|
|
4,154
|
|
|
|
MRI Software LLC
|
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026
|
6.50
|
%
|
Application Software
|
3,830
|
|
|
3,795
|
|
|
3,737
|
|
(4)
|
|
MRI Software LLC
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(1)
|
|
|
(4)
|
|
(4)(5)
|
|
MRI Software LLC
|
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(3)
|
|
|
(8)
|
|
(4)(5)
|
|
Total MRI Software LLC
|
|
|
|
3,830
|
|
|
3,791
|
|
|
3,725
|
|
|
|
Navicure, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026
|
4.15
|
%
|
Health Care Technology
|
5,970
|
|
|
5,940
|
|
|
5,849
|
|
|
|
New IPT, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021
|
6.00
|
%
|
Oil & Gas Equipment & Services
|
1,006
|
|
|
1,006
|
|
|
786
|
|
(4)
|
|
New IPT, Inc.
|
21.876 Class A Common Units in New IPT Holdings, LLC
|
|
Oil & Gas Equipment & Services
|
|
|
—
|
|
|
—
|
|
(4)
|
|
Total New IPT, Inc.
|
|
|
|
1,006
|
|
|
1,006
|
|
|
786
|
|
|
|
Northern Star Industries Inc.
|
First Lien Term Loan, LIBOR+4.75% cash due 3/31/2025
|
5.75
|
%
|
Electrical Components & Equipment
|
6,825
|
|
|
6,803
|
|
|
6,518
|
|
|
|
Northwest Fiber, LLC
|
First Lien Term Loan, LIBOR+5.50% cash due 4/30/2027
|
5.66
|
%
|
Integrated Telecommunication Services
|
2,400
|
|
|
2,314
|
|
|
2,403
|
|
|
|
Novetta Solutions, LLC
|
First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022
|
6.00
|
%
|
Application Software
|
5,931
|
|
|
5,909
|
|
|
5,827
|
|
|
|
OEConnection LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026
|
4.15
|
%
|
Application Software
|
7,455
|
|
|
7,418
|
|
|
7,371
|
|
|
|
OEConnection LLC
|
First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/25/2026
|
|
Application Software
|
—
|
|
|
(2)
|
|
|
(5)
|
|
(5)
|
|
Total OEConnection LLC
|
|
|
|
7,455
|
|
|
7,416
|
|
|
7,366
|
|
|
|
Olaplex, Inc.
|
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026
|
7.50
|
%
|
Personal Products
|
4,938
|
|
|
4,851
|
|
|
4,938
|
|
(4)
|
|
Olaplex, Inc.
|
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025
|
7.50
|
%
|
Personal Products
|
270
|
|
|
261
|
|
|
270
|
|
(4)(5)
|
|
Total Olaplex, Inc.
|
|
|
|
5,208
|
|
|
5,112
|
|
|
5,208
|
|
|
|
PetVet Care Centers, LLC
|
First Lien Term Loan, LIBOR+4.25% cash due 2/14/2025
|
5.25
|
%
|
Specialized Consumer Services
|
2,743
|
|
|
2,736
|
|
|
2,747
|
|
|
|
PG&E Corporation
|
First Lien Term Loan, LIBOR+4.50% cash due 6/23/2025
|
5.50
|
%
|
Electric Utilities
|
5,985
|
|
|
5,899
|
|
|
5,875
|
|
|
|
Recorded Books, Inc.
|
First Lien Term Loan, LIBOR+4.25% cash due 8/31/2025
|
4.75
|
%
|
Publishing
|
6,000
|
|
|
5,940
|
|
|
5,940
|
|
|
|
Sabert Corporation
|
First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026
|
5.50
|
%
|
Metal & Glass Containers
|
2,828
|
|
|
2,800
|
|
|
2,791
|
|
|
|
Salient CRGT, Inc.
|
First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022
|
7.50
|
%
|
Aerospace & Defense
|
2,111
|
|
|
2,099
|
|
|
1,963
|
|
(4)
|
|
SHO Holding I Corporation
|
First Lien Term Loan, LIBOR+3.00% cash PIK 2.25% due 4/27/2024
|
4.00
|
%
|
Footwear
|
8,396
|
|
|
8,380
|
|
|
5,898
|
|
|
|
Signify Health, LLC
|
First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024
|
5.50
|
%
|
Health Care Services
|
9,750
|
|
|
9,690
|
|
|
9,409
|
|
|
|
Sirva Worldwide, Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025
|
5.65
|
%
|
Diversified Support Services
|
4,781
|
|
|
4,709
|
|
|
3,992
|
|
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Star US Bidco LLC
|
First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027
|
5.25
|
%
|
Industrial Machinery
|
$
|
3,718
|
|
|
$
|
3,532
|
|
|
$
|
3,551
|
|
|
|
Sunshine Luxembourg VII SARL
|
First Lien Term Loan, LIBOR+4.25% cash due 10/1/2026
|
5.25
|
%
|
Personal Products
|
7,940
|
|
|
7,900
|
|
|
7,911
|
|
|
|
Supermoose Borrower, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025
|
3.90
|
%
|
Application Software
|
4,888
|
|
|
4,575
|
|
|
4,407
|
|
(4)
|
|
Surgery Center Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024
|
4.25
|
%
|
Health Care Facilities
|
4,962
|
|
|
4,943
|
|
|
4,691
|
|
(4)
|
|
Uber Technologies, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025
|
5.00
|
%
|
Application Software
|
2,997
|
|
|
2,959
|
|
|
2,980
|
|
|
|
UFC Holdings, LLC
|
First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026
|
4.25
|
%
|
Movies & Entertainment
|
2,856
|
|
|
2,816
|
|
|
2,814
|
|
|
|
Veritas US Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 9/1/2025
|
6.50
|
%
|
Application Software
|
6,500
|
|
|
6,371
|
|
|
6,375
|
|
|
|
Verscend Holding Corp.
|
First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025
|
4.65
|
%
|
Health Care Technology
|
4,112
|
|
|
4,080
|
|
|
4,084
|
|
(4)
|
|
VM Consolidated, Inc.
|
First Lien Term Loan, LIBOR+3.25% cash due 2/28/2025
|
3.40
|
%
|
Data Processing & Outsourced Services
|
10,487
|
|
|
10,495
|
|
|
10,291
|
|
|
|
Windstream Services II, LLC
|
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027
|
7.25
|
%
|
Integrated Telecommunication Services
|
7,980
|
|
|
7,662
|
|
|
7,744
|
|
(4)
|
|
WP CPP Holdings, LLC
|
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026
|
8.75
|
%
|
Aerospace & Defense
|
6,000
|
|
|
5,956
|
|
|
4,680
|
|
(4)
|
|
Total Portfolio Investments
|
|
|
|
$
|
307,579
|
|
|
$
|
311,428
|
|
|
$
|
298,771
|
|
|
__________
(1) Represents the interest rate as of September 30, 2020. All interest rates are payable in cash, unless otherwise noted.
(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is in U.S. dollars. As of September 30, 2020, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22%, the 180-day LIBOR at 0.27% and the PRIME at 3.25%. Most loans include an interest floor, which generally ranges from 0% to 1%.
(3) Represents the current determination of fair value as of September 30, 2020 utilizing a similar technique as the Company in accordance with ASC 820. However, the determination of such fair value is not included in the Company's Board of Directors' valuation process described elsewhere herein.
(4) This investment was held by both the Company and SLF JV I as of September 30, 2020.
(5) Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
(6) This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.
Both the cost and fair value of the Company's debt investment in SLF JV I were $96.3 million as of each of June 30, 2021 and September 30, 2020. The Company earned interest income of $1.9 million and $5.4 million on its debt investment in the SLF JV I for the three and nine months ended June 30, 2021, respectively. The Company earned interest income of $2.0 million and $6.3 million on its debt investment in the SLF JV I for the three and nine months ended June 30, 2020, respectively. As of June 30, 2021, the Company's debt investment in SLF JV I bore interest at a rate of one-month LIBOR plus 7.0% per annum with a LIBOR floor of 1.00% and will mature on December 29, 2028.
The cost and fair value of the LLC equity interests in SLF JV I held by the Company were $49.3 million and $36.7 million, respectively, as of June 30, 2021, and $49.3 million and $21.2 million, respectively, as of September 30, 2020. The Company earned $0.5 million in dividend income for the three and nine months ended June 30, 2021 with respect to its investment in the LLC equity interests of SLF JV I. The Company did not earn dividend income for the three and nine months ended June 30, 2020 with respect to its investment in the LLC equity interests of SLF JV I. The LLC equity interests of SLF JV I are generally dividend producing to the extent SLF JV I has residual cash to be distributed on a quarterly basis.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Below is certain summarized financial information for SLF JV I as of June 30, 2021 and September 30, 2020 and for the three and nine months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Selected Balance Sheet Information:
|
|
|
|
|
|
Investments at fair value (cost June 30, 2021: $360,570; cost September 30, 2020: $311,428)
|
|
$
|
361,246
|
|
|
$
|
298,771
|
|
|
Cash and cash equivalents
|
|
14,620
|
|
|
5,389
|
|
|
Restricted cash
|
|
4,438
|
|
|
4,211
|
|
|
Other assets
|
|
6,191
|
|
|
5,093
|
|
|
Total assets
|
|
$
|
386,495
|
|
|
$
|
313,464
|
|
|
|
|
|
|
|
|
Senior credit facility payable
|
|
$
|
209,620
|
|
|
$
|
167,910
|
|
|
Debt securities payable at fair value (proceeds June 30, 2021: $110,000; proceeds September 30, 2020: $110,000)
|
|
110,000
|
|
|
110,000
|
|
|
Other liabilities
|
|
24,941
|
|
|
11,336
|
|
|
Total liabilities
|
|
$
|
344,561
|
|
|
$
|
289,246
|
|
|
Members' equity
|
|
41,934
|
|
|
24,218
|
|
|
Total liabilities and members' equity
|
|
$
|
386,495
|
|
|
$
|
313,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2021
|
|
Three months ended June 30, 2020
|
|
Nine months ended June 30, 2021
|
|
Nine months ended June 30, 2020
|
|
Selected Statements of Operations Information:
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
5,247
|
|
|
$
|
4,419
|
|
|
$
|
14,535
|
|
|
$
|
15,358
|
|
|
Other income
|
|
19
|
|
|
—
|
|
|
546
|
|
|
297
|
|
|
Total investment income
|
|
5,266
|
|
|
4,419
|
|
|
15,081
|
|
|
15,655
|
|
|
Senior credit facility interest expense
|
|
1,430
|
|
|
1,847
|
|
|
4,222
|
|
|
6,019
|
|
|
Subordinated notes interest expense
|
|
2,224
|
|
|
2,229
|
|
|
6,195
|
|
|
7,191
|
|
|
Other expenses
|
|
56
|
|
|
47
|
|
|
193
|
|
|
178
|
|
|
Total expenses (1)
|
|
3,710
|
|
|
4,123
|
|
|
10,610
|
|
|
13,388
|
|
|
Net unrealized appreciation (depreciation)
|
|
1,407
|
|
|
16,829
|
|
|
13,334
|
|
|
(17,721)
|
|
|
Net realized gains (losses)
|
|
426
|
|
|
(1,285)
|
|
|
427
|
|
|
(3,052)
|
|
|
Net income (loss)
|
|
$
|
3,389
|
|
|
$
|
15,840
|
|
|
$
|
18,232
|
|
|
$
|
(18,506)
|
|
__________
(1) There are no management fees or incentive fees charged at SLF JV I.
SLF JV I has elected to fair value the debt securities issued to the Company and Kemper under FASB ASC Topic 825,
Financial Instruments - Fair Value Option
. The debt securities are valued based on the total assets less the total liabilities senior to the SLF JV I Notes in an amount not exceeding par under the EV technique.
During the three and nine months ended June 30, 2021, the Company sold $10.5 million and $45.5 million, respectively, of senior secured debt investments to SLF JV I, for $10.3 million and $44.8 million cash consideration, respectively, which represented the fair value at the time of sale. During the three and nine months ended June 30, 2020, the Company did not sell any debt investments to SLF JV I.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Glick JV
On March 19, 2021, as a result of the consummation of the Mergers, the Company became party to the LLC agreement of Glick JV. The Glick JV invests primarily in senior secured loans of middle-market companies. The Company co-invests in these securities with GF Equity Funding through the Glick JV. The Glick JV is managed by a four person Board of Directors, two of whom are selected by the Company and two of whom are selected by GF Equity Funding. The Glick JV is capitalized as transactions are completed, and portfolio decisions and investment decisions in respect of the Glick JV must be approved by the Glick JV investment committee, which consists of one representative selected by the Company and one representative selected by GF Equity Funding (with approval from a representative of each required). Since the Company does not have a controlling financial interest in the Glick JV, the Company does not consolidate the Glick JV. The members provide capital to the Glick JV in exchange for LLC equity interests, and the Company and GF Debt Funding 2014 LLC ("GF Debt Funding"), an entity advised by affiliates of GF Equity Funding, provide capital to the Glick JV in exchange for subordinated notes issued by the Glick JV (the "Glick JV Notes"). As of June 30, 2021, the Company and GF Equity Funding owned 87.5% and 12.5%, respectively, of the outstanding LLC equity interests, and the Company and GF Debt Funding owned 87.5% and 12.5%, respectively, of the Glick JV Notes. The Glick JV is not an "eligible portfolio company" as defined in section 2(a)(46) of the Investment Company Act.
The Glick JV's portfolio consisted of middle-market and other corporate debt securities of 38 portfolio companies as of June 30, 2021. The portfolio companies in the Glick JV are in industries similar to those in which the Company may invest directly.
The Glick JV has a senior revolving credit facility with Deutsche Bank AG, New York Branch (the "Glick JV Deutsche Bank Facility"), which, as of June 30, 2021, had a reinvestment period end date and maturity date of May 3, 2023 and May 3, 2028, respectively, and permitted borrowings of up to $90.0 million (subject to borrowing base and other limitations). Borrowings under the Glick JV Deutsche Bank Facility are secured by all of the assets of the Glick JV and all of the equity interests in the Glick JV and, as of June 30, 2021, bore interest at a rate equal to 3-month LIBOR plus 2.25% per annum during the reinvestment period, 3-month LIBOR plus 2.40% for the first year after the end of the reinvestment period, 3-month LIBOR plus 2.50% for the following year and 2.75% thereafter, in each case with a 0.125% LIBOR floor. Under the Glick JV Deutsche Bank Facility, $71.9 million of borrowings were outstanding as of June 30, 2021.
As of June 30, 2021, the Glick JV had total assets of $148.1 million. The Company's investment in the Glick JV consisted of LLC equity interests and Glick JV Notes of $55.4 million in the aggregate at fair value as of June 30, 2021. The Glick JV Notes are junior in right of payment to the repayment of temporary contributions made by the Company to fund investments of the Glick JV that are repaid when GF Equity Funding and GF Debt Funding make their capital contributions and fund their Glick JV Notes, respectively.
As of June 30, 2021, the Glick JV had total capital commitments of $100.0 million, $87.5 million of which was from the Company and the remaining $12.5 million of which was from GF Equity Funding and GF Debt Funding. Approximately $84.0 million in aggregate commitments were funded as of June 30, 2021, of which $73.5 million was from the Company. As of June 30, 2021, the Company had commitments to fund Glick JV Notes of $78.8 million, of which $12.4 million were unfunded as of such date. As of June 30, 2021, the Company had commitments to fund LLC equity interests in the Glick JV of $8.7 million, of which $1.6 million were unfunded.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Below is a summary of the Glick JV's portfolio, followed by a listing of the individual loans in the Glick JV's portfolio as of June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
Senior secured loans (1)
|
|
$131,675
|
|
Weighted average current interest rate on senior secured loans (2)
|
|
5.92%
|
|
Number of borrowers in the Glick JV
|
|
38
|
|
Largest loan exposure to a single borrower (1)
|
|
$6,995
|
|
Total of five largest loan exposures to borrowers (1)
|
|
$29,305
|
__________
(1) At principal amount.
(2) Computed using the weighted average annual interest rate on accruing senior secured loans at fair value.
Glick JV Portfolio as of June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
ADB Companies, LLC
|
First Lien Term Loan, LIBOR+6.25% cash due 12/18/2025
|
7.25%
|
Construction & Engineering
|
$
|
3,915
|
|
|
$
|
3,827
|
|
|
$
|
3,856
|
|
(4)
|
|
AI Ladder (Luxembourg) Subco S.a.r.l.
|
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025
|
4.58%
|
Electrical Components & Equipment
|
2,636
|
|
|
2,591
|
|
|
2,639
|
|
(4)
|
|
Alvogen Pharma US, Inc.
|
First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023
|
6.25%
|
Pharmaceuticals
|
6,995
|
|
|
6,852
|
|
|
6,903
|
|
|
|
Amplify Finco Pty Ltd.
|
First Lien Term Loan, LIBOR+4.25% cash due 11/26/2026
|
5.00%
|
Movies & Entertainment
|
2,963
|
|
|
2,933
|
|
|
2,911
|
|
(4)
|
|
Anastasia Parent, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025
|
3.90%
|
Personal Products
|
1,672
|
|
|
1,313
|
|
|
1,344
|
|
|
|
Aurora Lux Finco S.À.R.L.
|
First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026
|
7.00%
|
Airport Services
|
3,703
|
|
|
3,631
|
|
|
3,485
|
|
(4)
|
|
BAART Programs, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 6/11/2027
|
6.00%
|
Health Care Equipment
|
3,600
|
|
|
3,564
|
|
|
3,582
|
|
|
|
BAART Programs, Inc.
|
First Lien Delayed Draw Term Loan, LIBOR+5.00% cash due 6/11/2027
|
|
Health Care Equipment
|
—
|
|
|
(4)
|
|
|
(2)
|
|
(5)
|
|
Total BAART Programs, Inc.
|
|
|
|
3,600
|
|
|
3,560
|
|
|
3,580
|
|
|
|
Brazos Delaware II, LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025
|
4.09%
|
Oil & Gas Equipment & Services
|
4,848
|
|
|
4,835
|
|
|
4,741
|
|
|
|
CITGO Petroleum Corp.
|
First Lien Term Loan, LIBOR+6.25% cash due 3/28/2024
|
7.25%
|
Oil & Gas Refining & Marketing
|
3,564
|
|
|
3,529
|
|
|
3,593
|
|
(4)
|
|
Curium Bidco S.à.r.l.
|
First Lien Term Loan, LIBOR+4.00% cash due 7/9/2026
|
4.15%
|
Biotechnology
|
4,913
|
|
|
4,876
|
|
|
4,906
|
|
|
|
Enviva Holdings, LP
|
First Lien Term Loan, LIBOR+5.50% cash due 2/17/2026
|
6.50%
|
Forest Products
|
3,929
|
|
|
3,889
|
|
|
3,973
|
|
|
|
eResearch Technology, Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027
|
5.50%
|
Application Software
|
2,475
|
|
|
2,450
|
|
|
2,489
|
|
|
|
Gibson Brands, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 6/25/2028
|
5.75%
|
Leisure Products
|
4,000
|
|
|
3,960
|
|
|
4,001
|
|
|
|
Houghton Mifflin Harcourt Publishers Inc.
|
First Lien Term Loan, LIBOR+6.25% cash due 11/22/2024
|
7.25%
|
Education Services
|
431
|
|
|
420
|
|
|
434
|
|
(4)
|
|
Indivior Finance S.À.R.L.
|
First Lien Term Loan, LIBOR+5.25% cash due 6/28/2026
|
6.00%
|
Pharmaceuticals
|
4,000
|
|
|
3,920
|
|
|
3,920
|
|
|
|
Integro Parent, Inc.
|
First Lien Term Loan, LIBOR+5.75% cash due 10/31/2022
|
6.75%
|
Insurance Brokers
|
3,241
|
|
|
3,228
|
|
|
3,185
|
|
|
|
Intelsat Jackson Holdings S.A.
|
First Lien Term Loan, LIBOR+5.50% cash due 7/13/2022
|
6.50%
|
Alternative Carriers
|
797
|
|
|
725
|
|
|
803
|
|
|
|
INW Manufacturing, LLC
|
First Lien Term Loan, LIBOR+5.75% cash due 5/7/2027
|
6.50%
|
Personal Products
|
2,484
|
|
|
2,411
|
|
|
2,435
|
|
(4)
|
|
Lightstone Holdco LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 1/30/2024
|
4.75%
|
Electric Utilities
|
3,439
|
|
|
3,079
|
|
|
2,667
|
|
|
|
LTI Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.50% cash due 9/6/2025
|
3.60%
|
Electronic Components
|
1,376
|
|
|
1,135
|
|
|
1,359
|
|
|
|
MHE Intermediate Holdings, LLC
|
First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024
|
6.00%
|
Diversified Support Services
|
4,892
|
|
|
4,847
|
|
|
4,783
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
MRI Software LLC
|
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026
|
6.50%
|
Application Software
|
$
|
1,621
|
|
|
$
|
1,607
|
|
|
$
|
1,623
|
|
(4)
|
|
MRI Software LLC
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(1)
|
|
|
—
|
|
(4)(5)
|
|
MRI Software LLC
|
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(1)
|
|
|
—
|
|
(4)(5)
|
|
Total MRI Software LLC
|
|
|
|
1,621
|
|
|
1,605
|
|
|
1,623
|
|
|
|
Navicure, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026
|
4.10%
|
Health Care Technology
|
3,950
|
|
|
3,930
|
|
|
3,962
|
|
|
|
Northern Star Industries Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 3/31/2025
|
5.50%
|
Electrical Components & Equipment
|
5,321
|
|
|
5,307
|
|
|
5,308
|
|
|
|
Novetta Solutions, LLC
|
First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022
|
6.00%
|
Application Software
|
5,762
|
|
|
5,730
|
|
|
5,769
|
|
|
|
OEConnection LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026
|
4.10%
|
Application Software
|
3,936
|
|
|
3,918
|
|
|
3,936
|
|
(4)
|
|
Olaplex, Inc.
|
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026
|
7.50%
|
Personal Products
|
3,524
|
|
|
3,474
|
|
|
3,524
|
|
(4)
|
|
Olaplex, Inc.
|
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025
|
|
Personal Products
|
—
|
|
|
(5)
|
|
|
(3)
|
|
(4)(5)
|
|
Total Olaplex, Inc.
|
|
|
|
3,524
|
|
|
3,469
|
|
|
3,521
|
|
|
|
Planview Parent, Inc.
|
Second Lien Term Loan, LIBOR+7.25% cash due 12/18/2028
|
8.00%
|
Application Software
|
2,842
|
|
|
2,799
|
|
|
2,849
|
|
(4)
|
|
Pluralsight, LLC
|
First Lien Term Loan, LIBOR+8.00% cash due 4/6/2027
|
9.00%
|
Application Software
|
3,706
|
|
|
3,635
|
|
|
3,632
|
|
(4)
|
|
Pluralsight, LLC
|
First Lien Revolver, LIBOR+8.00% cash due 4/6/2027
|
|
Application Software
|
—
|
|
|
(6)
|
|
|
(6)
|
|
(4)(5)
|
|
Total Pluralsight, LLC
|
|
|
|
3,706
|
|
|
3,629
|
|
|
3,626
|
|
|
|
RS Ivy Holdco, Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 12/23/2027
|
6.50%
|
Oil & Gas Exploration & Production
|
3,980
|
|
|
3,920
|
|
|
3,982
|
|
(4)
|
|
Sabert Corporation
|
First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026
|
5.50%
|
Metal & Glass Containers
|
1,823
|
|
|
1,805
|
|
|
1,825
|
|
(4)
|
|
SHO Holding I Corporation
|
First Lien Term Loan, LIBOR+5.25% cash due 4/27/2024
|
6.25%
|
Footwear
|
6,175
|
|
|
6,154
|
|
|
5,805
|
|
|
|
SHO Holding I Corporation
|
First Lien Term Loan, LIBOR+5.23% cash due 4/27/2024
|
6.23%
|
Footwear
|
102
|
|
|
102
|
|
|
96
|
|
|
|
Total SHO Holding I Corporation
|
|
|
|
6,277
|
|
|
6,256
|
|
|
5,901
|
|
|
|
Supermoose Borrower, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025
|
3.90%
|
Application Software
|
2,857
|
|
|
2,700
|
|
|
2,678
|
|
(4)
|
|
Surgery Center Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.75% cash due 8/31/2026
|
4.50%
|
Health Care Facilities
|
4,924
|
|
|
4,908
|
|
|
4,950
|
|
|
|
Tribe Buyer LLC
|
First Lien Term Loan, LIBOR+4.50% cash due 2/16/2024
|
5.50%
|
Human Resource & Employment Services
|
1,604
|
|
|
1,602
|
|
|
1,402
|
|
|
|
Verscend Holding Corp.
|
First Lien Term Loan, LIBOR+4.00% cash due 8/27/2025
|
4.10%
|
Health Care Technology
|
1,725
|
|
|
1,712
|
|
|
1,732
|
|
|
|
Windstream Services II, LLC
|
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027
|
7.25%
|
Integrated Telecommunication Services
|
4,950
|
|
|
4,774
|
|
|
4,973
|
|
(4)
|
|
WP CPP Holdings, LLC
|
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026
|
8.75%
|
Aerospace & Defense
|
3,000
|
|
|
2,981
|
|
|
2,935
|
|
(4)
|
|
Total Portfolio Investments
|
|
|
|
$
|
131,675
|
|
|
$
|
129,056
|
|
|
$
|
128,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
(1) Represents the interest rate as of June 30, 2021. All interest rates are payable in cash, unless otherwise noted.
(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, the Company has provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars. As of June 30, 2021, the reference rates for the Glick JV's variable rate loans were the 30-day LIBOR at 0.10%, the 60-day LIBOR at 0.13%, the 90-day LIBOR at 0.15%, the 180-day LIBOR at 0.17% and the 360-day LIBOR at 0.25%. Most loans include an interest floor, which generally ranges from 0% to 1%.
(3) Represents the current determination of fair value as of June 30, 2021 utilizing a similar technique as the Company in accordance with ASC 820. However, the determination of such fair value is not included in the Company's Board of Directors' valuation process described elsewhere herein.
(4) This investment was held by both the Company and the Glick JV as of June 30, 2021.
(5) Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
The cost and fair value of the Company's aggregate investment in the Glick JV was $50.7 million and $55.4 million, respectively, as of June 30, 2021. For the three months ended June 30, 2021, the Company's investment in the Glick JV Notes earned cash interest income of $0.7 million. For the period from March 19, 2021 to June 30, 2021, the Company's investment in the Glick JV Notes earned cash interest income of $0.8 million. The Company did not earn any dividend income for the period from March 19, 2021 to June 30, 2021 with respect to its investment in the LLC equity interests of the Glick JV. The LLC equity interests of the Glick JV are income producing to the extent there is residual cash to be distributed on a quarterly basis.
Below is certain summarized financial information for the Glick JV as of June 30, 2021, for the three months ended June 30, 2021 and for the period from March 19, 2021 to June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
Selected Balance Sheet Information:
|
|
|
|
Investments at fair value (cost June 30, 2021: $129,056)
|
|
$
|
128,979
|
|
|
Cash and cash equivalents
|
|
15,218
|
|
|
Restricted cash
|
|
1,389
|
|
|
Other assets
|
|
2,534
|
|
|
Total assets
|
|
$
|
148,120
|
|
|
|
|
|
|
Senior credit facility payable
|
|
$
|
71,882
|
|
|
Glick JV Notes payable at fair value (proceeds June 30, 2021: $71,195)
|
|
63,311
|
|
|
Other liabilities
|
|
12,927
|
|
|
Total liabilities
|
|
$
|
148,120
|
|
|
Members' equity
|
|
—
|
|
|
Total liabilities and members' equity
|
|
$
|
148,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2021
|
|
For the period from March 19, 2021 to June 30, 2021
|
|
Selected Statements of Operations Information:
|
|
|
|
|
|
Interest income
|
|
$
|
2,161
|
|
|
$
|
2,465
|
|
|
Fee income
|
|
56
|
|
|
59
|
|
|
Total investment income
|
|
2,217
|
|
|
2,524
|
|
|
Senior credit facility interest expense
|
|
557
|
|
|
646
|
|
|
Glick JV Notes interest expense
|
|
830
|
|
|
950
|
|
|
Other expenses
|
|
48
|
|
|
54
|
|
|
Total expenses (1)
|
|
1,435
|
|
|
1,650
|
|
|
Net unrealized appreciation (depreciation)
|
|
(778)
|
|
|
(902)
|
|
|
Realized gain (loss)
|
|
(4)
|
|
|
28
|
|
|
Net income (loss)
|
|
$
|
—
|
|
|
$
|
—
|
|
__________
(1) There are no management fees or incentive fees charged at the Glick JV.
The Glick JV has elected to fair value the Glick JV Notes issued to the Company and GF Debt Funding under FASB ASC Topic 825,
Financial Instruments - Fair Value Option
. The Glick JV Notes are valued based on the total assets less the liabilities senior to the Glick JV Notes in an amount not exceeding par under the EV technique.
During the period from March 19, 2021 to June 30, 2021, the Company did not sell any debt investments to the Glick JV.
Note 4. Fee Income
For the three and nine months ended June 30, 2021, the Company recorded total fee income of $7.8 million and $13.5 million, respectively, of which $0.1 million and $0.3 million, respectively, was recurring in nature. For the three and nine months ended June 30, 2020, the Company recorded total fee income of $1.8 million and $4.9 million, respectively, of which $0.2 million and $0.5 million, respectively, was recurring in nature. Recurring fee income primarily consisted of servicing fees and exit fees.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Note 5. Share Data and Net Assets
Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share, pursuant to ASC Topic 260-10,
Earnings per Share
, for the three and nine months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Share amounts in thousands)
|
|
Three months ended
June 30, 2021
|
|
Three months ended
June 30, 2020
|
|
Nine months ended
June 30, 2021
|
|
Nine months ended
June 30, 2020
|
|
Earnings (loss) per common share — basic and diluted:
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net assets resulting from operations
|
|
$
|
47,038
|
|
|
$
|
120,231
|
|
|
$
|
200,699
|
|
|
$
|
(31,393)
|
|
|
Weighted average common shares outstanding — basic and diluted
|
|
180,361
|
|
|
140,961
|
|
|
155,970
|
|
|
140,961
|
|
|
Earnings (loss) per common share — basic and diluted
|
|
$
|
0.26
|
|
|
$
|
0.85
|
|
|
$
|
1.29
|
|
|
$
|
(0.22)
|
|
Changes in Net Assets
The following table presents the changes in net assets for the three and nine months ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Par Value
|
|
Additional paid-in-capital
|
|
Accumulated Overdistributed Earnings
|
|
Total Net Assets
|
|
Balance as of September 30, 2020
|
|
140,961
|
|
|
$
|
1,409
|
|
|
$
|
1,487,774
|
|
|
$
|
(574,304)
|
|
|
$
|
914,879
|
|
|
Net investment income
|
|
—
|
|
—
|
|
—
|
|
10,018
|
|
10,018
|
|
Net unrealized appreciation (depreciation)
|
|
—
|
|
—
|
|
—
|
|
47,556
|
|
47,556
|
|
Net realized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
8,215
|
|
8,215
|
|
(Provision) benefit for taxes on realized and unrealized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
(245)
|
|
(245)
|
|
Distributions to stockholders
|
|
—
|
|
—
|
|
—
|
|
(15,506)
|
|
(15,506)
|
|
Issuance of common stock under dividend reinvestment plan
|
|
94
|
|
1
|
|
527
|
|
—
|
|
528
|
|
Repurchases of common stock under dividend reinvestment plan
|
|
(94)
|
|
(1)
|
|
(527)
|
|
—
|
|
(528)
|
|
Balance as of December 31, 2020
|
|
140,961
|
|
|
$
|
1,409
|
|
|
$
|
1,487,774
|
|
|
$
|
(524,266)
|
|
|
$
|
964,917
|
|
|
Net investment income
|
|
—
|
|
—
|
|
—
|
|
18,114
|
|
18,114
|
|
Net unrealized appreciation (depreciation)
|
|
—
|
|
—
|
|
—
|
|
65,144
|
|
65,144
|
|
Net realized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
5,856
|
|
5,856
|
|
(Provision) benefit for taxes on realized and unrealized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
(997)
|
|
(997)
|
|
Distributions to stockholders
|
|
—
|
|
—
|
|
—
|
|
(16,915)
|
|
(16,915)
|
|
Issuance of common stock in connection with the Mergers
|
|
39,400
|
|
395
|
|
242,309
|
|
—
|
|
242,704
|
|
Issuance of common stock under dividend reinvestment plan
|
|
82
|
|
1
|
|
510
|
|
—
|
|
511
|
|
Repurchases of common stock under dividend reinvestment plan
|
|
(82)
|
|
(1)
|
|
(510)
|
|
—
|
|
(511)
|
|
Balance as of March 31, 2021
|
|
180,361
|
|
|
$
|
1,804
|
|
|
$
|
1,730,083
|
|
|
$
|
(453,064)
|
|
|
$
|
1,278,823
|
|
|
Net investment income
|
|
—
|
|
—
|
|
—
|
|
35,932
|
|
35,932
|
|
Net unrealized appreciation (depreciation)
|
|
—
|
|
—
|
|
—
|
|
3,917
|
|
3,917
|
|
Net realized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
8,610
|
|
8,610
|
|
(Provision) benefit for taxes on realized and unrealized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
(1,421)
|
|
(1,421)
|
|
Distributions to stockholders
|
|
—
|
|
—
|
|
—
|
|
(23,447)
|
|
(23,447)
|
|
Issuance of common stock under dividend reinvestment plan
|
|
77
|
|
1
|
|
519
|
|
—
|
|
520
|
|
Repurchases of common stock under dividend reinvestment plan
|
|
(77)
|
|
(1)
|
|
(519)
|
|
—
|
|
(520)
|
|
Balance as of June 30, 2021
|
|
180,361
|
|
|
$
|
1,804
|
|
|
$
|
1,730,083
|
|
|
$
|
(429,473)
|
|
|
$
|
1,302,414
|
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The following table presents the changes in net assets for the three and nine months ended June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Par Value
|
|
Additional paid-in-capital
|
|
Accumulated Overdistributed Earnings
|
|
Total Net Assets
|
|
Balance as of September 30, 2019
|
|
140,961
|
|
|
$
|
1,409
|
|
|
$
|
1,487,774
|
|
|
$
|
(558,553)
|
|
|
$
|
930,630
|
|
|
Net investment income
|
|
—
|
|
—
|
|
—
|
|
7,836
|
|
7,836
|
|
Net unrealized appreciation (depreciation)
|
|
—
|
|
—
|
|
—
|
|
2,879
|
|
2,879
|
|
Net realized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
3,288
|
|
3,288
|
|
(Provision) benefit for taxes on realized and unrealized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
(160)
|
|
(160)
|
|
Distributions to stockholders
|
|
—
|
|
—
|
|
—
|
|
(13,391)
|
|
(13,391)
|
|
Issuance of common stock under dividend reinvestment plan
|
|
88
|
|
1
|
|
480
|
|
—
|
|
481
|
|
Repurchases of common stock under dividend reinvestment plan
|
|
(88)
|
|
(1)
|
|
(480)
|
|
—
|
|
(481)
|
|
Balance as of December 31, 2019
|
|
140,961
|
|
|
$
|
1,409
|
|
|
$
|
1,487,774
|
|
|
$
|
(558,101)
|
|
|
$
|
931,082
|
|
|
Net investment income
|
|
—
|
|
—
|
|
—
|
|
22,841
|
|
22,841
|
|
Net unrealized appreciation (depreciation)
|
|
—
|
|
—
|
|
—
|
|
(163,533)
|
|
(163,533)
|
|
Net realized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
(26,480)
|
|
(26,480)
|
|
(Provision) benefit for taxes on realized and unrealized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
1,705
|
|
1,705
|
|
Distributions to stockholders
|
|
—
|
|
—
|
|
—
|
|
(13,391)
|
|
(13,391)
|
|
Issuance of common stock under dividend reinvestment plan
|
|
158
|
|
2
|
|
504
|
|
—
|
|
506
|
|
Repurchases of common stock under dividend reinvestment plan
|
|
(158)
|
|
(2)
|
|
(504)
|
|
—
|
|
(506)
|
|
Balance at March 31, 2020
|
|
140,961
|
|
|
$
|
1,409
|
|
|
$
|
1,487,774
|
|
|
$
|
(736,959)
|
|
|
$
|
752,224
|
|
|
Net investment income
|
|
—
|
|
—
|
|
—
|
|
16,770
|
|
16,770
|
|
Net unrealized appreciation (depreciation)
|
|
—
|
|
—
|
|
—
|
|
100,572
|
|
100,572
|
|
Net realized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
2,821
|
|
2,821
|
|
(Provision) benefit for taxes on realized and unrealized gains (losses)
|
|
—
|
|
—
|
|
—
|
|
68
|
|
68
|
|
Distributions to stockholders
|
|
—
|
|
—
|
|
—
|
|
(13,392)
|
|
(13,392)
|
|
Issuance of common stock under dividend reinvestment plan
|
|
87
|
|
1
|
|
389
|
|
—
|
|
390
|
|
Repurchases of common stock under dividend reinvestment plan
|
|
(87)
|
|
(1)
|
|
(389)
|
|
—
|
|
(390)
|
|
Balance at June 30, 2020
|
|
140,961
|
|
|
$
|
1,409
|
|
|
$
|
1,487,774
|
|
|
$
|
(630,120)
|
|
|
$
|
859,063
|
|
Distributions
Distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by the Board of Directors and is based on management’s estimate of the Company’s annual taxable income. Net realized capital gains, if any, may be distributed to stockholders or retained for reinvestment.
The Company has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Company’s Board of Directors declares a cash distribution, then the Company’s stockholders who have not “opted out” of the Company’s DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. If the Company’s shares are trading at a premium to net asset value, the Company typically issues new shares to implement the DRIP with such shares issued at the greater of the most recently computed net asset value per share of common stock or 95% of the current market price per share of common stock on the payment date for such distribution. If the Company’s shares are trading at a discount to net asset value, the Company typically purchases shares in the open market in connection with the Company’s obligations under the DRIP.
For income tax purposes, the Company has reported its distributions for the 2020 calendar year as ordinary income. The character of such distributions was appropriately reported to the Internal Revenue Service and stockholders for the 2020 calendar year. To the extent the Company’s taxable earnings for a fiscal and taxable year fall below the amount of distributions paid for the fiscal and taxable year, a portion of the total amount of the Company’s distributions for the fiscal and taxable year is deemed a return of capital for tax purposes to the Company’s stockholders.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The following table reflects the distributions per share that the Company has paid, including shares issued under the DRIP, on its common stock during the nine months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date Declared
|
|
Record Date
|
|
Payment Date
|
|
Amount
per Share
|
|
Cash
Distribution
|
|
DRIP Shares
Issued (1)
|
|
DRIP Shares
Value (2)
|
|
|
|
November 13, 2020
|
|
December 15, 2020
|
|
December 31, 2020
|
|
$
|
0.11
|
|
|
$ 15.0 million
|
|
93,964
|
|
|
$ 0.5 million
|
|
|
|
January 29, 2021
|
|
March 15, 2021
|
|
March 31, 2021
|
|
0.12
|
|
|
16.4 million
|
|
81,702
|
|
|
0.5 million
|
|
|
|
April 30, 2021
|
|
June 15, 2021
|
|
June 30, 2021
|
|
0.13
|
|
|
22.9 million
|
|
76,979
|
|
|
0.5 million
|
|
|
|
Total for the nine months ended June 30, 2021
|
|
$
|
0.360
|
|
|
$ 54.3 million
|
|
252,645
|
|
|
$ 1.6 million
|
|
|
|
Date Declared
|
|
Record Date
|
|
Payment Date
|
|
Amount
per Share
|
|
Cash
Distribution
|
|
DRIP Shares
Issued (1)
|
|
DRIP Shares
Value
|
|
|
|
November 12, 2019
|
|
December 13, 2019
|
|
December 31, 2019
|
|
$
|
0.095
|
|
|
$ 12.9 million
|
|
87,747
|
|
|
0.5 million
|
|
|
|
January 31, 2020
|
|
March 13, 2020
|
|
March 31, 2020
|
|
0.095
|
|
|
12.9 million
|
|
157,523
|
|
|
0.5 million
|
|
|
|
April 30, 2020
|
|
June 15, 2020
|
|
June 30, 2020
|
|
0.095
|
|
|
13.0 million
|
|
87,351
|
|
|
0.4 million
|
|
|
|
Total for the nine months ended June 30, 2020
|
|
$
|
0.285
|
|
|
$ 38.8 million
|
|
332,621
|
|
|
$ 1.4 million
|
|
|
__________
(1) Shares were purchased on the open market and distributed.
(2) Rounded balance may not sum to the total.
Common Stock Issuances
On March 19, 2021, in connection with the Mergers, the Company issued an aggregate of 39,400,011 shares of common stock to former OCSI stockholders. There were no other common stock issuances during the nine months ended June 30, 2021 and 2020.
Note 6. Borrowings
Syndicated Facility
On November 30, 2017, the Company entered into a senior secured revolving credit facility (as amended and restated, the “Syndicated Facility”) pursuant to a Senior Secured Revolving Credit Agreement with the lenders party thereto, ING Capital LLC, as administrative agent, ING Capital LLC, JPMorgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A. and Bank of America, N.A., as syndication agents. The Syndicated Facility provides that the Company may use the proceeds of the loans and issuances of letters of credit under the Syndicated Facility for general corporate purposes, including acquiring and funding leveraged loans, mezzanine loans, high-yield securities, convertible securities, preferred stock, common stock and other investments. The Syndicated Facility further allows the Company to request letters of credit from ING Capital LLC, as the issuing bank.
On October 28, 2020, the Company entered into an incremental commitment and assumption agreement in connection with the Company’s exercise of $75 million of the accordion feature under the Syndicated Facility. On December 28, 2020, the Company entered into an incremental commitment agreement pursuant to which a lender under the Syndicated Facility increased its commitment amount under the Syndicated Facility by $25 million. On May 4, 2021, the Company amended the Syndicated Credit Facility to, among other things, increase the size of the facility by $150 million (and increase the “accordion” feature to permit the Company, under certain circumstances, to increase the size of the facility to up to the greater of $1.25 billion and the Company’s net worth, as defined in the facility). As a result of such agreements, as of June 30, 2021, the size of the Syndicated Facility was $950 million.
As of June 30, 2021, (i) the period during which the Company may make drawings will expire on May 4, 2025 and the maturity date is May 4, 2026 and (ii) the interest rate margin for (a) LIBOR loans (which may be 1-, 2-, 3- or 6-month, at the Company’s option) was 2.00% and (b) alternate base rate loans was 1.00%.
The Syndicated Facility is secured by substantially all of the Company’s assets (excluding, among other things, investments held in and by certain subsidiaries of the Company (including OCSL Senior Funding II LLC) or investments in certain portfolio companies of the Company) and guaranteed by certain subsidiaries of the Company. As of June 30, 2021, except for assets that were held by OCSL Senior Funding II LLC and certain immaterial subsidiaries, substantially all of the Company's assets are pledged as collateral under the Syndicated Facility.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The Syndicated Facility requires the Company to, among other things, (i) make representations and warranties regarding the collateral as well as each of the Company’s portfolio companies’ businesses, (ii) agree to certain indemnification obligations, and (iii) comply with various affirmative and negative covenants, reporting requirements and other customary requirements for similar revolving credit facilities, including covenants related to: (A) limitations on the incurrence of additional indebtedness and liens, (B) limitations on certain investments, (C) limitations on certain asset transfers and restricted payments, (D) maintaining a certain minimum stockholders’ equity, (E) maintaining a ratio of total assets (less total liabilities) to total indebtedness, of the Company and its subsidiaries (subject to certain exceptions), of not less than 1.50 to 1.00, (F) maintaining a ratio of consolidated EBITDA to consolidated interest expense, of the Company and its subsidiaries (subject to certain exceptions), of not less than 2.00 to 1.00 until March 31, 2022, and 2.25 to 1.00 thereafter, (G) maintaining a minimum liquidity and net worth, and (H) limitations on the creation or existence of agreements that prohibit liens on certain properties of the Company and certain of its subsidiaries. The Syndicated Facility also includes usual and customary default provisions such as the failure to make timely payments under the facility, the occurrence of a change in control, and the failure by the Company to materially perform under the agreements governing the facility, which, if not complied with, could accelerate repayment under the facility. As of June 30, 2021, the Company was in compliance with all financial covenants under the Syndicated Facility. In addition to the asset coverage ratio described above, borrowings under the Syndicated Facility (and the incurrence of certain other permitted debt) are subject to compliance with a borrowing base that will apply different advance rates to different types of assets in the Company’s portfolio. Each loan or letter of credit originated or assumed under the Syndicated Facility is subject to the satisfaction of certain conditions.
As of June 30, 2021 and September 30, 2020, the Company had $350.0 million and $414.8 million of borrowings outstanding under the Syndicated Facility, respectively, which had a fair value of $350.0 million and $414.8 million, respectively. The Company's borrowings under the Syndicated Facility bore interest at a weighted average interest rate of 2.202% and 3.325% for the nine months ended June 30, 2021 and 2020, respectively. For the three and nine months ended June 30, 2021, the Company recorded interest expense (inclusive of fees) of $4.0 million and $10.5 million, respectively, related to the Syndicated Facility. For the three and nine months ended June 30, 2020, the Company recorded interest expense (inclusive of fees) of $3.5 million and $11.7 million, respectively, related to the Syndicated Facility.
Citibank Facility
On March 19, 2021, as a result of the consummation of the Mergers, the Company became party to a revolving credit facility (as amended and/or restated from time to time, the “Citibank Facility”) with OCSL Senior Funding II LLC (formerly OCSI Senior Funding II LLC), the Company’s wholly-owned, special purpose financing subsidiary, as the borrower, the Company, as collateral manager and seller, each of the lenders from time to time party thereto, Citibank, N.A., as administrative agent, and Wells Fargo Bank, National Association, as collateral agent and custodian.
As of June 30, 2021, the Company was able to borrow up to $150 million under the Citibank Facility (subject to borrowing base and other limitations). As of June 30, 2021, the reinvestment period under the Citibank Facility was scheduled to expire on July 19, 2021 and the maturity date for the Citibank Facility was July 18, 2023. See "Note 16. Subsequent Events - Citibank Facility Amendment".
As of June 30, 2021, borrowings under the Citibank Facility are subject to certain customary advance rates and accrue interest at a rate equal to LIBOR plus 1.70% per annum on broadly syndicated loans and LIBOR plus 2.25% per annum on all other eligible loans during the reinvestment period. Following termination of the reinvestment period, borrowings under the Citibank Facility will accrue interest at rates equal to LIBOR plus 3.50% per annum during the first year after the reinvestment period and LIBOR plus 4.00% per annum during the subsequent two years, respectively. In addition, as of June 30, 2021, for the duration of the reinvestment period there is a non-usage fee payable of 0.50% per annum on the undrawn amount under the Citibank Facility. The minimum asset coverage ratio applicable to the Company under the Citibank Facility is 150% as determined in accordance with the requirements of the Investment Company Act. Borrowings under the Citibank Facility are secured by all of the assets of OCSL Senior Funding II LLC and all of the Company’s equity interests in OCSL Senior Funding II LLC. The Company may use the Citibank Facility to fund a portion of its loan origination activities and for general corporate purposes. Each loan origination under the Citibank Facility is subject to the satisfaction of certain conditions.
As of June 30, 2021, the Company had $114.1 million outstanding under the Citibank Facility. The Company's borrowings under the Citibank Facility bore interest at a weighted average interest rate of 2.198% for the period from March 19, 2021 to June 30, 2021. For the three months ended June 30, 2021 and the period from March 19, 2021 to June 30, 2021, the Company recorded interest expense (inclusive of fees) of $0.8 million and $0.9 million, respectively, related to the Citibank Facility.
Deutsche Bank Facility
On March 19, 2021, as a result of the consummation of the Mergers, the Company became party a loan financing and servicing agreement (as amended, the “Deutsche Bank Facility”) with OCSI Senior Funding Ltd., the Company’s wholly-
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
owned, special purpose financing subsidiary, as borrower, the Company, as equityholder and as servicer, the lenders from time to time party thereto, Deutsche Bank AG, New York Branch, as facility agent, and Wells Fargo Bank, National Association, as collateral agent and as collateral custodian. On May 4, 2021, the Company repaid all outstanding borrowings under the Deutsche Bank Facility using borrowings under the Syndicated Credit Facility, following which the Deutsche Bank Facility was terminated. For the period from March 19, 2021 to May 4, 2021, the Company’s borrowings under the Deutsche Bank Facility bore interest at a weighted average interest rate of 2.900%. For the three months ended June 30, 2021 and the period from March 19, 2021 to June 30, 2021, the Company recorded interest expense (inclusive of fees) of $0.2 million and $0.3 million, respectively, related to the Deutsche Bank Facility.
2025 Notes
On February 25, 2020, the Company issued $300.0 million in aggregate principal amount of the 2025 Notes for net proceeds of $293.8 million after deducting OID of $2.5 million, underwriting commissions and discounts of $3.0 million and offering costs of $0.7 million. The OID on the 2025 Notes is amortized based on the effective interest method over the term of the 2025 Notes.
The 2025 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the fifth supplemental indenture, dated February 25, 2020 (collectively, the "2025 Notes Indenture"), between the Company and Deutsche Bank Trust Company Americas (the "Trustee"). The 2025 Notes are the Company's general unsecured obligations that rank senior in right of payment to all of the Company's existing and future indebtedness that is expressly subordinated in right of payment to the 2025 Notes. The 2025 Notes rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated. The 2025 Notes effectively rank junior to any of the Company's secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness. The 2025 Notes rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company's subsidiaries, financing vehicles or similar facilities.
Interest on the 2025 Notes is paid semi-annually on February 25 and August 25 at a rate of 3.500% per annum. The 2025 Notes mature on February 25, 2025 and may be redeemed in whole or in part at any time or from time to time at the Company's option prior to maturity at par plus a “make-whole” premium, if applicable. In addition, holders of the 2025 Notes can require the Company to repurchase the 2025 Notes at 100% of their principal amount upon the occurrence of certain change of control events as described in the 2025 Notes Indenture. The 2025 Notes were issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. During the three and nine months ended June 30, 2021, the Company did not repurchase any of the 2025 Notes in the open market.
The 2025 Notes Indenture contains certain covenants, including covenants requiring the Company's compliance with the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the Investment Company Act or any successor provisions (but giving effect to any exemptive relief granted to the Company by the U.S. Securities and Exchange Commission ("SEC")), as well as covenants requiring the Company to provide financial information to the holders of the 2025 Notes and the Trustee if the Company ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These covenants are subject to limitations and exceptions that are described in the 2025 Notes Indenture.
2027 Notes
On May 18, 2021, the Company issued $350.0 million in aggregate principal amount of the 2027 Notes for net proceeds of $344.8 million after deducting OID of $1.0 million, underwriting commissions and discounts of $3.5 million and offering costs of $0.7 million. The OID on the 2027 Notes is amortized based on the effective interest method over the term of the 2027 Notes.
The 2027 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the sixth supplemental indenture, dated May 18, 2021 (collectively, the "2027 Notes Indenture"), between the Company and the Trustee. The 2027 Notes are the Company's general unsecured obligations that rank senior in right of payment to all of the Company's existing and future indebtedness that is expressly subordinated in right of payment to the 2027 Notes. The 2027 Notes rank equally in right of payment with all of the Company's existing and future liabilities that are not so subordinated. The 2027 Notes effectively rank junior to any of the Company's secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness. The 2027 Notes rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company's subsidiaries, financing vehicles or similar facilities.
Interest on the 2027 Notes is paid semi-annually on January 15 and July 15, beginning on January 15, 2022, at a rate of 2.700% per annum. The 2027 Notes mature on January 15, 2027 and may be redeemed in whole or in part at any time or from
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
time to time at the Company's option prior to maturity at par plus a “make-whole” premium, if applicable. In addition, holders of the 2027 Notes can require the Company to repurchase the 2027 Notes at 100% of their principal amount upon the occurrence of certain change of control events as described in the 2027 Notes Indenture. The 2027 Notes were issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. During the three months ended June 30, 2021, the Company did not repurchase any of the 2027 Notes in the open market.
The 2027 Notes Indenture contains certain covenants, including covenants requiring the Company's compliance with the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the Investment Company Act or any successor provisions (but giving effect to any exemptive relief granted to the Company by the SEC, as well as covenants requiring the Company to provide financial information to the holders of the 2027 Notes and the Trustee if the Company ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 2027 Notes Indenture.
In connection with the 2027 Notes, the Company entered into an interest rate swap to more closely align the interest rates of its liabilities with its investment portfolio, which consists of predominately floating rate loans. Under the interest rate swap agreement, the Company receives a fixed interest rate of 2.700% and pays a floating interest rate of the three-month LIBOR plus 1.658% on a notional amount of $350 million. The Company designated the interest rate swap as the hedging instrument in an effective hedge accounting relationship. See Note 13 for more information regarding the interest rate swaps.
The below table presents the components of the carrying value of the 2025 Notes and the 2027 Notes as of June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2021
|
|
($ in millions)
|
|
2025 Notes
|
|
2027 Notes
|
|
Principal
|
|
$
|
300.0
|
|
|
$
|
350.0
|
|
|
Unamortized financing costs
|
|
(2.7)
|
|
|
(4.1)
|
|
|
Unaccreted discount
|
|
(1.9)
|
|
|
(1.0)
|
|
|
Interest rate swap fair value adjustment
|
|
—
|
|
|
(0.3)
|
|
|
Net carrying value
|
|
$
|
295.4
|
|
|
$
|
344.6
|
|
|
Fair Value
|
|
$
|
315.2
|
|
|
$
|
356.6
|
|
The below table presents the components of the carrying value of the 2025 Notes as of September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2020
|
|
($ in millions)
|
|
2025 Notes
|
|
Principal
|
|
$
|
300.0
|
|
|
Unamortized financing costs
|
|
(3.3)
|
|
|
Unaccreted discount
|
|
(2.2)
|
|
|
Net carrying value
|
|
$
|
294.5
|
|
|
Fair Value
|
|
$
|
301.4
|
|
The below table presents the components of interest and other debt expenses related to the 2025 Notes and the 2027 Notes for the three and nine months ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 Notes
|
|
2027 Notes
|
|
($ in millions)
|
|
Three Months Ended June 30, 2021
|
|
Nine Months Ended June 30, 2021
|
|
Three Months Ended June 30, 2021
|
|
Nine Months Ended June 30, 2021
|
|
Coupon interest
|
|
$
|
2.6
|
|
|
$
|
7.9
|
|
|
$
|
1.1
|
|
|
$
|
1.1
|
|
|
Amortization of financing costs and discount
|
|
0.3
|
|
|
0.9
|
|
|
0.1
|
|
|
0.1
|
|
|
Effect of interest rate swap
|
|
—
|
|
|
—
|
|
|
(0.3)
|
|
|
(0.3)
|
|
|
Total interest expense
|
|
$
|
2.9
|
|
|
$
|
8.8
|
|
|
$
|
0.9
|
|
|
$
|
0.9
|
|
|
Coupon interest rate (net of effect of interest rate swap for 2027 Notes)
|
|
3.500
|
%
|
|
3.500
|
%
|
|
1.813
|
%
|
|
1.813
|
%
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The below table presents the components of interest and other debt expenses related to the 2025 Notes for the three and nine months ended June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 Notes
|
|
($ in millions)
|
|
Three Months Ended June 30, 2020
|
|
Nine Months Ended June 30, 2020
|
|
Coupon interest
|
|
$
|
2.6
|
|
|
$
|
3.6
|
|
|
Amortization of financing costs and discount
|
|
0.3
|
|
|
0.4
|
|
|
Total interest expense
|
|
$
|
2.9
|
|
|
$
|
4.0
|
|
|
Coupon interest rate
|
|
3.500
|
%
|
|
3.500
|
%
|
2024 Notes
On October 18, 2012, the Company issued $75.0 million in aggregate principal amount of the 5.875% notes due 2024 (the "2024 Notes") for net proceeds of $72.5 million after deducting underwriting commissions of $2.2 million and offering costs of $0.3 million. The 2024 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the first supplemental indenture, dated October 18, 2012, between the Company and the Trustee.
Interest on the 2024 Notes was paid quarterly in arrears on January 30, April 30, July 30 and October 30 at a rate of 5.875% per annum. On March 2, 2020, the Company redeemed 100%, or $75.0 million aggregate principal amount, of the issued and outstanding 2024 Notes, following which they were delisted from the New York Stock Exchange. The redemption price per 2024 Note was $25 plus accrued and unpaid interest. The Company recognized a loss of $1.0 million in connection with the redemption of the 2024 Notes during the nine months ended June 30, 2020.
For the nine months ended June 30, 2020, the Company recorded interest expense of $1.9 million (inclusive of fees) related to the 2024 Notes. As of June 30, 2021 and September 30, 2020, there were no 2024 Notes outstanding.
2028 Notes
In April and May 2013, the Company issued $86.3 million in aggregate principal amount of the 6.125% notes due 2028 (the "2028 Notes") for net proceeds of $83.4 million after deducting underwriting commissions of $2.6 million and offering costs of $0.3 million. The 2028 Notes were issued pursuant to an indenture, dated April 30, 2012, as supplemented by the second supplemental indenture, dated April 4, 2013, between the Company and the Trustee.
Interest on the 2028 Notes was paid quarterly in arrears on January 30, April 30, July 30 and October 30 at a rate of 6.125% per annum. On March 13, 2020, the Company redeemed 100%, or $86.3 million aggregate principal amount, of the issued and outstanding 2028 Notes, following which they were delisted from the Nasdaq Global Select Market. The redemption price per 2028 Note was $25 plus accrued and unpaid interest. The Company recognized a loss of $1.5 million in connection with the redemption of the 2028 Notes during each of the nine months ended June 30, 2020.
For the nine months ended June 30, 2020, the Company recorded interest expense of $2.5 million (inclusive of fees) related to the 2028 Notes. As of June 30, 2021 and September 30, 2020, there were no 2028 Notes outstanding.
Secured Borrowings
As of June 30, 2021 and September 30, 2020, the Company did not have any secured borrowings outstanding. On March 19, 2021, as a result of the consummation of the Mergers, the Company became party to a secured borrowing arrangement under which certain securities were sold and simultaneously repurchased at a premium. The amounts due under the secured borrowing arrangement were settled prior to June 30, 2021. For the period from March 19, 2021 to June 30, 2021, the Company recorded less than $0.1 million of interest expense in connection with secured borrowings. The Company's secured borrowings bore interest at a weighted average rate of 3.123% for the period from March 19, 2021 to June 30, 2021.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Note 7. Interest and Dividend Income
As of June 30, 2021, there were no investments on non-accrual status
.
As of September 30, 2020, there were two investments on which the Company had stopped accruing cash and/or PIK interest or OID income. The percentages of the Company's debt investments at cost and fair value by accrual status as of September 30, 2020 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
|
|
Cost
|
|
% of Debt
Portfolio
|
|
Fair Value
|
|
% of Debt
Portfolio
|
|
Accrual
|
|
$
|
1,500,364
|
|
|
98.79
|
%
|
|
$
|
1,483,284
|
|
|
99.89
|
%
|
|
PIK non-accrual (1)
|
|
12,661
|
|
|
0.83
|
|
|
—
|
|
|
—
|
|
|
Cash non-accrual (2)
|
|
5,712
|
|
|
0.38
|
|
|
1,571
|
|
|
0.11
|
|
|
Total
|
|
$
|
1,518,737
|
|
|
100.00
|
%
|
|
$
|
1,484,855
|
|
|
100.00
|
%
|
___________________
(1)
PIK non-accrual status is inclusive of other non-cash income, where applicable.
(2)
Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.
Note 8. Taxable/Distributable Income and Dividend Distributions
Taxable income differs from net increase (decrease) in net assets resulting from operations primarily due to: (1) unrealized appreciation (depreciation) on investments and foreign currency, as gains and losses are not included in taxable income until they are realized; (2) origination and exit fees received in connection with investments in portfolio companies; (3) organizational costs; (4) income or loss recognition on exited investments; (5) recognition of interest income on certain loans; and (6) investments in controlled foreign corporations.
As of September 30, 2020, the Company had net capital loss carryforwards of $515.3 million to offset net capital gains that will not expire, to the extent available and permitted by U.S. federal income tax law, of which $84.3 million are available to offset future short-term capital gains and $431.0 million are available to offset future long-term capital gains.
Listed below is a reconciliation of "net increase (decrease) in net assets resulting from operations" to taxable income for the three and nine months ended June 30, 2021 and 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2021
|
|
Three months ended
June 30, 2020
|
|
Nine months ended
June 30, 2021
|
|
Nine months ended
June 30, 2020
|
|
Net increase (decrease) in net assets resulting from operations
|
|
$
|
47,038
|
|
|
$
|
120,231
|
|
|
$
|
200,699
|
|
|
$
|
(31,393)
|
|
|
Net unrealized (appreciation) depreciation
|
|
(3,917)
|
|
|
(100,572)
|
|
|
(116,617)
|
|
|
60,082
|
|
|
Book/tax difference due to organizational costs
|
|
—
|
|
|
(22)
|
|
|
(22)
|
|
|
(65)
|
|
|
Book/tax difference due to interest income on certain loans
|
|
339
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Book/tax difference due to capital losses utilized
|
|
(12,728)
|
|
|
(3,465)
|
|
|
(34,625)
|
|
|
16,516
|
|
|
Other book/tax differences
|
|
(3,785)
|
|
|
(1,269)
|
|
|
13,847
|
|
|
(4,127)
|
|
|
Taxable/Distributable Income (1)
|
|
$
|
26,947
|
|
|
$
|
14,903
|
|
|
$
|
63,282
|
|
|
$
|
41,013
|
|
__________
(1) The Company's taxable income for the three and nine months ended June 30, 2021 is an estimate and will not be finally determined until the Company files its tax return for the fiscal year ending September 30, 2021. Therefore, the final taxable income may be different than the estimate.
The Company uses the liability method to account for its taxable subsidiaries' income taxes. Using this method, the Company recognizes deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences between financial reporting and tax bases of assets and liabilities. In addition, the Company recognizes deferred tax benefits associated with net loss carry forwards that it may use to offset future tax obligations. The Company measures deferred tax assets and liabilities using the enacted tax rates expected to apply to taxable income in the years in which it expects to recover or settle those temporary differences.
When assessing the realizability of deferred tax assets, the Company considers whether it is probable that some or all of the deferred tax assets will not be realized. In determining whether the deferred tax assets are realizable, the Company considers the period of expiration of the tax asset, historical and projected taxable income and tax liabilities for the tax jurisdiction in which the tax asset is located. The deferred tax asset recognized by the Company, as it relates to the higher tax basis in the
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
carrying value of certain assets compared to the book basis of those assets, will be recognized in future years by these taxable entities. Deferred tax assets are based on the amount of the tax benefit that the Company’s management has determined is more likely than not to be realized in future periods. In determining the realizability of this tax benefit, management considered numerous factors that will give rise to pre-tax income in future periods. Among these are the historical and expected future book and tax basis pre-tax income of the Company and unrealized gains in the Company’s assets at the determination date. Based on these and other factors, the Company determined that, as of June 30, 2021, $0.3 million of the $1.0 million deferred tax assets would not more likely than not be realized in future periods. As of June 30, 2021, the Company recorded a net deferred tax asset of $0.7 million on the Consolidated Statements of Assets and Liabilities.
For the three months ended June 30, 2021, the Company recognized a provision for income tax related to realized and unrealized gains of $1.4 million, which was comprised of (i) a current income tax expense of approximately $1.6 million, and (ii) a deferred income tax benefit of approximately $0.2 million, which resulted from unrealized depreciation on investments held by the Company’s wholly-owned taxable subsidiaries. For the three months ended June 30, 2021, the Company recognized a provision for income tax related to net investment income of $0.4 million.
For the nine months ended June 30, 2021, the Company recognized a total provision for income tax related to realized and unrealized gains of $2.7 million, which was comprised of (i) a current income tax expense of approximately $2.6 million, and (ii) a deferred income tax expense of approximately $0.1 million, which resulted from unrealized appreciation on investments held by the Company’s wholly-owned taxable subsidiaries. For the nine months ended June 30, 2021, the Company recognized a provision for income tax related to net investment income of $0.4 million.
As of September 30, 2020, the Company's last tax year end, the components of accumulated overdistributed earnings on a tax basis were as follows:
|
|
|
|
|
|
|
|
Undistributed ordinary income, net
|
$
|
9,392
|
|
|
Net realized capital losses
|
515,255
|
|
|
Unrealized losses, net
|
68,439
|
|
The aggregate cost of investments for income tax purposes was $1.6 billion as of September 30, 2020. As of September 30, 2020, the aggregate gross unrealized appreciation for all investments in which there was an excess of value over cost for income tax purposes was $300.3 million. As of September 30, 2020, the aggregate gross unrealized depreciation for all investments in which there was an excess of cost for income tax purposes over value was $368.7 million. Net unrealized depreciation based on the aggregate cost of investments for income tax purposes was $68.4 million.
Note 9. Realized Gains or Losses and Net Unrealized Appreciation or Depreciation
Realized Gains or Losses
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption and the cost basis of the investment without regard to unrealized appreciation or depreciation previously recognized, and include investments written-off during the period, net of recoveries. Realized losses may also be recorded in connection with the Company's determination that certain investments are considered worthless securities and/or meet the conditions for loss recognition per the applicable tax rules.
During the three months ended June 30, 2021, the Company recorded an aggregate net realized gain of $8.6 million, which consisted of the following:
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
Portfolio Company
|
Net Realized Gain (Loss)
|
|
Keypath Education Holdings, LLC
|
$
|
6.8
|
|
|
Signify Health, LLC
|
0.6
|
|
|
Other, net
|
1.2
|
|
|
Total, net
|
$
|
8.6
|
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
During the three months ended June 30, 2020, the Company recorded an aggregate net realized gain of $2.8 million, which consisted of the following:
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
Portfolio Company
|
Net Realized Gain (Loss)
|
|
HealthEdge Software, Inc.
|
$
|
1.7
|
|
|
Sorrento Therapeutics, Inc.
|
1.4
|
|
|
Covia Holdings Corporation
|
(3.3)
|
|
|
Other, net
|
3.0
|
|
|
Total, net
|
$
|
2.8
|
|
During the nine months ended June 30, 2021, the Company recorded an aggregate net realized gain of $22.7 million, which consisted of the following:
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
Portfolio Company
|
Net Realized Gain (Loss)
|
|
PLATO Learning Inc.
|
$
|
7.8
|
|
|
Keypath Education Holdings, LLC
|
6.8
|
|
|
L Squared Capital Partners LLC
|
3.4
|
|
|
LTI Holdings, Inc.
|
2.6
|
|
|
BX Commercial Mortgage Trust 2020-VIVA
|
2.6
|
|
|
California Pizza Kitchen Inc.
|
(1.8)
|
|
|
Other, net
|
1.3
|
|
|
Total, net
|
$
|
22.7
|
|
During the nine months ended June 30, 2020, the Company recorded an aggregate net realized loss of $20.4 million, which consisted of the following:
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
Portfolio Company
|
Net Realized Gain (Loss)
|
|
Cenegenics, LLC
|
$
|
(29.2)
|
|
|
Dominion Diagnostics, LLC
|
(15.6)
|
|
|
Covia Holdings Corporation
|
(3.3)
|
|
|
YETI Holdings, Inc.
|
17.6
|
|
|
Lytx Holdings, LLC
|
5.2
|
|
|
HealthEdge Software, Inc.
|
1.7
|
|
|
Sorrento Therapeutics, Inc.
|
1.4
|
|
|
Other, net
|
1.8
|
|
|
Total, net
|
$
|
(20.4)
|
|
Net Unrealized Appreciation or Depreciation
Net unrealized appreciation or depreciation reflects the net change in the valuation of the portfolio pursuant to the Company's valuation guidelines and the reclassification of any prior period unrealized appreciation or depreciation.
During the three months ended June 30, 2021 and 2020, the Company recorded net unrealized appreciation of $3.9 million and $100.6 million, respectively. For the three months ended June 30, 2021, this consisted of $12.3 million of net unrealized appreciation on debt investments, $3.8 million of net unrealized appreciation on equity investments and $1.1 million of net unrealized appreciation of foreign currency forward contracts, partially offset by $13.3 million of net unrealized depreciation related to exited investments (a portion of which resulted in a reclassification to realized gains). For the three months ended June 30, 2020, this consisted of $85.2 million of net unrealized appreciation on debt investments, $11.8 million of net unrealized appreciation on equity investments and $3.9 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses), partially offset by $0.4 million of net unrealized depreciation of foreign currency forward contracts.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
During the nine months ended June 30, 2021 and 2020, the Company recorded net unrealized appreciation (depreciation) of $116.6 million and $(60.1) million, respectively. For the nine months ended June 30, 2021, this consisted of $79.7 million of net unrealized appreciation on debt investments, $30.7 million of net unrealized appreciation on equity investments, $4.0 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses) and $2.2 million of net unrealized appreciation of foreign currency forward contracts. For the nine months ended June 30, 2020, this consisted of $42.5 million of net unrealized depreciation on debt investments and $39.3 million of net unrealized depreciation on equity investments, partially offset by $21.3 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses) and $0.4 million of net unrealized appreciation of foreign currency forward contracts.
For the three and nine months ended June 30, 2021, there were $(5.0) million and $28.4 million of net realized and unrealized gains (losses) that resulted solely from accounting adjustments related to the Mergers.
Note 10. Concentration of Credit Risks
The Company deposits its cash with financial institutions and at times such balances may be in excess of the FDIC insurance limit. The Company limits its exposure to credit loss by depositing its cash with high credit quality financial institutions and monitoring their financial stability.
Note 11. Related Party Transactions
As of June 30, 2021 and September 30, 2020, the Company had a liability on its Consolidated Statements of Assets and Liabilities in the amount of $31.1 million and $11.2 million, respectively, reflecting the unpaid portion of the base management fees and incentive fees payable to Oaktree.
Investment Advisory Agreement
The Company is party to the Investment Advisory Agreement. Under the Investment Advisory Agreement, the Company pays Oaktree a fee for its services under the Investment Advisory Agreement consisting of two components: a base management fee and an incentive fee. The cost of both the base management fee payable to Oaktree and any incentive fees earned by Oaktree is ultimately borne by common stockholders of the Company.
From October 17, 2017 through May 3, 2020, the Company was externally managed by OCM pursuant to an investment advisory agreement. On May 4, 2020, OCM effected the novation of such investment advisory agreement to Oaktree. Immediately following such novation, the Company and Oaktree entered into a new investment advisory agreement with the same terms, including fee structure, as the investment advisory agreement with OCM. The investment advisory agreement with Oaktree was amended and restated on March 19, 2021 in connection with the closing of the Mergers. The term “Investment Advisory Agreement” refers collectively to the agreements with Oaktree and, prior to its novation, with OCM. Prior to October 17, 2017, the Company was externally managed by Fifth Street Management LLC (the "Former Adviser”), an indirect, partially-owned subsidiary of Fifth Street Asset Management Inc., pursuant to an investment advisory agreement between the Company and the Former Adviser, which was terminated on October 17, 2017.
Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect until September 30, 2021 and thereafter from year-to-year if approved annually by the Board of Directors of the Company or by the affirmative vote of the holders of a majority of the Company’s outstanding voting securities, including, in either case, approval by a majority of the directors of the Company who are not interested persons. The Investment Advisory Agreement will automatically terminate in the event of its assignment. The Investment Advisory Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other. The Investment Advisory Agreement may also be terminated, without penalty, upon the vote of a majority of the outstanding voting securities of the Company.
Base Management Fee
Under the Investment Advisory Agreement, the base management fee is calculated at an annual rate of 1.50% of total gross assets, including any investment made with borrowings, but excluding cash and cash equivalents. The base management fee is payable quarterly in arrears and the fee for any partial month or quarter is appropriately prorated. Effective May 3, 2019, the base management fee on the Company’s gross assets, including any investments made with borrowings, but excluding any cash and cash equivalents, that exceed the product of (A) 200% and (B) the Company’s net asset value will be 1.00%. For the avoidance of doubt, the 200% will be calculated in accordance with the Investment Company Act and will give effect to exemptive relief the Company received from the SEC with respect to debentures issued by a small business investment company subsidiary. In connection with the Mergers, the Company and Oaktree entered into an amended and restated
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
investment advisory agreement, which among other items, waived an aggregate of $6 million of base management fees otherwise payable to Oaktree in the two years following the closing of the Mergers on March 19, 2021 at a rate of $750,000 per quarter (with such amount appropriately prorated for any partial quarter).
For the three and nine months ended June 30, 2021, the base management fee incurred under the Investment Advisory Agreement was $8.2 million (net of waiver) and $21.7 million (net of waiver), respectively. For the three and nine months ended June 30, 2020, the base management fee incurred under the Investment Advisory Agreement was $6.0 million and $16.9 million, respectively.
Incentive Fee
The incentive fee consists of two parts. Under the Investment Advisory Agreement, the first part of the incentive fee (the “incentive fee on income” or "Part I incentive fee") is calculated and payable quarterly in arrears based upon the “pre-incentive fee net investment income” of the Company for the immediately preceding quarter. The payment of the incentive fee on income is subject to payment of a preferred return to investors each quarter (i.e., a “hurdle rate”), expressed as a rate of return on the value of the Company’s net assets at the end of the most recently completed quarter, of 1.50%, subject to a “catch up” feature.
For this purpose, “pre-incentive fee net investment income” means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies, other than fees for providing managerial assistance) accrued during the fiscal quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as OID debt, instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. In addition, pre-incentive fee net investment income does not include any amortization or accretion of any purchase premium or purchase discount to interest income resulting solely from merger-related accounting adjustments in connection with the assets acquired in the Mergers, including any premium or discount paid for the acquisition of such assets, solely to the extent that the inclusion of such merger-related accounting adjustments, in the aggregate, would result in an increase in pre-incentive fee net investment income.
Under the Investment Advisory Agreement, the calculation of the incentive fee on income for each quarter is as follows:
•
No incentive fee is payable to Oaktree in any quarter in which the Company’s pre-incentive fee net investment income does not exceed the preferred return rate of 1.50% (the “preferred return”) on net assets;
•
100% of the Company’s pre-incentive fee net investment income, if any, that exceeds the preferred return but is less than or equal to 1.8182% in any fiscal quarter is payable to Oaktree. This portion of the incentive fee on income is referred to as the “catch-up” provision, and it is intended to provide Oaktree with an incentive fee of 17.5% on all of the Company’s pre-incentive fee net investment income when the Company’s pre-incentive fee net investment income exceeds 1.8182% on net assets in any fiscal quarter; and
•
For any quarter in which the Company’s pre-incentive fee net investment income exceeds 1.8182% on net assets, the incentive fee on income is equal to 17.5% of the amount of the Company’s pre-incentive fee net investment income, as the preferred return and catch-up will have been achieved.
There is no accumulation of amounts on the hurdle rate from quarter to quarter and accordingly there is no clawback of amounts previously paid if subsequent quarters are below the quarterly hurdle.
For the three and nine months ended June 30, 2021, the first part of the incentive fee (incentive fee on income) incurred under the Investment Advisory Agreement was $7.0 million and $15.6 million, respectively. For the three and nine months ended June 30, 2020, the first part of the incentive fee (incentive fee on income) incurred under the Investment Advisory Agreement was $3.6 million and $10.0 million, respectively.
Under the Investment Advisory Agreement, the second part of the incentive fee (the "capital gains incentive fee") is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Investment Advisory Agreement, as of the termination date) commencing with the fiscal year ended September 30, 2019 and equals 17.5% of the Company’s realized capital gains, if any, on a cumulative basis from the beginning of the fiscal year ended September 30, 2019 through the end of each subsequent fiscal year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees under the Investment Advisory
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Agreement. Any realized capital gains, realized capital losses, unrealized capital appreciation and unrealized capital depreciation with respect to the Company’s portfolio as of the end of the fiscal year ended September 30, 2018 are excluded from the calculations of the second part of the incentive fee. In addition, the calculation of realized capital gains, realized capital losses and unrealized capital depreciation does (1) not include any such amounts resulting solely from merger-related accounting adjustments in connection with the assets acquired in the Mergers, including any premium or discount paid for the acquisition of such assets, solely to the extent that the inclusion of such merger-related accounting adjustments, in the aggregate, would result in an increase in the capital gains incentive fee and (2) include any such amounts associated with the investments acquired in the Mergers for the period from October 1, 2018 to the date of closing of the Mergers, solely to the extent that the exclusion of such amounts, in the aggregate, would result in an increase in the capital gains incentive fee.
GAAP requires that the capital gains incentive fee accrual consider the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized on a theoretical "liquidation basis." A fee so calculated and accrued would not be payable under applicable law and may never be paid based upon the computation of capital gains incentive fees in subsequent periods. Amounts ultimately paid under the Investment Advisory Agreement will be consistent with the formula reflected in the Investment Advisory Agreement. This GAAP accrual is calculated using the aggregate cumulative realized capital gains and losses and aggregate cumulative unrealized capital depreciation included in the calculation of the capital gains incentive fee plus the aggregate cumulative unrealized capital appreciation. Any realized capital gains and losses and cumulative unrealized capital appreciation and depreciation with respect to the Company’s portfolio as of the end of the fiscal year ended September 30, 2018 are excluded from the GAAP accrual. If such amount is positive at the end of a period, then GAAP requires the Company to record a capital gains incentive fee equal to 17.5% of such cumulative amount, less the aggregate amount of actual capital gains incentive fees payable or capital gains incentive fees accrued under GAAP in all prior periods. The resulting accrual for any capital gains incentive fee under GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual. There can be no assurance that such unrealized capital appreciation will be realized in the future or any accrued capital gains incentive fee will become payable under the Investment Advisory Agreement.
For the three and nine months ended June 30, 2021, $2.8 million and $16.0 million of accrued Part II incentive fees were expensed. As of June 30, 2021, the total accrued Part II incentive fee liability was $16.0 million. Part II incentive fees are contractually calculated and paid at the end of the fiscal year in accordance with the Investment Advisory Agreement, which, as described above, differs from Part II incentive fees accrued under GAAP. Hypothetically, if Part II incentive fees were calculated as of June 30, 2021 under the Investment Advisory Agreement, the amount payable would have been $7.2 million.
To ensure compliance with Section 15(f) of the Investment Company Act, OCM entered into a two-year contractual fee waiver with the Company, which ended on October 17, 2019, pursuant to which OCM waived any management or incentive fees payable under the Investment Advisory Agreement that exceeded what would have been paid to the Former Adviser in the aggregate under the investment advisory agreement with the Former Advisor. The contractual amount of fees permanently waived at the end of the two-year period was $3.9 million. Prior to the end of the two-year period, amounts potentially subject to waiver under the two-year contractual fee waiver were accrued quarterly based on a theoretical “liquidation basis.” As of September 30, 2019, the Company had accrued cumulative fee waivers of $9.1 million. During the three months ended December 31, 2019, the Company reversed $5.2 million of previously accrued fee waivers since the two-year fee waiver period ended.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
The following table provides a roll-forward of the accrued waiver balance and illustrates the impact of the end of the two-year contractual fee waiver period:
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
Accrued fee waivers as of September 30, 2019 (1)
|
$
|
9.1
|
|
|
Reversal of previously accrued fee waivers (2)
|
(5.2)
|
|
|
Contractual fees waived under the Investment Advisory Agreement (3)
|
(3.9)
|
|
|
Accrued fee waivers as of December 31, 2019
|
$
|
—
|
|
(1)
Calculated in accordance with GAAP as of September 30, 2019 and is based on a hypothetical liquidation basis.
(2)
Reflects the reversal of fee waivers that were previously accrued based on a hypothetical liquidation basis when the two-year contractual fee waiver was in effect. This reversal was recognized in connection with the expiration of the two-year contractual fee waiver, which ended on October 17, 2019, and is reflected in reversal of fees waived in the Consolidated Statement of Operations for the three months ended December 31, 2019.
(3)
Reflects the amount of fees permanently waived pursuant to the two-year contractual fee waiver.
As of September 30, 2019, the capital gains incentive fee payable under the Investment Advisory Agreement (net of waivers) was $0.8 million as shown below:
|
|
|
|
|
|
|
|
($ in millions)
|
September 30, 2019 (1)
|
|
Capital gains incentive fee payable under the Investment Advisory Agreement (prior to waivers)
|
$
|
4.6
|
|
|
Contractual fees waived
|
(3.9)
|
|
|
Capital gains incentive fee payable under the Investment Advisory Agreement (net of waivers)
|
$
|
0.8
|
|
(1)
Amounts may not sum due to rounding.
From October 1, 2018 to June 30, 2021, the Company paid $0.8 million of capital gains incentive fees (net of waivers) cumulatively under the Investment Advisory Agreement.
Indemnification
The Investment Advisory Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of their respective duties or by reason of the reckless disregard of their respective duties and obligations, Oaktree and its officers, managers, partners, members (and their members, including the owners of their members), agents, employees, controlling persons and any other person or entity affiliated with it, are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys' fees and amounts reasonably paid in settlement) arising from the rendering of Oaktree's services under the Investment Advisory Agreement or otherwise as investment adviser.
Administrative Services
The Company is party to the Administration Agreement with Oaktree Administrator. Pursuant to the Administration Agreement, Oaktree Administrator provides administrative services to the Company necessary for the operations of the Company, which include providing office facilities, equipment, clerical, bookkeeping and record keeping services at such facilities and such other services as Oaktree Administrator, subject to review by the Company’s Board of Directors, shall from time to time deem to be necessary or useful to perform its obligations under the Administration Agreement. Oaktree Administrator may, on behalf of the Company, conduct relations and negotiate agreements with custodians, trustees, depositories, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed to be necessary or desirable. Oaktree Administrator makes reports to the Company’s Board of Directors of its performance of obligations under the Administration Agreement and furnishes advice and recommendations with respect to such other aspects of the Company’s business and affairs, in each case, as it shall determine to be desirable or as reasonably required by the Company’s Board of Directors; provided that Oaktree Administrator shall not provide any investment advice or recommendation.
Oaktree Administrator also provides portfolio collection functions for interest income, fees and warrants and is responsible for the financial and other records that the Company is required to maintain and prepares, prints and disseminates reports to the Company’s stockholders and all other materials filed with the SEC. In addition, Oaktree Administrator assists the Company in determining and publishing the Company’s net asset value, overseeing the preparation and filing of the Company’s tax returns, and generally overseeing the payment of the Company’s expenses and the performance of administrative and professional
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
services rendered to the Company by others. Oaktree Administrator may also offer to provide, on the Company’s behalf, managerial assistance to the Company’s portfolio companies.
For providing these services, facilities and personnel, the Company reimburses Oaktree Administrator the allocable portion of overhead and other expenses incurred by Oaktree Administrator in performing its obligations under the Administration Agreement, including the Company’s allocable portion of the rent of the Company’s principal executive offices (which are located in a building owned by a Brookfield affiliate) at market rates and the Company’s allocable portion of the costs of compensation and related expenses of its Chief Financial Officer, Chief Compliance Officer, their staffs and other non-investment professionals at Oaktree that perform duties for the Company. Such reimbursement is at cost, with no profit to, or markup by, Oaktree Administrator. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other. The Administration Agreement may also be terminated, without penalty, upon the vote of a majority of the Company’s outstanding voting securities.
For the three months ended June 30, 2021 and 2020, the Company accrued administrative expenses of $0.5 million and $0.4 million, respectively, including $0.1 million and $0.1 million of general and administrative expenses, respectively. For the nine months ended June 30, 2021 and 2020, the Company accrued administrative expenses of $1.2 million and $1.4 million, respectively, including $0.1 million and $0.2 million of general and administrative expenses, respectively.
As of June 30, 2021 and September 30, 2020, $5.0 million and $2.1 million, respectively, was included in “Due to affiliate” in the Consolidated Statements of Assets and Liabilities, reflecting the unpaid portion of administrative expenses and other reimbursable expenses payable to Oaktree Administrator.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Note 12. Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Share amounts in thousands)
|
|
Three months ended
June 30, 2021
|
|
Three months ended
June 30, 2020
|
|
Nine months ended
June 30, 2021
|
|
Nine months ended
June 30, 2020
|
|
Net asset value per share at beginning of period
|
|
$7.09
|
|
$5.34
|
|
$6.49
|
|
$6.60
|
|
Net investment income (1)
|
|
0.20
|
|
0.12
|
|
0.41
|
|
0.34
|
|
Net unrealized appreciation (depreciation) (1)(2)
|
|
0.02
|
|
0.71
|
|
0.74
|
|
(0.43)
|
|
Net realized gains (losses) (1)
|
|
0.05
|
|
0.02
|
|
0.15
|
|
(0.14)
|
|
(Provision) benefit for taxes on realized and unrealized gains (losses) (1)
|
|
(0.01)
|
|
—
|
|
(0.02)
|
|
0.01
|
|
Distributions of net investment income to stockholders
|
|
(0.13)
|
|
(0.10)
|
|
(0.36)
|
|
(0.29)
|
|
Issuance of common stock
|
|
—
|
|
—
|
|
(0.19)
|
|
—
|
|
Net asset value per share at end of period
|
|
$7.22
|
|
$6.09
|
|
$7.22
|
|
$6.09
|
|
Per share market value at beginning of period
|
|
$6.20
|
|
$3.24
|
|
$4.84
|
|
$5.18
|
|
Per share market value at end of period
|
|
$6.69
|
|
$4.47
|
|
$6.69
|
|
$4.47
|
|
Total return (3)
|
|
9.98%
|
|
40.90%
|
|
46.39%
|
|
(7.69)%
|
|
Common shares outstanding at beginning of period
|
|
180,361
|
|
140,961
|
|
140,961
|
|
140,961
|
|
Common shares outstanding at end of period
|
|
180,361
|
|
140,961
|
|
180,361
|
|
140,961
|
|
Net assets at beginning of period
|
|
$1,278,823
|
|
$752,224
|
|
$914,879
|
|
$930,630
|
|
Net assets at end of period
|
|
$1,302,414
|
|
$859,063
|
|
$1,302,414
|
|
$859,063
|
|
Average net assets (4)
|
|
$1,298,995
|
|
$810,793
|
|
$1,094,761
|
|
$864,370
|
|
Ratio of net investment income to average net assets (5)
|
|
11.09%
|
|
8.30%
|
|
7.82%
|
|
7.31%
|
|
Ratio of total expenses to average net assets (5)
|
|
9.23%
|
|
8.72%
|
|
10.02%
|
|
7.23%
|
|
Ratio of net expenses to average net assets (5)
|
|
9.00%
|
|
8.72%
|
|
9.91%
|
|
8.03%
|
|
Ratio of portfolio turnover to average investments at fair value
|
|
7.43%
|
|
9.27%
|
|
31.59%
|
|
26.51%
|
|
Weighted average outstanding debt (6)
|
|
$1,140,774
|
|
$738,891
|
|
$884,525
|
|
$616,917
|
|
Average debt per share (1)
|
|
$6.32
|
|
$5.24
|
|
$5.67
|
|
$4.38
|
|
Asset coverage ratio at end of period (7)
|
|
216.01%
|
|
211.27%
|
|
216.01%
|
|
211.27%
|
__________
|
|
|
|
|
|
|
|
(1)
|
Calculated based upon weighted average shares outstanding for the period.
|
|
(2)
|
For the nine months ended June 30, 2021, the amount shown for net unrealized appreciation (depreciation) includes the effect of the timing of common stock issuances in connection with the Mergers.
|
|
(3)
|
Total return equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming dividend reinvestment prices obtained under the Company's DRIP. Total return does not include sales load.
|
|
(4)
|
Calculated based upon the weighted average net assets for the period.
|
|
(5)
|
Interim periods are annualized.
|
|
(6)
|
Calculated based upon the weighted average of principal debt outstanding for the period.
|
|
(7)
|
Based on outstanding senior securities of $1,114.1 million and $766.8 million as of June 30, 2021 and 2020, respectively.
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Note 13. Derivative Instruments
The Company enters into foreign currency forward contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company entered into an International Swaps and Derivatives Association, Inc. Master Agreement (the "ISDA Master Agreement") with its derivative counterparty, JPMorgan Chase Bank, N.A. The ISDA Master Agreement permits a single net payment in the event of a default or similar event. As of June 30, 2021, no cash collateral has been pledged to cover obligations and no cash collateral has been received from the counterparty with respect to the Company's forward currency contracts.
During the three months ended June 30, 2021, in connection with the issuance of the 2027 Notes, the Company entered into an interest rate swap agreement with the Royal Bank of Canada pursuant to an ISDA Master Agreement. As of June 30, 2021, the Company paid $1.6 million to the Royal Bank of Canada to cover collateral obligations under the terms of the interest swap agreement, which is included in due from broker on the Consolidated Statement of Assets and Liabilities.
Certain information related to the Company’s foreign currency forward contracts is presented below as of June 30, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Notional Amount to be Purchased
|
|
Notional Amount to be Sold
|
|
Maturity Date
|
|
Gross Amount of Recognized Assets
|
|
Gross Amount of Recognized Liabilities
|
|
Balance Sheet Location of Net Amounts
|
|
Foreign currency forward contract
|
|
$
|
53,390
|
|
|
£
|
37,709
|
|
|
8/12/2021
|
|
$
|
1,292
|
|
|
$
|
—
|
|
|
Derivative asset
|
|
Foreign currency forward contract
|
|
$
|
46,457
|
|
|
€
|
38,165
|
|
|
8/12/2021
|
|
$
|
1,157
|
|
|
$
|
—
|
|
|
Derivative asset
|
|
|
|
|
|
|
|
|
|
$
|
2,449
|
|
|
$
|
—
|
|
|
|
Certain information related to the Company’s interest rate swap is presented below as of June 30, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Notional Amount
|
|
Maturity Date
|
|
Gross Amount of Recognized Assets
|
|
Gross Amount of Recognized Liabilities
|
|
Balance Sheet Location of Net Amounts
|
|
Interest rate swap
|
|
$
|
350,000
|
|
|
1/15/2027
|
|
$
|
—
|
|
|
$
|
267
|
|
|
Derivative liability
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
267
|
|
|
|
Certain information related to the Company’s foreign currency forward contracts is presented below as of September 30, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Notional Amount to be Purchased
|
|
Notional Amount to be Sold
|
|
Maturity Date
|
|
Gross Amount of Recognized Assets
|
|
Gross Amount of Recognized Liabilities
|
|
Balance Sheet Location of Net Amounts
|
|
Foreign currency forward contract
|
|
$
|
35,577
|
|
|
£
|
27,494
|
|
|
11/12/2020
|
|
$
|
25
|
|
|
$
|
—
|
|
|
Derivative asset
|
|
Foreign currency forward contract
|
|
$
|
30,260
|
|
|
€
|
25,614
|
|
|
11/12/2020
|
|
$
|
198
|
|
|
$
|
—
|
|
|
Derivative asset
|
|
|
|
|
|
|
|
|
|
$
|
223
|
|
|
$
|
—
|
|
|
|
Note 14. Commitments and Contingencies
Merger Litigation
On December 18, 2020, putative stockholder Oklahoma Firefighters Pension and Retirement System filed a complaint on behalf of itself and all other similarly situated holders of the Company’s common stock and derivatively on behalf of the Company as nominal defendant in the Delaware Court of Chancery, captioned Oklahoma Firefighters Pension and Retirement System v. Frank, et al., No. 2020-1075-VCM (Del. Ch.). This lawsuit is referred to herein as the “Merger Litigation”. The Merger Litigation alleges a direct breach of fiduciary duty claim against the Board of Directors in connection with the solicitation of the approval by the Company’s stockholders of
the issuance of shares of the Company’s common stock to be issued pursuant to the Merger Agreement
and a derivative breach of fiduciary duty claim against the Board of Directors in connection with its negotiation and approval of the Mergers. The Merger Litigation alleges, among other things, that the members of the Board of Directors had certain conflicts of interest in the negotiation and approval of the Mergers and that the initial filing of the joint proxy statement/prospectus relating to the Mergers omitted certain information that the plaintiff claims is material. The Merger Litigation, among other things, requested that the court enjoin the vote of the Company’s stockholders with respect to the approval of the
issuance of shares of the Company’s common stock to be issued pursuant to the Merger Agreement
and award attorneys’ fees and damages in an unspecified amount. On February 16, 2021, the plaintiff withdrew the
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
request that the court enjoin the vote of the Company’s stockholders. On April 26, 2021, putative stockholder Oklahoma Firefighters Pension and Retirement System filed a proposed order voluntarily dismissing its claims surrounding the Mergers, with prejudice as to the plaintiff and without prejudice as to any other stockholder of the Company.
The court entered the order of dismissal on May 10, 2021. The Court retained jurisdiction solely for the purpose of adjudicating the anticipated application of plaintiff’s counsel for an award of attorneys’ fees and reimbursement of expenses in connection with the supplemental disclosures included in the amended joint proxy statement/prospectus. The Company subsequently agreed to pay $0.4 million to plaintiff’s counsel for attorneys’ fees and expenses in full satisfaction of the claim for attorneys’ fees and expenses in the action.
For the three and nine months ended June 30, 2021, the Company recognized a $0.4 million loss in connection with the litigation matter described above. Additionally, the Company determined that it is probable that it will receive $0.4 million of insurance recoveries in connection with such loss and has recognized such amount for the three and nine months ended June 30, 2021. In connection with the lawsuit, the Company incurred professional fees of $0.1 million and $0.6 million, respectively, during the three and nine months ended June 30, 2021.
Off-Balance Sheet Arrangements
The Company may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its portfolio companies. As of June 30, 2021, the Company's only off-balance sheet arrangements consisted of $288.0 million of unfunded commitments, which was comprised of $235.5 million to provide debt financing to certain of its portfolio companies, $49.0 million to provide financing to the JVs and $3.5 million related to unfunded limited partnership interests. As of September 30, 2020, the Company's only off-balance sheet arrangements consisted of $157.5 million of unfunded commitments, which was comprised of $152.7 million to provide debt financing to certain of its portfolio companies, $1.3 million to provide equity financing to SLF JV I and $3.5 million related to unfunded limited partnership interests. Such commitments are subject to the portfolio companies' satisfaction of certain financial and nonfinancial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in the Company's Consolidated Statements of Assets and Liabilities.
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
A list of unfunded commitments by investment (consisting of revolvers, term loans with delayed draw components, subordinated notes and LLC equity interests in the JVs, preferred stock and limited partnership interests) as of June 30, 2021 and September 30, 2020 is shown in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Senior Loan Fund JV I, LLC
|
|
$
|
35,000
|
|
|
$
|
1,328
|
|
|
Assembled Brands Capital LLC
|
|
28,842
|
|
|
36,079
|
|
|
WPEngine, Inc.
|
|
26,348
|
|
|
26,348
|
|
|
Marinus Pharmaceuticals, Inc.
|
|
25,230
|
|
|
—
|
|
|
Athenex, Inc.
|
|
21,072
|
|
|
22,780
|
|
|
Thrasio, LLC
|
|
20,864
|
|
|
—
|
|
|
OCSI Glick JV LLC
|
|
13,998
|
|
|
—
|
|
|
Jazz Acquisition, Inc.
|
|
13,825
|
|
|
—
|
|
|
Dominion Diagnostics, LLC
|
|
11,148
|
|
|
5,887
|
|
|
Gulf Operating, LLC
|
|
10,064
|
|
|
—
|
|
|
Coty Inc.
|
|
9,886
|
|
|
—
|
|
|
Latam Airlines Group S.A.
|
|
7,267
|
|
|
—
|
|
|
NeuAG, LLC
|
|
5,441
|
|
|
4,382
|
|
|
MHE Intermediate Holdings, LLC
|
|
5,255
|
|
|
—
|
|
|
SumUp Holdings Luxembourg S.À.R.L.
|
|
5,154
|
|
|
—
|
|
|
Olaplex, Inc.
|
|
4,806
|
|
|
1,917
|
|
|
MRI Software LLC
|
|
4,723
|
|
|
7,239
|
|
|
Mindbody, Inc.
|
|
4,000
|
|
|
3,048
|
|
|
CorEvitas, LLC
|
|
3,968
|
|
|
5,189
|
|
|
Pluralsight, LLC
|
|
3,532
|
|
|
—
|
|
|
Pingora MSR Opportunity Fund I-A, LP
|
|
3,500
|
|
|
3,500
|
|
|
The Avery
|
|
3,257
|
|
|
—
|
|
|
Accupac, Inc.
|
|
3,063
|
|
|
2,346
|
|
|
PRGX Global, Inc.
|
|
2,518
|
|
|
—
|
|
|
Relativity ODA LLC
|
|
2,218
|
|
|
—
|
|
|
Acquia Inc.
|
|
2,061
|
|
|
2,240
|
|
|
Telestream Holdings Corporation
|
|
1,759
|
|
|
—
|
|
|
Apptio, Inc.
|
|
1,338
|
|
|
1,538
|
|
|
Coyote Buyer, LLC
|
|
1,333
|
|
|
942
|
|
|
Sunland Asphalt & Construction, LLC
|
|
1,258
|
|
|
—
|
|
|
4 Over International, LLC
|
|
1,183
|
|
|
—
|
|
|
109 Montgomery Owner LLC
|
|
1,104
|
|
|
—
|
|
|
Ministry Brands, LLC
|
|
1,100
|
|
|
425
|
|
|
Digital.AI Software Holdings, Inc.
|
|
1,077
|
|
|
—
|
|
|
Thermacell Repellents, Inc.
|
|
438
|
|
|
—
|
|
|
GKD Index Partners, LLC
|
|
320
|
|
|
231
|
|
|
CircusTrix Holdings, LLC
|
|
61
|
|
|
—
|
|
|
NuStar Logistics, L.P.
|
|
—
|
|
|
17,911
|
|
|
A.T. Holdings II SÀRL
|
|
—
|
|
|
7,541
|
|
|
Ardonagh Midco 3 PLC
|
|
—
|
|
|
3,007
|
|
|
New IPT, Inc.
|
|
—
|
|
|
2,229
|
|
|
iCIMs, Inc.
|
|
—
|
|
|
882
|
|
|
Immucor, Inc.
|
|
—
|
|
|
541
|
|
|
Total
|
|
$
|
288,011
|
|
|
$
|
157,530
|
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Note 15. Merger with OCSI
On March 19, 2021, the Company completed its previously announced acquisition of OCSI. The Company was the accounting survivor of the Mergers. In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of OCSI common stock was converted into the right to receive 1.3371 shares of common stock of the Company (with OCSI stockholders receiving cash in lieu of fractional shares of the Company’s common stock). As a result of the Merger, the Company issued an aggregate of 39,400,011 shares of its common stock to former OCSI stockholders.
The Mergers were accounted for as an asset acquisition in accordance with the asset acquisition method of accounting as detailed in ASC 805-50,
Business Combinations—Related Issues
("ASC 805"). The Company determined the fair value of the shares of the Company's common stock that were issued to former OCSI stockholders pursuant to the Merger Agreement plus transaction costs to be the consideration paid in connection with the Mergers under ASC 805. The consideration paid to OCSI stockholders was less than the aggregate fair values of the assets acquired and liabilities assumed, which resulted in a purchase discount (the “purchase discount”). The consideration paid was allocated to the individual assets acquired and liabilities assumed based on the relative fair values of net identifiable assets acquired other than “non-qualifying” assets (for example, cash) and did not give rise to goodwill. As a result, the purchase discount was allocated to the cost basis of the OCSI investments acquired by the Company on a pro-rata basis based on their relative fair values as of the effective time of the Mergers. Immediately following the Mergers, the investments were marked to their respective fair values in accordance with ASC 820 which resulted in $34.1 million of unrealized appreciation in the Consolidated Statement of Operations as a result of the Mergers. The purchase discount allocated to the debt investments acquired will accrete over the life of each respective debt investment through interest income, with a corresponding adjustment recorded to unrealized appreciation on such investment acquired through its ultimate disposition. The purchase discount allocated to equity investments acquired will not amortize over the life of such investments through interest income and, assuming no subsequent change to the fair value of the equity investments acquired and disposition of such equity investments at fair value, the Company will recognize a realized gain with a corresponding reversal of the unrealized appreciation on disposition of such equity investments acquired. The Mergers were considered a tax-free reorganization and the Company has elected to carry forward the historical cost basis of the acquired OCSI investments for tax purposes.
The following table summarizes the allocation of the consideration paid to the assets acquired and liabilities assumed as a result of the Mergers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued by the Company
|
|
$
|
242,704
|
|
|
Transaction costs
|
|
1,593
|
|
|
Consideration paid
|
|
$
|
244,297
|
|
|
|
|
|
|
Investments
|
|
$
|
470,155
|
|
|
Cash and cash equivalents
|
|
20,945
|
|
|
Other assets
|
|
8,995
|
|
|
Total assets acquired
|
|
500,095
|
|
|
|
|
|
|
Debt
|
|
249,098
|
|
|
Other liabilities
|
|
6,700
|
|
|
Total liabilities assumed
|
|
255,798
|
|
|
Net assets acquired
|
|
$
|
244,297
|
|
OAKTREE SPECIALTY LENDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Note 16. Subsequent Events
The Company’s management evaluated subsequent events through the date of issuance of the Consolidated Financial Statements. There have been no subsequent events that occurred during such period that would require disclosure in, or would be required to be recognized in the Consolidated Financial Statements as of and for the three months ended June 30, 2021, except as discussed below.
Distribution Declaration
On July 30, 2021, the Company’s Board of Directors declared a quarterly distribution of $0.145 per share, payable in cash on September 30, 2021 to stockholders of record on September 15, 2021.
Citibank Facility Amendment
On July 2, 2021, the Company amended the Citibank facility to, among other things, (1) reduce the size of the facility from $180 million to $150 million, (2) extend the reinvestment period to July 18, 2023, (3) extend the maturity date to July 18, 2024, (4) modify the interest rate on outstanding borrowings to LIBOR plus between 1.25% and 2.20% per annum on broadly syndicated loans subject to the observable market depth and pricing and LIBOR plus 2.25% per annum on all other eligible loans during the reinvestment period and (5) add provisions relating to the transition from LIBOR to the Secured Overnight Financing Rate.
Schedule 12-14
Oaktree Specialty Lending Corporation
Schedule of Investments in and Advances to Affiliates
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Nine months ended June 30, 2021
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)
|
|
Cash Interest Rate
|
|
Industry
|
|
Principal
|
|
Net Realized Gain (Loss)
|
|
Amount of
Interest,
Fees or
Dividends
Credited in
Income (2)
|
|
Fair Value
as of October 1,
2020
|
|
Gross
Additions (3)
|
|
Gross
Reductions (4)
|
|
Fair Value
as of June 30, 2021
|
|
% of Total Net Assets
|
|
Control Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C5 Technology Holdings, LLC
|
|
|
|
Data Processing & Outsourced Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
829 Common Units
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
34,984,460.37 Preferred Units
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
27,638
|
|
|
—
|
|
|
—
|
|
|
27,638
|
|
|
2.1
|
%
|
|
Dominion Diagnostics, LLC
|
|
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024
|
|
6.00
|
%
|
|
|
|
$
|
27,451
|
|
|
—
|
|
|
1,293
|
|
|
27,660
|
|
|
—
|
|
|
(209)
|
|
|
27,451
|
|
|
2.1
|
%
|
|
First Lien Revolver, LIBOR+5.00% cash due 2/28/2024
|
|
|
|
|
|
—
|
|
|
—
|
|
|
261
|
|
|
5,260
|
|
|
2,439
|
|
|
(7,699)
|
|
|
—
|
|
|
—
|
%
|
|
30,030.8 Common Units in DD Healthcare Services Holdings, LLC
|
|
|
|
|
|
|
|
—
|
|
|
358
|
|
|
7,667
|
|
|
10,398
|
|
|
—
|
|
|
18,065
|
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Star Speir Aviation Limited (5)
|
|
|
|
Airlines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Term Loan, 9.00% cash due 12/15/2025
|
|
|
|
|
|
7,500
|
|
|
—
|
|
|
—
|
|
|
11,510
|
|
|
—
|
|
|
(4,010)
|
|
|
7,500
|
|
|
0.6
|
%
|
|
100% equity interest
|
|
|
|
|
|
|
|
—
|
|
|
550
|
|
|
1,622
|
|
|
1,021
|
|
|
(2,161)
|
|
|
482
|
|
|
—
|
%
|
|
New IPT, Inc.
|
|
|
|
Oil & Gas Equipment & Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021
|
|
|
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
1,800
|
|
|
504
|
|
|
(2,304)
|
|
|
—
|
|
|
—
|
%
|
|
First Lien Revolver, LIBOR+5.00% cash due 3/17/2021
|
|
|
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
788
|
|
|
221
|
|
|
(1,009)
|
|
|
—
|
|
|
—
|
%
|
|
50.087 Class A Common Units in New IPT Holdings, LLC
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
OCSI Glick JV LLC (6)
|
|
|
|
Multi-Sector Holdings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated Debt, LIBOR+4.50% cash due 10/20/2028
|
|
4.70
|
%
|
|
|
|
62,296
|
|
|
—
|
|
|
1,134
|
|
|
—
|
|
|
55,923
|
|
|
(526)
|
|
|
55,397
|
|
|
4.3
|
%
|
|
87.5% equity interest
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
Senior Loan Fund JV I, LLC (7)
|
|
|
|
Multi-Sector Holdings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated Debt, LIBOR+7.00% cash due 12/29/2028
|
|
8.00
|
%
|
|
|
|
96,250
|
|
|
—
|
|
|
5,420
|
|
|
96,250
|
|
|
—
|
|
|
—
|
|
|
96,250
|
|
|
7.4
|
%
|
|
87.5% LLC equity interest
|
|
|
|
|
|
|
|
—
|
|
|
451
|
|
|
21,190
|
|
|
15,505
|
|
|
—
|
|
|
36,695
|
|
|
2.8
|
%
|
|
Total Control Investments
|
|
|
|
|
|
$
|
193,497
|
|
|
$
|
—
|
|
|
$
|
9,526
|
|
|
$
|
201,385
|
|
|
$
|
86,011
|
|
|
$
|
(17,918)
|
|
|
$
|
269,478
|
|
|
20.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assembled Brands Capital LLC
|
|
|
|
Specialized Finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Revolver, LIBOR+6.00% cash due 10/17/2023
|
|
7.00
|
%
|
|
|
|
$
|
11,924
|
|
|
$
|
—
|
|
|
$
|
452
|
|
|
$
|
4,194
|
|
|
$
|
7,996
|
|
|
$
|
(510)
|
|
|
$
|
11,680
|
|
|
0.9
|
%
|
|
1,609,201 Class A Units
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
483
|
|
|
96
|
|
|
—
|
|
|
579
|
|
|
—
|
%
|
|
1,019,168.80 Preferred Units, 6%
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
1,091
|
|
|
40
|
|
|
—
|
|
|
1,131
|
|
|
0.1
|
%
|
|
70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
Caregiver Services, Inc.
|
|
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,080,399 shares of Series A Preferred Stock, 10%
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
741
|
|
|
—
|
|
|
(172)
|
|
|
569
|
|
|
—
|
%
|
|
Total Affiliate Investments
|
|
|
|
|
|
$
|
11,924
|
|
|
$
|
—
|
|
|
$
|
452
|
|
|
$
|
6,509
|
|
|
$
|
8,132
|
|
|
$
|
(682)
|
|
|
$
|
13,959
|
|
|
1.1
|
%
|
|
Total Control & Affiliate Investments
|
|
|
|
|
|
$
|
205,421
|
|
|
$
|
—
|
|
|
$
|
9,978
|
|
|
$
|
207,894
|
|
|
$
|
94,143
|
|
|
$
|
(18,600)
|
|
|
$
|
283,437
|
|
|
21.8
|
%
|
This schedule should be read in connection with the Company's Consolidated Financial Statements, including the Consolidated Schedules of Investments and Notes to the Consolidated Financial Statements.
______________________
(1)
The principal amount and ownership detail are shown in the Company's Consolidated Schedules of Investments .
(2)
Represents the total amount of interest (net of non-accrual amounts), fees and dividends credited to income for the portion of the period an investment was included in the Control or Affiliate categories.
(3)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments, accrued PIK interest (net of non-accrual amounts) and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category or out of a different category.
(4)
Gross reductions include decreases in the cost basis of investments resulting from principal payments or sales and exchanges of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.
(5)
First Star Speir Aviation Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be an investment company under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities.
(6)
Together with GF Equity Funding, the Company co-invests through Glick JV. Glick JV is capitalized as transactions are completed and all portfolio and investment decisions in respect to Glick JV must be approved by the Glick JV investment committee consisting of representatives of the Company and GF Equity Funding (with approval from a representative of each required).
(7)
Together with Kemper, the Company co-invests through SLF JV I. SLF JV I is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF JV I must be approved by the SLF JV I investment committee consisting of representatives of the Company and Kemper (with approval from a representative of each required).
Schedule 12-14
Oaktree Specialty Lending Corporation
Schedule of Investments in and Advances to Affiliates
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
Nine months ended June 30, 2020
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company/Type of Investment (1)
|
|
Cash Interest Rate
|
|
Industry
|
|
Principal
|
|
Net Realized Gain (Loss)
|
|
Amount of
Interest,
Fees or
Dividends
Credited in
Income (2)
|
|
Fair Value
at October 1,
2019
|
|
Gross
Additions (3)
|
|
Gross
Reductions (4)
|
|
Fair Value
at June 30, 2020
|
|
% of Total Net Assets
|
|
Control Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C5 Technology Holdings, LLC
|
|
|
|
Data Processing & Outsourced Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
829 Common Units
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
|
34,984,460.37 Preferred Units
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
34,984
|
|
|
—
|
|
|
(7,346)
|
|
|
27,638
|
|
|
3.2
|
%
|
|
Dominion Diagnostics, LLC
|
|
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 2/28/2024
|
|
6.00
|
%
|
|
|
|
$
|
27,730
|
|
|
—
|
|
|
639
|
|
|
—
|
|
|
27,869
|
|
|
(139)
|
|
|
27,730
|
|
|
3.2
|
%
|
|
First Lien Revolver, LIBOR+5.00% cash due 2/28/2024
|
|
6.00
|
%
|
|
|
|
5,260
|
|
|
—
|
|
|
128
|
|
|
—
|
|
|
5,260
|
|
|
—
|
|
|
5,260
|
|
|
0.6
|
%
|
|
30,030.8 Common Units in DD Healthcare Services Holdings, LLC
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,627
|
|
|
(10,960)
|
|
|
7,667
|
|
|
0.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Star Speir Aviation Limited (5)
|
|
|
|
Airlines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Term Loan, 9.00% cash due 12/15/2020
|
|
|
|
|
|
11,510
|
|
|
—
|
|
|
881
|
|
|
11,510
|
|
|
81
|
|
|
(81)
|
|
|
11,510
|
|
|
1.3
|
%
|
|
100% equity interest
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
4,630
|
|
|
—
|
|
|
(1,465)
|
|
|
3,165
|
|
|
0.4
|
%
|
|
New IPT, Inc.
|
|
|
|
Oil & Gas Equipment & Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021
|
|
6.00
|
%
|
|
|
|
2,454
|
|
|
—
|
|
|
154
|
|
|
3,256
|
|
|
—
|
|
|
(802)
|
|
|
2,454
|
|
|
0.3
|
%
|
|
First Lien Revolver, LIBOR+5.00% cash due 3/17/2021
|
|
6.00
|
%
|
|
|
|
1,009
|
|
|
—
|
|
|
58
|
|
|
1,009
|
|
|
—
|
|
|
—
|
|
|
1,009
|
|
|
0.1
|
%
|
|
50.087 Class A Common Units in New IPT Holdings, LLC
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
2,903
|
|
|
—
|
|
|
(1,730)
|
|
|
1,173
|
|
|
0.1
|
%
|
|
Senior Loan Fund JV I, LLC (6)
|
|
|
|
Multi-Sector Holdings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated Debt, LIBOR+7.00% cash due 12/29/2028
|
|
8.02
|
%
|
|
|
|
96,250
|
|
|
—
|
|
|
6,292
|
|
|
96,250
|
|
|
—
|
|
|
—
|
|
|
96,250
|
|
|
11.2
|
%
|
|
87.5% LLC equity interest
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
30,052
|
|
|
—
|
|
|
(16,256)
|
|
|
13,796
|
|
|
1.6
|
%
|
|
Thruline Marketing, Inc.
|
|
|
|
Advertising
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022
|
|
|
|
|
|
—
|
|
|
—
|
|
|
257
|
|
|
18,146
|
|
|
—
|
|
|
(18,146)
|
|
|
—
|
|
|
—
|
%
|
|
First Lien Revolver, LIBOR+7.75% cash due 4/3/2022
|
|
|
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
9,073 Class A Units in FS AVI Holdco, LLC
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
6,438
|
|
|
—
|
|
|
(3,291)
|
|
|
3,147
|
|
|
0.4
|
%
|
|
Total Control Investments
|
|
|
|
|
|
$
|
144,213
|
|
|
$
|
—
|
|
|
$
|
8,410
|
|
|
$
|
209,178
|
|
|
$
|
51,837
|
|
|
$
|
(60,216)
|
|
|
$
|
200,799
|
|
|
23.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assembled Brands Capital LLC
|
|
|
|
Specialized Finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 10/17/2023
|
|
7.00
|
%
|
|
|
|
$
|
5,504
|
|
|
$
|
—
|
|
|
$
|
394
|
|
|
$
|
5,585
|
|
|
$
|
2,038
|
|
|
$
|
(3,279)
|
|
|
$
|
4,344
|
|
|
0.5
|
%
|
|
1,609,201 Class A Units
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
782
|
|
|
312
|
|
|
—
|
|
|
1,094
|
|
|
0.1
|
%
|
|
1,019,168.80 Preferred Units, 6%
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
1,019
|
|
|
51
|
|
|
—
|
|
|
1,070
|
|
|
0.1
|
%
|
|
70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
Caregiver Services, Inc.
|
|
|
|
Health Care Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,080,399 shares of Series A Preferred Stock, 10%
|
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,784
|
|
|
—
|
|
|
(1,043)
|
|
|
741
|
|
|
0.1
|
%
|
|
Total Affiliate Investments
|
|
|
|
|
|
$
|
5,504
|
|
|
$
|
—
|
|
|
$
|
394
|
|
|
$
|
9,170
|
|
|
$
|
2,401
|
|
|
$
|
(4,322)
|
|
|
$
|
7,249
|
|
|
0.8
|
%
|
|
Total Control & Affiliate Investments
|
|
|
|
|
|
$
|
149,717
|
|
|
$
|
—
|
|
|
$
|
8,804
|
|
|
$
|
218,348
|
|
|
$
|
54,238
|
|
|
$
|
(64,538)
|
|
|
$
|
208,048
|
|
|
24.2
|
%
|
This schedule should be read in connection with the Company's Consolidated Financial Statements, including the Consolidated Schedules of Investments and Notes to the Consolidated Financial Statements.
______________________
(1)
The principal amount and ownership detail are shown in the Company's Consolidated Schedules of Investments as of June 30, 2020 included in the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2020.
(2)
Represents the total amount of interest (net of non-accrual amounts), fees and dividends credited to income for the portion of the period an investment was included in the Control or Affiliate categories.
(3)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments, accrued PIK interest (net of non-accrual amounts) and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as the movement of an existing portfolio company into this category or out of a different category.
(4)
Gross reductions include decreases in the cost basis of investments resulting from principal payments or sales and exchanges of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.
(5)
First Star Speir Aviation Limited is a wholly-owned holding company formed by the Company in order to facilitate its investment strategy. In accordance with ASU 2013-08, the Company has deemed the holding company to be an investment company under GAAP and therefore deemed it appropriate to consolidate the financial results and financial position of the holding company and to recognize dividend income versus a combination of interest income and dividend income. Accordingly, the debt and equity investments in the wholly-owned holding company are disregarded for accounting purposes since the economic substance of these instruments are equity investments in the operating entities.
(6)
Together with Kemper, the Company co-invests through SLF JV I. SLF JV I is capitalized as transactions are completed and all portfolio and investment decisions in respect to SLF JV I must be approved by the SLF JV I investment committee consisting of representatives of the Company and Kemper (with approval from a representative of each required).
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in connection with our Consolidated Financial Statements and the notes thereto included elsewhere in this quarterly report on Form 10-Q.
Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:
•
our future operating results and distribution projections;
•
the ability of Oaktree Fund Advisors, LLC, or Oaktree, to reposition our portfolio and to implement Oaktree's future plans with respect to our business;
•
the ability of Oaktree and its affiliates to attract and retain highly talented professionals;
•
our business prospects and the prospects of our portfolio companies;
•
the impact of the investments that we expect to make;
•
the ability of our portfolio companies to achieve their objectives;
•
our expected financings and investments and additional leverage we may seek to incur in the future;
•
the adequacy of our cash resources and working capital;
•
the timing of cash flows, if any, from the operations of our portfolio companies; and
•
the cost or potential outcome of any litigation to which we may be a party.
In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “
Item 1A. Risk Factors
” in our annual report on Form 10-K for the year ended September 30, 2020 and elsewhere in this quarterly report on Form 10-Q.
Other factors that could cause actual results to differ materially include:
•
changes or potential disruptions in our operations, the economy, financial markets or political environment;
•
risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic;
•
future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to Business Development Companies or regulated investment companies, or RICs;
•
general considerations associated with the COVID-19 pandemic;
•
the ability to realize the anticipated benefits of the Mergers (as defined below); and
•
other considerations that may be disclosed from time to time in our publicly disseminated documents and filings.
We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the Securities and Exchange Commission, or the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
All dollar amounts in tables are in thousands, except share and per share amounts and as otherwise indicated.
Business Overview
We are a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. We are a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a Business Development Company under the Investment Company Act of 1940, as amended, or the Investment Company Act. In addition, we have qualified and elected to be treated as a RIC under the Internal Revenue Code of 1986, as amended, or the Code, for tax purposes.
We are externally managed by Oaktree pursuant to an investment advisory agreement, as amended from time to time, or the Investment Advisory Agreement. Oaktree Fund Administration, LLC, or the Oaktree Administrator, an affiliate of Oaktree, provides certain administrative and other services necessary for us to operate pursuant to an administration agreement, as amended from time to time, or the Administration Agreement.
Our investment objective is to generate current income and capital appreciation by providing companies with flexible and innovative financing solutions, including first and second lien loans, unsecured and mezzanine loans, bonds, preferred equity and certain equity co-investments. We may also seek to generate capital appreciation and income through secondary investments at discounts to par in either private or syndicated transactions. Our portfolio may also include certain structured finance and other non-traditional structures. We invest in companies that typically possess resilient business models with strong underlying fundamentals. We intend to deploy capital across credit and economic cycles with a focus on long-term results, which we believe will enable us to build lasting partnerships with financial sponsors and management teams, and we may seek to opportunistically take advantage of dislocations in the financial markets and other situations that may benefit from Oaktree’s credit and structuring expertise, including during the COVID-19 pandemic. Sponsors may include financial sponsors, such as an institutional investor or a private equity firm, or a strategic entity seeking to invest in a portfolio company. Oaktree is generally focused on middle-market companies, which we define as companies with enterprise values of between $100 million and $750 million. We generally invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as “high yield” and “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.
In the current market environment, Oaktree intends to focus on the following areas, in which Oaktree believes there is less competition and thus potential for greater returns, for our new investment opportunities: (1) situational lending, which we define to include directly originated loans to non-sponsor companies that are hard to understand and value using traditional underwriting techniques, (2) select sponsor lending, which we define to include financing to support leveraged buyouts of companies with specialized sponsors that have expertise in certain industries, and (3) stressed sector and rescue lending, which we define to include opportunistic private loans in industries experiencing stress or limited access to capital.
Oaktree intends to continue to rotate our portfolio into investments that are better aligned with Oaktree's overall approach to credit investing and that it believes have the potential to generate attractive returns across market cycles (which we call "core investments"). Oaktree has performed a comprehensive review of our portfolio and categorized our portfolio into core investments, non-core performing investments and underperforming investments. Certain additional information on such categorization and our portfolio composition is included in investor presentations that we file with the SEC. Since an Oaktree affiliate became our investment adviser in October 2017, Oaktree and its affiliates have reduced the investments identified as non-core by over $700 million at fair value. Over time, Oaktree intends to rotate us out of the remaining non-core investments, which were approximately $136 million at fair value as of June 30, 2021. Oaktree periodically reviews designations of investments as core and non-core and may change such designations over time.
On March 19, 2021, we acquired Oaktree Strategic Income Corporation, or OCSI, pursuant to that certain Agreement and Plan of Merger, or the Merger Agreement, dated as of October 28, 2020, by and among OCSI, us, Lion Merger Sub, Inc., our wholly-owned subsidiary, or Merger Sub, and, solely for the limited purposes set forth therein, Oaktree. Pursuant to the Merger Agreement, Merger Sub was first merged with and into OCSI, with OCSI as the surviving corporation, or the Merger, and, immediately following the Merger, OCSI was then merged with and into us, with us as the surviving company, or together with the Merger, the Mergers. In accordance with the terms of the Merger Agreement, at the effective time of the Merger, each outstanding share of OCSI’s common stock was converted into the right to receive 1.3371 shares of our common stock (with OCSI’s stockholders receiving cash in lieu of fractional shares of our common stock). As a result of the Mergers, we issued an aggregate of 39,400,011 shares of our common stock to former OCSI stockholders.
Business Environment and Developments
The rapid spread of COVID-19 in early 2020 led to disruptions in the U.S. and global financial markets. While several countries, including the U.S., have eased certain travel restrictions, business closures and social distancing measures, the U.S. and global economy continues to experience economic uncertainty, particularly due to recurring COVID-19 outbreaks, vaccine hesitancy and potential re-imposition of certain restrictions or lockdowns. This uncertainty can ultimately impact the overall supply and demand of the market through changing spreads, deal terms and structures, and equity purchase price multiples.
We are unable to predict the full effects of the COVID-19 pandemic or how long any further outbreaks, market disruptions or volatility might last at this time. We continue to closely monitor the impact that this has had on our business, industry and portfolio companies, which we believe may help us identify vulnerabilities and allow us to address potential problems early and provide constructive solutions if necessary.
Despite the challenges brought forth by the COVID-19 pandemic, we believe attractive risk-adjusted returns can be achieved by making loans to companies in the middle market. Given the breadth of the investment platform of Oaktree and its affiliates, we believe that we have the resources and experience to source, diligence and structure investments in these companies and are well placed to generate attractive returns for investors.
As of June 30, 2021, 91.4% of our debt investment portfolio (at fair value) and 91.8% of our debt investment portfolio (at cost) bore interest at floating rates indexed to the LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly or monthly at the borrower’s option. As a result of the COVID-19 pandemic and the related decision of the U.S. Federal Reserve to reduce certain interest rates, LIBOR decreased beginning in March 2020. A prolonged reduction in interest rates will result in a decrease in our total investment income and could result in a decrease in our net investment income to the extent the decreases are not offset by an increase in the spread on our floating rate investments, a decrease in our interest expense or a reduction of our incentive fee on income. In July 2017, the head of the United Kingdom Financial Conduct Authority, or the FCA, announced the desire to phase out the use of LIBOR by the end of 2021. However, the FCA recently announced that most US Dollar LIBOR would continue to be published through June 30, 2023. In anticipation of the cessation of LIBOR, we may need to renegotiate any credit agreements extending beyond the applicable phase out date with our prospective portfolio companies that utilize LIBOR as a factor in determining the interest rate. Certain of the loan agreements with our portfolio companies have included fallback language in the event that LIBOR becomes unavailable. This language generally provides that the administrative agent may identify a replacement reference rate, typically with the consent of (or prior consultation with) the borrower. In certain cases, the administrative agent will be required to obtain the consent of either a majority of the lenders under the facility, or the consent of each lender, prior to identifying a replacement reference rate. Certain of the loan agreements with our portfolio companies do not include any fallback language providing a mechanism for the parties to negotiate a new reference interest rate and will instead revert to the base rate in the event LIBOR ceases to exist.
Critical Accounting Policies
Basis of Presentation
Our Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair presentation of the Consolidated Financial Statements have been made. All intercompany balances and transactions have been eliminated. We are an investment company following the accounting and reporting guidance in Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 946,
Financial Services-Investment Companies
, or ASC 946.
Investment Valuation
We value our investments in accordance with FASB ASC Topic 820,
Fair Value Measurements and Disclosures
, or ASC 820, which defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. ASC 820 prioritizes the use of observable market prices over entity-specific inputs. Where observable prices or inputs are not available or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments’ complexity.
Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:
•
Level 1 — Unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date.
•
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities.
•
Level 3 — Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
If inputs used to measure fair value fall into different levels of the fair value hierarchy, an investment's level is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. This includes investment securities that are valued using "bid" and "ask" prices obtained from independent third party pricing services or directly from brokers. These investments may be classified as Level 3 because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities or may require adjustments for investment-specific factors or restrictions.
Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. As such, Oaktree obtains and analyzes readily available market quotations provided by pricing vendors and brokers for all of our investments for which quotations are available. In determining the fair value of a particular investment, pricing vendors and brokers use observable market information, including both binding and non-binding indicative quotations.
We seek to obtain at least two quotations for the subject or similar securities, typically from pricing vendors. If we are unable to obtain two quotes from pricing vendors, or if the prices obtained from pricing vendors are not within our set threshold, we seek to obtain a quote directly from a broker making a market for the asset. Oaktree evaluates the quotations provided by pricing vendors and brokers based on available market information, including trading activity of the subject or similar securities, or by performing a comparable security analysis to ensure that fair values are reasonably estimated. Oaktree also performs back-testing of valuation information obtained from pricing vendors and brokers against actual prices received in transactions. In addition to ongoing monitoring and back-testing, Oaktree performs due diligence procedures over pricing vendors to understand their methodology and controls to support their use in the valuation process. Generally, we do not adjust any of the prices received from these sources.
If the quotations obtained from pricing vendors or brokers are determined to not be reliable or are not readily available, we value such investments using any of three different valuation techniques. The first valuation technique is the transaction precedent technique, which utilizes recent or expected future transactions of the investment to determine fair value, to the extent applicable. The second valuation technique is an analysis of the enterprise value, or EV, of the portfolio company. EV means the entire value of the portfolio company to a market participant, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. The EV analysis is typically performed to determine (i) the value of equity investments, (ii) whether there is credit impairment for debt investments and (iii) the value for debt investments that we are deemed to control under the Investment Company Act. To estimate the EV of a portfolio company, Oaktree analyzes various factors, including the portfolio company’s historical and projected financial results, macroeconomic impacts on the company and competitive dynamics in the company’s industry. Oaktree also utilizes some or all of the following information based on the individual circumstances of the portfolio company: (i) valuations of comparable public companies, (ii) recent sales of private and public comparable companies in similar industries or having similar business or earnings characteristics, (iii) purchase prices as a multiple of their earnings or cash flow, (iv) the portfolio company’s ability to meet its forecasts and its business prospects, (v) a discounted cash flow analysis, (vi) estimated liquidation or collateral value of the portfolio company’s assets and (vii) offers from third parties to buy the portfolio company. We may probability weight potential sale outcomes with respect to a portfolio company when uncertainty exists as of the valuation date. The third valuation technique is a market yield technique, which is typically performed for non-credit impaired debt investments. In the market yield technique, a current price is imputed for the investment based upon an assessment of the expected market yield for a similarly structured investment with a similar level of risk, and we consider the current contractual interest rate, the capital structure and other terms of the investment relative to risk of the company and the specific investment. A key determinant of risk, among other things, is the leverage through the investment relative to the EV of the portfolio company. As debt investments held by us are substantially illiquid with no active transaction market, we depend on primary market data, including newly funded transactions and industry-specific market movements, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.
In accordance with ASC 820-10, certain investments that qualify as investment companies in accordance with ASC 946 may be valued using net asset value as a practical expedient for fair value. Consistent with FASB guidance under ASC 820, these investments are excluded from the hierarchical levels. These investments are generally not redeemable.
We estimate the fair value of privately held warrants using a Black Scholes pricing model, which includes an analysis of various factors and subjective assumptions, including the current stock price (by using an EV analysis as described above), the expected period until exercise, expected volatility of the underlying stock price, expected dividends and the risk-free rate. Changes in the subjective input assumptions can materially affect the fair value estimates.
Our Board of Directors undertakes a multi-step valuation process each quarter in connection with determining the fair value of our investments:
•
The quarterly valuation process begins with each portfolio company or investment being initially valued by Oaktree’s valuation team in conjunction with Oaktree’s portfolio management team and investment professionals responsible for each portfolio investment;
•
Preliminary valuations are then reviewed and discussed with management of Oaktree;
•
Separately, independent valuation firms engaged by our Board of Directors prepare valuations of our investments, on a selected basis, for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment, and submit the reports to us and provide such reports to Oaktree and the Audit Committee of our Board of Directors;
•
Oaktree compares and contrasts its preliminary valuations to the valuations of the independent valuation firms and prepares a valuation report for the Audit Committee;
•
The Audit Committee reviews the preliminary valuations with Oaktree, and Oaktree responds and supplements the preliminary valuations to reflect any discussions between Oaktree and the Audit Committee;
•
The Audit Committee makes a recommendation to our full Board of Directors regarding the fair value of the investments in our portfolio; and
•
Our Board of Directors discusses valuations and determines the fair value of each investment in our portfolio.
The fair value of our investments as of June 30, 2021 and September 30, 2020 was determined in good faith by our Board of Directors. Our Board of Directors has and will continue to engage independent valuation firms to provide assistance regarding the determination of the fair value of a portion of our portfolio securities for which market quotations are not readily available or are readily available but deemed not reflective of the fair value of the investment each quarter, and the Board of Directors may reasonably rely on that assistance. As of June 30, 2021, 89.6% of our portfolio at fair value was valued either based on market quotations, the transactions precedent approach or corroborated by independent valuation firms. However, our Board of Directors is responsible for the ultimate valuation of the portfolio investments at fair value as determined in good faith pursuant to our valuation policy and a consistently applied valuation process.
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. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been reported had a ready market for the investments existed, and it is reasonably possible that the difference could be material.
As of June 30, 2021 and September 30, 2020, approximately 95.0% and 95.9%, respectively, of our total assets represented investments at fair value.
Revenue Recognition
Interest Income
Interest income, adjusted for accretion of original issue discount, or OID, is recorded on an accrual basis to the extent that such amounts are expected to be collected. We stop accruing interest on investments when it is determined that interest is no longer collectible. Investments that are expected to pay regularly scheduled interest in cash are generally placed on non-accrual status when there is reasonable doubt that principal or interest cash payments will be collected. Cash interest payments received on investments may be recognized as income or a return of capital depending upon management’s judgment. A non-accrual investment is restored to accrual status if past due principal and interest are paid in cash, and the portfolio company, in management’s judgment, is likely to continue timely payment of its remaining obligations. As of June 30, 2021, there were no investments on non-accrual status.
In connection with our investment in a portfolio company, we sometimes receive nominal cost equity that is valued as part of the negotiation process with the portfolio company. When we receive nominal cost equity, we allocate our cost basis in the investment between debt securities and the nominal cost equity at the time of origination. Any resulting discount from recording the loan, or otherwise purchasing a security at a discount, is accreted into interest income over the life of the loan.
PIK Interest Income
Our investments in debt securities may contain PIK interest provisions. PIK interest, which typically represents contractually deferred interest added to the loan balance that is generally due at the end of the loan term, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. We generally cease accruing PIK interest if there is insufficient value to support the accrual or if we do not expect the portfolio company to be able to pay all principal and interest due. Our decision to cease accruing PIK interest on a loan or debt security involves subjective judgments and determinations based on available information about a particular portfolio company, including whether the portfolio company is current with respect to its payment of principal and interest on its loans and debt securities; financial statements and financial projections for the portfolio company; our assessment of the portfolio company's business development success; information obtained by us in connection with periodic formal update interviews with the portfolio company's management and, if appropriate, the private equity sponsor; and information about the general economic and market conditions in which the portfolio company operates. Our determination to cease accruing PIK interest is generally made well before our full write-down of a loan or debt security. In addition, if it is subsequently determined that we will not be able to collect any previously accrued PIK interest, the fair value of the loans or debt securities would be reduced by the amount of such previously accrued, but uncollectible, PIK interest. The accrual of PIK interest on our debt investments increases the recorded cost bases of these investments in our Consolidated Financial Statements including for purposes of computing the capital gains incentive fee payable by us to Oaktree. To maintain
our status as a RIC, certain income from PIK interest may be required to be distributed to our stockholders, even though we have not yet collected the cash and may never do so.
Fee Income
Oaktree or its affiliates may provide financial advisory services to portfolio companies and, in return, we may receive fees for capital structuring services. These fees are generally nonrecurring and are recognized by us upon the investment closing date. We may also receive additional fees in the ordinary course of business, including servicing, amendment and prepayment fees, which are classified as fee income and recognized as they are earned or the services are rendered.
We have also structured exit fees across certain of our portfolio investments to be received upon the future exit of those investments. These fees are typically paid to us upon the earliest to occur of (i) a sale of the borrower or substantially all of the assets of the borrower, (ii) the maturity date of the loan or (iii) the date when full prepayment of the loan occurs. The receipt of such fees is contingent upon the occurrence of one of the events listed above for each of the investments. These fees are included in net investment income over the life of the loan.
Dividend Income
We generally recognize dividend income on the ex-dividend date for public securities and the record date for private equity investments. Distributions received from private equity investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from private equity investments as dividend income unless there are sufficient earnings at the portfolio company prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.
Portfolio Composition
Our investments principally consist of loans, common and preferred equity and warrants in privately-held companies, Senior Loan Fund JV I, LLC, or SLF JV I
,
a joint venture through which we and Trinity Universal Insurance Company, a subsidiary of Kemper Corporation, or Kemper, co-invest in senior secured loans of middle-market companies and other corporate debt securities, and OCSI Glick JV LLC, or the Glick JV, a joint venture through which we and GF Equity Funding 2014 LLC, or GF Equity Funding, co-invest primarily in senior secured loans of middle-market companies. We refer to SLF JV I and the Glick JV collectively as the JVs. Our loans are typically secured by a first, second or subordinated lien on the assets of the portfolio company and generally have terms of up to ten years (but an expected average life of between three and four years).
During the nine months ended June 30, 2021, we originated $782.4 million of investment commitments in 41 new and 10 existing portfolio companies and funded $708.6 million of investments.
During the nine months ended June 30, 2021, we received $560.2 million of proceeds from prepayments, exits, other paydowns and sales and exited 35 portfolio companies.
A summary of the composition of our investment portfolio at cost and fair value as a percentage of total investments is shown in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Cost:
|
|
|
|
|
|
Senior secured debt
|
|
85.40
|
%
|
|
80.58
|
%
|
|
Debt investments in the JVs
|
|
6.33
|
|
|
5.77
|
|
|
Preferred equity
|
|
2.56
|
|
|
2.37
|
|
|
Common equity and warrants
|
|
2.22
|
|
|
3.69
|
|
|
LLC equity interests of the JVs
|
|
2.13
|
|
|
2.95
|
|
|
Subordinated debt
|
|
1.36
|
|
|
4.64
|
|
|
Total
|
|
100.00
|
%
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Fair value:
|
|
|
|
|
|
Senior secured debt
|
|
86.66
|
%
|
|
84.06
|
%
|
|
Debt investments in the JVs
|
|
6.48
|
|
|
6.12
|
|
|
Preferred equity
|
|
2.24
|
|
|
1.90
|
|
|
Common equity and warrants
|
|
1.67
|
|
|
2.40
|
|
|
LLC equity interests of the JVs
|
|
1.57
|
|
|
1.35
|
|
|
Subordinated debt
|
|
1.38
|
|
|
4.17
|
|
|
Total
|
|
100.00
|
%
|
|
100.00
|
%
|
The industry composition of our portfolio at cost and fair value as a percentage of total investments was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Cost:
|
|
|
|
|
|
Application Software
|
|
14.18
|
%
|
|
9.71
|
%
|
|
Multi-Sector Holdings (1)
|
|
8.46
|
|
|
8.87
|
|
|
Data Processing & Outsourced Services
|
|
7.36
|
|
|
6.57
|
|
|
Pharmaceuticals
|
|
5.14
|
|
|
5.96
|
|
|
Biotechnology
|
|
4.93
|
|
|
5.36
|
|
|
Personal Products
|
|
4.50
|
|
|
3.00
|
|
|
Industrial Machinery
|
|
3.42
|
|
|
0.90
|
|
|
Health Care Services
|
|
3.32
|
|
|
4.26
|
|
|
Construction & Engineering
|
|
2.90
|
|
|
0.80
|
|
|
Specialized Finance
|
|
2.79
|
|
|
3.11
|
|
|
Internet & Direct Marketing Retail
|
|
2.77
|
|
|
0.89
|
|
|
Aerospace & Defense
|
|
2.53
|
|
|
1.68
|
|
|
Integrated Telecommunication Services
|
|
2.17
|
|
|
2.67
|
|
|
Specialty Chemicals
|
|
2.01
|
|
|
2.68
|
|
|
Internet Services & Infrastructure
|
|
2.01
|
|
|
1.72
|
|
|
Fertilizers & Agricultural Chemicals
|
|
1.90
|
|
|
2.02
|
|
|
Electrical Components & Equipment
|
|
1.90
|
|
|
1.25
|
|
|
Diversified Support Services
|
|
1.78
|
|
|
1.13
|
|
|
Real Estate Services
|
|
1.75
|
|
|
2.34
|
|
|
Oil & Gas Storage & Transportation
|
|
1.61
|
|
|
1.59
|
|
|
Oil & Gas Refining & Marketing
|
|
1.55
|
|
|
1.87
|
|
|
Real Estate Operating Companies
|
|
1.32
|
|
|
—
|
|
|
Health Care Supplies
|
|
1.27
|
|
|
1.30
|
|
|
Advertising
|
|
1.23
|
|
|
0.82
|
|
|
Property & Casualty Insurance
|
|
1.21
|
|
|
2.88
|
|
|
Insurance Brokers
|
|
1.14
|
|
|
1.05
|
|
|
Movies & Entertainment
|
|
1.12
|
|
|
2.68
|
|
|
Leisure Facilities
|
|
1.03
|
|
|
0.11
|
|
|
Independent Power Producers & Energy Traders
|
|
1.02
|
|
|
1.29
|
|
|
Managed Health Care
|
|
0.98
|
|
|
1.65
|
|
|
Airport Services
|
|
0.96
|
|
|
1.34
|
|
|
Airlines
|
|
0.94
|
|
|
0.63
|
|
|
Commercial Printing
|
|
0.86
|
|
|
0.47
|
|
|
Health Care Technology
|
|
0.72
|
|
|
1.29
|
|
|
Thrifts & Mortgage Finance
|
|
0.70
|
|
|
0.06
|
|
|
Other Diversified Financial Services
|
|
0.61
|
|
|
0.01
|
|
|
Health Care Distributors
|
|
0.55
|
|
|
0.77
|
|
|
Auto Parts & Equipment
|
|
0.54
|
|
|
2.02
|
|
|
Apparel, Accessories & Luxury Goods
|
|
0.48
|
|
|
0.82
|
|
|
Health Care Equipment
|
|
0.46
|
|
|
—
|
|
|
Electronic Components
|
|
0.43
|
|
|
1.53
|
|
|
IT Consulting & Other Services
|
|
0.43
|
|
|
0.89
|
|
|
Restaurants
|
|
0.40
|
|
|
0.61
|
|
|
Research & Consulting Services
|
|
0.32
|
|
|
1.49
|
|
|
Leisure Products
|
|
0.30
|
|
|
—
|
|
|
Systems Software
|
|
0.29
|
|
|
1.24
|
|
|
Alternative Carriers
|
|
0.28
|
|
|
—
|
|
|
Automotive Retail
|
|
0.26
|
|
|
—
|
|
|
Integrated Oil & Gas
|
|
0.21
|
|
|
—
|
|
|
Food Distributors
|
|
0.20
|
|
|
—
|
|
|
Food Retail
|
|
0.16
|
|
|
0.41
|
|
|
Diversified Banks
|
|
0.15
|
|
|
—
|
|
|
Oil & Gas Exploration & Production
|
|
0.10
|
|
|
—
|
|
|
Construction Materials
|
|
0.10
|
|
|
0.13
|
|
|
Housewares & Specialties
|
|
0.08
|
|
|
—
|
|
|
Metal & Glass Containers
|
|
0.07
|
|
|
0.68
|
|
|
Specialty Stores
|
|
0.06
|
|
|
0.08
|
|
|
Education Services
|
|
0.04
|
|
|
1.37
|
|
|
General Merchandise Stores
|
|
—
|
|
|
1.15
|
|
|
Hotels, Resorts & Cruise Lines
|
|
—
|
|
|
0.92
|
|
|
Diversified Real Estate Activities
|
|
—
|
|
|
0.92
|
|
|
Trading Companies & Distributors
|
|
—
|
|
|
0.61
|
|
|
Oil & Gas Equipment & Services
|
|
—
|
|
|
0.20
|
|
|
Health Care Facilities
|
|
—
|
|
|
0.19
|
|
|
Specialized REITs
|
|
—
|
|
|
0.01
|
|
|
Total
|
|
100.00
|
%
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Fair value:
|
|
|
|
|
|
Application Software
|
|
14.30
|
%
|
|
10.21
|
%
|
|
Multi-Sector Holdings (1)
|
|
8.05
|
|
|
7.74
|
|
|
Data Processing & Outsourced Services
|
|
7.07
|
|
|
6.33
|
|
|
Pharmaceuticals
|
|
5.31
|
|
|
6.55
|
|
|
Biotechnology
|
|
4.99
|
|
|
6.14
|
|
|
Personal Products
|
|
4.56
|
|
|
3.24
|
|
|
Industrial Machinery
|
|
3.46
|
|
|
0.74
|
|
|
Health Care Services
|
|
3.28
|
|
|
3.81
|
|
|
Internet & Direct Marketing Retail
|
|
2.93
|
|
|
0.97
|
|
|
Construction & Engineering
|
|
2.92
|
|
|
0.86
|
|
|
Specialized Finance
|
|
2.80
|
|
|
3.08
|
|
|
Aerospace & Defense
|
|
2.61
|
|
|
1.56
|
|
|
Integrated Telecommunication Services
|
|
2.23
|
|
|
2.61
|
|
|
Specialty Chemicals
|
|
2.01
|
|
|
2.48
|
|
|
Internet Services & Infrastructure
|
|
1.99
|
|
|
1.69
|
|
|
Fertilizers & Agricultural Chemicals
|
|
1.92
|
|
|
2.14
|
|
|
Electrical Components & Equipment
|
|
1.90
|
|
|
1.30
|
|
|
Diversified Support Services
|
|
1.82
|
|
|
1.12
|
|
|
Real Estate Services
|
|
1.77
|
|
|
2.40
|
|
|
Oil & Gas Refining & Marketing
|
|
1.58
|
|
|
1.90
|
|
|
Oil & Gas Storage & Transportation
|
|
1.53
|
|
|
1.64
|
|
|
Real Estate Operating Companies
|
|
1.35
|
|
|
—
|
|
|
Advertising
|
|
1.30
|
|
|
0.85
|
|
|
Health Care Supplies
|
|
1.28
|
|
|
1.37
|
|
|
Insurance Brokers
|
|
1.24
|
|
|
1.15
|
|
|
Property & Casualty Insurance
|
|
1.22
|
|
|
2.97
|
|
|
Movies & Entertainment
|
|
1.17
|
|
|
2.77
|
|
|
Airlines
|
|
1.02
|
|
|
0.83
|
|
|
Independent Power Producers & Energy Traders
|
|
1.01
|
|
|
1.32
|
|
|
Managed Health Care
|
|
0.98
|
|
|
1.70
|
|
|
Leisure Facilities
|
|
0.94
|
|
|
—
|
|
|
Airport Services
|
|
0.91
|
|
|
1.35
|
|
|
Commercial Printing
|
|
0.87
|
|
|
0.47
|
|
|
Health Care Technology
|
|
0.72
|
|
|
1.40
|
|
|
Thrifts & Mortgage Finance
|
|
0.69
|
|
|
0.02
|
|
|
Other Diversified Financial Services
|
|
0.62
|
|
|
—
|
|
|
Health Care Distributors
|
|
0.55
|
|
|
0.78
|
|
|
Auto Parts & Equipment
|
|
0.52
|
|
|
1.99
|
|
|
Health Care Equipment
|
|
0.46
|
|
|
—
|
|
|
Electronic Components
|
|
0.43
|
|
|
1.69
|
|
|
IT Consulting & Other Services
|
|
0.42
|
|
|
0.88
|
|
|
Restaurants
|
|
0.41
|
|
|
0.50
|
|
|
Research & Consulting Services
|
|
0.32
|
|
|
1.54
|
|
|
Leisure Products
|
|
0.30
|
|
|
—
|
|
|
Alternative Carriers
|
|
0.30
|
|
|
—
|
|
|
Systems Software
|
|
0.29
|
|
|
1.30
|
|
|
Apparel, Accessories & Luxury Goods
|
|
0.26
|
|
|
0.50
|
|
|
Automotive Retail
|
|
0.26
|
|
|
—
|
|
|
Integrated Oil & Gas
|
|
0.21
|
|
|
—
|
|
|
Food Distributors
|
|
0.20
|
|
|
—
|
|
|
Food Retail
|
|
0.16
|
|
|
0.44
|
|
|
Diversified Banks
|
|
0.15
|
|
|
—
|
|
|
Oil & Gas Exploration & Production
|
|
0.11
|
|
|
—
|
|
|
Construction Materials
|
|
0.10
|
|
|
0.13
|
|
|
Housewares & Specialties
|
|
0.08
|
|
|
—
|
|
|
Metal & Glass Containers
|
|
0.08
|
|
|
0.75
|
|
|
Education Services
|
|
0.04
|
|
|
0.45
|
|
|
General Merchandise Stores
|
|
—
|
|
|
1.14
|
|
|
Hotels, Resorts & Cruise Lines
|
|
—
|
|
|
1.09
|
|
|
Diversified Real Estate Activities
|
|
—
|
|
|
1.07
|
|
|
Trading Companies & Distributors
|
|
—
|
|
|
0.64
|
|
|
Health Care Facilities
|
|
—
|
|
|
0.23
|
|
|
Oil & Gas Equipment & Services
|
|
—
|
|
|
0.16
|
|
|
Specialized REITs
|
|
—
|
|
|
0.01
|
|
|
Total
|
|
100.00
|
%
|
|
100.00
|
%
|
___________________
(1)
This industry includes our investments in the JVs and certain limited partnership interests.
Loans and Debt Securities on Non-Accrual Status
As of June 30, 2021, there were no investments on non-accrual status. As of September 30, 2020, there were two investments on which we had stopped accruing cash and/or PIK interest or OID income.
The percentages of our debt investments at cost and fair value by accrual status as of September 30, 2020 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
|
|
Cost
|
|
% of Debt
Portfolio
|
|
Fair Value
|
|
% of Debt
Portfolio
|
|
Accrual
|
|
$
|
1,500,364
|
|
|
98.79
|
%
|
|
$
|
1,483,284
|
|
|
99.89
|
%
|
|
PIK non-accrual (1)
|
|
12,661
|
|
|
0.83
|
|
|
—
|
|
|
—
|
|
|
Cash non-accrual (2)
|
|
5,712
|
|
|
0.38
|
|
|
1,571
|
|
|
0.11
|
|
|
Total
|
|
$
|
1,518,737
|
|
|
100.00
|
%
|
|
$
|
1,484,855
|
|
|
100.00
|
%
|
___________________
(1)
PIK non-accrual status is inclusive of other non-cash income, where applicable.
(2)
Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.
Senior Loan Fund JV I, LLC
In May 2014, we entered into a limited liability company, or LLC, agreement with Kemper to form SLF JV I. We co-invest in senior secured loans of middle-market companies and other corporate debt securities with Kemper through our investment in SLF JV I. SLF JV I is managed by a four person Board of Directors, two of whom are selected by us and two of whom are selected by Kemper. All portfolio decisions and investment decisions in respect of SLF JV I must be approved by the SLF JV I investment committee, which consists of one representative selected by us and one representative selected by Kemper (with approval from a representative of each required). Since we do not have a controlling financial interest in SLF JV I, we do not consolidate SLF JV I.
SLF JV I is capitalized pro rata with LLC equity interests as transactions are completed and may be capitalized with additional subordinated notes issued to us and Kemper by SLF JV I. The subordinated notes issued by SLF JV I are referred to as the SLF JV I Notes. The SLF JV I Notes are senior in right of payment to SLF JV I LLC equity interests and subordinated in right of payment to SLF JV I’s secured debt. As of June 30, 2021 and September 30, 2020, we and Kemper owned, in the aggregate, 87.5% and 12.5%, respectively, of the LLC equity interests of SLF JV I and the outstanding SLF JV I Notes.
SLF JV I has a senior revolving credit facility with Deutsche Bank AG, New York Branch, or, as amended, the SLF JV I Deutsche Bank Facility, which permitted up to $260.0 million and $250.0 million of borrowings (subject to borrowing base and other limitations) as of June 30, 2021 and September 30, 2020, respectively. Borrowings under the SLF JV I Deutsche Bank Facility are secured by all of the assets of SLF JV I Funding LLC, a special purpose financing subsidiary of SLF JV I. As of June 30, 2021, the reinvestment period of the SLF JV I Deutsche Bank Facility was scheduled to expire May 3, 2023 and the maturity date for the SLF JV I Deutsche Bank Facility was May 3, 2028. As of June 30, 2021, borrowings under the SLF JV I Deutsche Bank Facility accrued interest at a rate equal to the 3-month LIBOR plus 2.00% per annum during the reinvestment period, 3-month LIBOR plus 2.15% for the first year after the end of the reinvestment period, 3-month LIBOR plus 2.25% for the following year and 3-month LIBOR plus 2.50% thereafter, in each case with a 0.125% LIBOR floor. Under the SLF JV I Deutsche Bank Facility, $209.6 million and $167.9 million of borrowings were outstanding as of June 30, 2021 and September 30, 2020, respectively.
As of June 30, 2021 and September 30, 2020, SLF JV I had total assets of $386.5 million and $313.5 million, respectively. SLF JV I's portfolio primarily consisted of senior secured loans to 57 and 56 portfolio companies as of June 30, 2021 and September 30, 2020, respectively. The portfolio companies in SLF JV I are in industries similar to those in which we may invest directly. As of June 30, 2021, our investment in SLF JV I consisted of LLC equity interests and SLF JV I Notes of $132.9 million in aggregate at fair value. As of September 30, 2020, our investment in SLF JV I consisted of LLC equity interests and SLF JV I Notes of $117.4 million in aggregate at fair value.
As of each of June 30, 2021 and September 30, 2020, we and Kemper had funded approximately $165.5 million to SLF JV I, of which $144.8 million was from us. As of June 30, 2021, we had aggregate commitments to fund SLF JV I of $35.0 million, of which approximately $26.2 million was to fund additional SLF JV I Notes and approximately $8.8 million was to fund LLC equity interests in SLF JV I. As of September 30, 2020, we had commitments to fund LLC equity interests in SLF JV I of $17.5 million, of which $1.3 million was unfunded.
Below is a summary of SLF JV I's portfolio, followed by a listing of the individual loans in SLF JV I's portfolio as of June 30, 2021 and September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Senior secured loans (1)
|
|
$359,079
|
|
$307,579
|
|
Weighted average interest rate on senior secured loans (2)
|
|
5.61%
|
|
5.44%
|
|
Number of borrowers in SLF JV I
|
|
57
|
|
56
|
|
Largest exposure to a single borrower (1)
|
|
$9,938
|
|
$10,487
|
|
Total of five largest loan exposures to borrowers (1)
|
|
$47,100
|
|
$49,097
|
__________________
(1) At principal amount.
(2) Computed using the weighted average annual interest rate on accruing senior secured loans at fair value.
SLF JV I Portfolio as of June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Access CIG, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025
|
3.84
|
%
|
Diversified Support Services
|
$
|
9,135
|
|
|
$
|
9,106
|
|
|
$
|
9,092
|
|
(4)
|
|
ADB Companies, LLC
|
First Lien Term Loan, LIBOR+6.25% cash due 12/18/2025
|
7.25
|
%
|
Construction & Engineering
|
7832
|
|
7,654
|
|
|
7,711
|
|
(4)
|
|
AI Ladder (Luxembourg) Subco S.a.r.l.
|
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025
|
4.58
|
%
|
Electrical Components & Equipment
|
5,957
|
|
|
5,855
|
|
|
5,963
|
|
(4)
|
|
Altice France S.A.
|
First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026
|
4.15
|
%
|
Integrated Telecommunication Services
|
4,607
|
|
|
4,440
|
|
|
4,606
|
|
|
|
Alvogen Pharma US, Inc.
|
First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023
|
6.25
|
%
|
Pharmaceuticals
|
9,879
|
|
|
9,682
|
|
|
9,749
|
|
|
|
Amplify Finco Pty Ltd.
|
First Lien Term Loan, LIBOR+4.25% cash due 11/26/2026
|
5.00
|
%
|
Movies & Entertainment
|
7,900
|
|
|
7,821
|
|
|
7,762
|
|
(4)
|
|
Anastasia Parent, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025
|
3.90
|
%
|
Personal Products
|
2,806
|
|
|
2,216
|
|
|
2,257
|
|
|
|
Apptio, Inc.
|
First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025
|
8.25
|
%
|
Application Software
|
4,615
|
|
|
4,561
|
|
|
4,533
|
|
(4)
|
|
Apptio, Inc.
|
First Lien Revolver, LIBOR+7.25% cash due 1/10/2025
|
8.25
|
%
|
Application Software
|
154
|
|
|
149
|
|
|
147
|
|
(4)(5)
|
|
Total Apptio, Inc.
|
|
|
|
4,769
|
|
|
4,710
|
|
|
4,680
|
|
|
|
Aurora Lux Finco S.À.R.L.
|
First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026
|
7.00
|
%
|
Airport Services
|
6,419
|
|
|
6,293
|
|
|
6,040
|
|
(4)
|
|
BAART Programs, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 6/11/2027
|
6.00
|
%
|
Health Care Equipment
|
6,750
|
|
|
6,683
|
|
|
6,716
|
|
|
|
BAART Programs, Inc.
|
First Lien Delayed Draw Term Loan, LIBOR+5.00% cash due 6/11/2027
|
|
Health Care Equipment
|
—
|
|
|
(8)
|
|
|
(4)
|
|
(5)
|
|
Total BAART Programs, Inc.
|
|
|
|
6,750
|
|
|
6,675
|
|
|
6,712
|
|
|
|
Blackhawk Network Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025
|
3.10
|
%
|
Data Processing & Outsourced Services
|
9,700
|
|
|
9,686
|
|
|
9,604
|
|
|
|
Boxer Parent Company Inc.
|
First Lien Term Loan, LIBOR+3.75% cash due 10/2/2025
|
3.85
|
%
|
Systems Software
|
6,662
|
|
|
6,589
|
|
|
6,632
|
|
|
|
Brazos Delaware II, LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025
|
4.09
|
%
|
Oil & Gas Equipment & Services
|
7,272
|
|
|
7,252
|
|
|
7,112
|
|
|
|
C5 Technology Holdings, LLC
|
171 Common Units
|
|
Data Processing & Outsourced Services
|
|
|
—
|
|
|
—
|
|
(4)
|
|
C5 Technology Holdings, LLC
|
7,193,539.63 Preferred Units
|
|
Data Processing & Outsourced Services
|
|
|
7,194
|
|
|
5,683
|
|
(4)
|
|
Total C5 Technology Holdings, LLC
|
|
|
|
|
|
7,194
|
|
|
5,683
|
|
|
|
CITGO Petroleum Corp.
|
First Lien Term Loan, LIBOR+6.25% cash due 3/28/2024
|
7.25
|
%
|
Oil & Gas Refining & Marketing
|
7,129
|
|
|
7,058
|
|
|
7,187
|
|
(4)
|
|
Connect U.S. Finco LLC
|
First Lien Term Loan, LIBOR+3.50% cash due 12/11/2026
|
4.50
|
%
|
Alternative Carriers
|
7,381
|
|
|
7,220
|
|
|
7,400
|
|
|
|
Convergeone Holdings, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 1/4/2026
|
5.10
|
%
|
IT Consulting & Other Services
|
4,975
|
|
|
4,810
|
|
|
4,930
|
|
(4)
|
|
Curium Bidco S.à.r.l.
|
First Lien Term Loan, LIBOR+4.00% cash due 7/9/2026
|
4.15
|
%
|
Biotechnology
|
5,895
|
|
|
5,851
|
|
|
5,888
|
|
|
|
Dcert Buyer, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 10/16/2026
|
4.10
|
%
|
Internet Services & Infrastructure
|
7,900
|
|
|
7,880
|
|
|
7,920
|
|
|
|
Enviva Holdings, LP
|
First Lien Term Loan, LIBOR+5.50% cash due 2/17/2026
|
6.50
|
%
|
Forest Products
|
5,893
|
|
|
5,834
|
|
|
5,959
|
|
|
|
eResearch Technology, Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027
|
5.50
|
%
|
Application Software
|
7,425
|
|
|
7,351
|
|
|
7,468
|
|
|
|
Gibson Brands, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 6/25/2028
|
5.75
|
%
|
Leisure Products
|
7,500
|
|
|
7,425
|
|
|
7,500
|
|
|
|
GI Chill Acquisition LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 8/6/2025
|
4.15
|
%
|
Managed Health Care
|
3,731
|
|
|
3,748
|
|
|
3,730
|
|
(4)
|
|
GI Chill Acquisition LLC
|
Second Lien Term Loan, LIBOR+7.50% cash due 8/6/2026
|
7.65
|
%
|
Managed Health Care
|
3,750
|
|
|
3,670
|
|
|
3,731
|
|
(4)
|
|
Total GI Chill Acquisition LLC
|
|
|
|
7,481
|
|
|
7,418
|
|
|
7,461
|
|
|
|
Gigamon, Inc.
|
First Lien Term Loan, LIBOR+3.75% cash due 12/27/2024
|
4.50
|
%
|
Systems Software
|
7,619
|
|
|
7,581
|
|
|
7,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Global Medical Response, Inc.
|
First Lien Term Loan, LIBOR+4.75% cash due 10/2/2025
|
5.75
|
%
|
Health Care Services
|
$
|
2,220
|
|
|
$
|
2,181
|
|
|
$
|
2,233
|
|
|
|
Grab Holdings Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 1/29/2026
|
5.50
|
%
|
Interactive Media & Services
|
2,993
|
|
|
2,910
|
|
|
3,045
|
|
|
|
Indivior Finance S.À.R.L.
|
First Lien Term Loan, LIBOR+5.25% cash due 6/28/2026
|
6.00
|
%
|
Pharmaceuticals
|
7,500
|
|
|
7,350
|
|
|
7,350
|
|
|
|
Intelsat Jackson Holdings S.A.
|
First Lien Term Loan, PRIME+4.75% cash due 11/27/2023
|
8.00
|
%
|
Alternative Carriers
|
3,568
|
|
|
3,547
|
|
|
3,633
|
|
|
|
Intelsat Jackson Holdings S.A.
|
First Lien Term Loan, LIBOR+5.50% cash due 7/13/2022
|
6.50
|
%
|
Alternative Carriers
|
1,943
|
|
|
1,769
|
|
|
1,960
|
|
|
|
Total Intelsat Jackson Holdings S.A.
|
|
|
|
5,511
|
|
|
5,316
|
|
|
5,593
|
|
|
|
INW Manufacturing, LLC
|
First Lien Term Loan, LIBOR+5.75% cash due 5/7/2027
|
6.50
|
%
|
Personal Products
|
9,938
|
|
|
9,645
|
|
|
9,739
|
|
(4)
|
|
Lightbox Intermediate, L.P.
|
First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026
|
5.15
|
%
|
Real Estate Services
|
7,462
|
|
|
7,392
|
|
|
7,425
|
|
(4)
|
|
LogMeIn, Inc.
|
First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027
|
4.83
|
%
|
Application Software
|
7,960
|
|
|
7,827
|
|
|
7,957
|
|
(4)
|
|
LTI Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.50% cash due 9/6/2025
|
3.60
|
%
|
Electronic Components
|
7,462
|
|
|
7,341
|
|
|
7,373
|
|
|
|
Maravai Intermediate Holdings, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 10/19/2027
|
4.75
|
%
|
Biotechnology
|
6,838
|
|
|
6,769
|
|
|
6,874
|
|
(4)
|
|
Mindbody, Inc.
|
First Lien Term Loan, LIBOR+7.00% cash 1.50% PIK due 2/14/2025
|
8.00
|
%
|
Internet Services & Infrastructure
|
4,598
|
|
|
4,544
|
|
|
4,373
|
|
(4)
|
|
Mindbody, Inc.
|
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025
|
|
Internet Services & Infrastructure
|
—
|
|
|
(6)
|
|
|
(23)
|
|
(4)(5)
|
|
Total Mindbody, Inc.
|
|
|
|
4,598
|
|
|
4,538
|
|
|
4,350
|
|
|
|
MRI Software LLC
|
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026
|
6.50
|
%
|
Application Software
|
3,844
|
|
|
3,809
|
|
|
3,849
|
|
(4)
|
|
MRI Software LLC
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(6)
|
|
|
3
|
|
(4)(5)
|
|
MRI Software LLC
|
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(3)
|
|
|
—
|
|
(4)(5)
|
|
Total MRI Software LLC
|
|
|
|
3,844
|
|
|
3,800
|
|
|
3,852
|
|
|
|
Navicure, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026
|
4.10
|
%
|
Health Care Technology
|
5,925
|
|
|
5,894
|
|
|
5,944
|
|
|
|
Northern Star Industries Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 3/31/2025
|
5.50
|
%
|
Electrical Components & Equipment
|
6,773
|
|
|
6,754
|
|
|
6,756
|
|
|
|
Novetta Solutions, LLC
|
First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022
|
6.00
|
%
|
Application Software
|
5,884
|
|
|
5,871
|
|
|
5,891
|
|
|
|
OEConnection LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026
|
4.10
|
%
|
Application Software
|
7,871
|
|
|
7,836
|
|
|
7,872
|
|
(4)
|
|
Olaplex, Inc.
|
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026
|
7.50
|
%
|
Personal Products
|
6,313
|
|
|
6,226
|
|
|
6,313
|
|
(4)
|
|
Olaplex, Inc.
|
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025
|
|
Personal Products
|
—
|
|
|
(8)
|
|
|
(4)
|
|
(4)(5)
|
|
Total Olaplex, Inc.
|
|
|
|
6,313
|
|
|
6,218
|
|
|
6,309
|
|
|
|
Park Place Technologies, LLC
|
First Lien Term Loan, LIBOR+5.00% cash due 11/10/2027
|
6.00
|
%
|
Internet Services & Infrastructure
|
4,988
|
|
|
4,806
|
|
|
5,011
|
|
(4)
|
|
PaySimple, Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025
|
5.61
|
%
|
Data Processing & Outsourced Services
|
7,462
|
|
|
7,427
|
|
|
7,425
|
|
(4)
|
|
Planview Parent, Inc.
|
Second Lien Term Loan, LIBOR+7.25% cash due 12/18/2028
|
8.00
|
%
|
Application Software
|
4,503
|
|
|
4,435
|
|
|
4,514
|
|
(4)
|
|
Pluralsight, LLC
|
First Lien Term Loan, LIBOR+8.00% cash due 4/6/2027
|
9.00
|
%
|
Application Software
|
4,983
|
|
|
4,887
|
|
|
4,883
|
|
(4)
|
|
Pluralsight, LLC
|
First Lien Revolver, LIBOR+8.00% cash due 4/6/2027
|
|
Application Software
|
—
|
|
|
(8)
|
|
|
(8)
|
|
(4)(5)
|
|
Total Pluralsight, LLC
|
|
|
|
4,983
|
|
|
4,879
|
|
|
4,875
|
|
|
|
RS Ivy Holdco, Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 12/23/2027
|
6.50
|
%
|
Oil & Gas Exploration & Production
|
6,965
|
|
|
6,861
|
|
|
6,969
|
|
(4)
|
|
Sabert Corporation
|
First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026
|
5.50
|
%
|
Metal & Glass Containers
|
2,735
|
|
|
2,707
|
|
|
2,738
|
|
(4)
|
|
Salient CRGT, Inc.
|
First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022
|
7.50
|
%
|
Aerospace & Defense
|
4,916
|
|
|
4,881
|
|
|
4,885
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
SHO Holding I Corporation
|
First Lien Term Loan, LIBOR+5.25% cash due 4/27/2024
|
6.25
|
%
|
Footwear
|
$
|
8,310
|
|
|
$
|
8,297
|
|
|
$
|
7,812
|
|
|
|
SHO Holding I Corporation
|
First Lien Term Loan, LIBOR+5.23% cash due 4/27/2024
|
6.23
|
%
|
Footwear
|
138
|
|
|
138
|
|
|
129
|
|
|
|
Total SHO Holding I Corporation
|
|
|
|
8,448
|
|
|
8,435
|
|
|
7,941
|
|
|
|
Sirva Worldwide, Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025
|
5.60
|
%
|
Diversified Support Services
|
3,694
|
|
|
3,639
|
|
|
3,490
|
|
(4)
|
|
Sorenson Communications, LLC
|
First Lien Term Loan, LIBOR+5.50% cash due 3/17/2026
|
6.25
|
%
|
Communications Equipment
|
2,929
|
|
|
2,900
|
|
|
2,958
|
|
|
|
Star US Bidco LLC
|
First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027
|
5.25
|
%
|
Industrial Machinery
|
8,276
|
|
|
8,088
|
|
|
8,281
|
|
(4)
|
|
Supermoose Borrower, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025
|
3.90
|
%
|
Application Software
|
7,843
|
|
|
7,461
|
|
|
7,353
|
|
(4)
|
|
Surgery Center Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.75% cash due 8/31/2026
|
4.50
|
%
|
Health Care Facilities
|
4,924
|
|
|
4,908
|
|
|
4,950
|
|
|
|
Trench Plate Rental, Co.
|
First Lien Term Loan, LIBOR+4.75% cash due 12/3/2026
|
5.75
|
%
|
Construction Materials
|
3,951
|
|
|
3,892
|
|
|
3,891
|
|
|
|
Trench Plate Rental, Co.
|
First Lien Delayed Draw Term Loan, LIBOR+4.75% cash due 12/3/2026
|
|
Construction Materials
|
—
|
|
|
(11)
|
|
|
(11)
|
|
(5)
|
|
Trench Plate Rental, Co.
|
First Lien Revolver, LIBOR+4.75% cash due 12/3/2026
|
5.75
|
%
|
Construction Materials
|
24
|
|
|
15
|
|
|
15
|
|
(5)
|
|
Total Trench Plate Rental, Co.
|
|
|
|
3,975
|
|
|
3,896
|
|
|
3,895
|
|
|
|
Veritas US Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 9/1/2025
|
6.00
|
%
|
Application Software
|
6,450
|
|
|
6,343
|
|
|
6,501
|
|
(4)
|
|
Verscend Holding Corp.
|
First Lien Term Loan, LIBOR+4.00% cash due 8/27/2025
|
4.10
|
%
|
Health Care Technology
|
4,090
|
|
|
4,061
|
|
|
4,107
|
|
|
|
Windstream Services II, LLC
|
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027
|
7.25
|
%
|
Integrated Telecommunication Services
|
7,920
|
|
|
7,638
|
|
|
7,956
|
|
(4)
|
|
WP CPP Holdings, LLC
|
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026
|
8.75
|
%
|
Aerospace & Defense
|
6,000
|
|
|
5,962
|
|
|
5,870
|
|
(4)
|
|
Total Portfolio Investments
|
|
|
|
$
|
359,079
|
|
|
$
|
360,570
|
|
|
$
|
361,246
|
|
|
__________________
(1) Represents the interest rate as of June 30, 2021. All interest rates are payable in cash, unless otherwise noted.
(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, we have provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is in U.S. dollars. As of June 30, 2021, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.10%, the 60-day LIBOR at 0.13%, the 90-day LIBOR at 0.15%, the 180-day LIBOR at 0.17%, the 360-day LIBOR at 0.25% and the PRIME at 3.25%. Most loans include an interest floor, which generally ranges from 0% to 1%.
(3) Represents the current determination of fair value as of June 30, 2021 utilizing a similar technique as us in accordance with ASC 820. However, the determination of such fair value is not included in our Board of Directors' valuation process described elsewhere herein.
(4) This investment is held by both us and SLF JV I as of June 30, 2021.
(5) Investment has undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
SLF JV I Portfolio as of September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Access CIG, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 2/27/2025
|
3.91
|
%
|
Diversified Support Services
|
$
|
9,206
|
|
|
$
|
9,170
|
|
|
$
|
9,029
|
|
|
|
AdVenture Interactive, Corp.
|
927 shares of common stock
|
|
Advertising
|
|
|
1,390
|
|
|
1,373
|
|
(4)
|
|
AI Ladder (Luxembourg) Subco S.a.r.l.
|
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025
|
4.65
|
%
|
Electrical Components & Equipment
|
6,038
|
|
|
5,914
|
|
|
5,781
|
|
(4)
|
|
Airbnb, Inc.
|
First Lien Term Loan, LIBOR+7.50% cash due 4/17/2025
|
8.50
|
%
|
Hotels, Resorts & Cruise Lines
|
3,051
|
|
|
2,981
|
|
|
3,311
|
|
(4)
|
|
Altice France S.A.
|
First Lien Term Loan, LIBOR+4.00% cash due 8/14/2026
|
4.15
|
%
|
Integrated Telecommunication Services
|
4,643
|
|
|
4,450
|
|
|
4,527
|
|
|
|
Alvogen Pharma US, Inc.
|
First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023
|
6.25
|
%
|
Pharmaceuticals
|
9,879
|
|
|
9,623
|
|
|
9,566
|
|
|
|
Amplify Finco Pty Ltd.
|
First Lien Term Loan, LIBOR+4.00% cash due 11/26/2026
|
4.75
|
%
|
Movies & Entertainment
|
7,960
|
|
|
7,880
|
|
|
6,846
|
|
(4)
|
|
Anastasia Parent, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025
|
|
Personal Products
|
2,828
|
|
|
2,282
|
|
|
1,248
|
|
—
|
|
Apptio, Inc.
|
First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025
|
8.25
|
%
|
Application Software
|
4,615
|
|
|
4,550
|
|
|
4,526
|
|
(4)
|
|
Apptio, Inc.
|
First Lien Revolver, LIBOR+7.25% cash due 1/10/2025
|
|
Application Software
|
—
|
|
|
(5)
|
|
|
(8)
|
|
(4)(5)
|
|
Total Apptio, Inc.
|
|
|
|
4,615
|
|
|
4,545
|
|
|
4,518
|
|
|
|
Aurora Lux Finco S.À.R.L.
|
First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026
|
7.00
|
%
|
Airport Services
|
6,468
|
|
|
6,324
|
|
|
6,015
|
|
(4)
|
|
Blackhawk Network Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.00% cash due 6/15/2025
|
3.15
|
%
|
Data Processing & Outsourced Services
|
9,775
|
|
|
9,758
|
|
|
9,251
|
|
|
|
Boxer Parent Company Inc.
|
First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025
|
4.40
|
%
|
Systems Software
|
7,532
|
|
|
7,448
|
|
|
7,331
|
|
(4)
|
|
Brazos Delaware II, LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025
|
4.16
|
%
|
Oil & Gas Equipment & Services
|
7,331
|
|
|
7,306
|
|
|
5,600
|
|
|
|
C5 Technology Holdings, LLC
|
171 Common Units
|
|
Data Processing & Outsourced Services
|
|
|
—
|
|
|
—
|
|
(4)
|
|
C5 Technology Holdings, LLC
|
7,193,539.63 Preferred Units
|
|
Data Processing & Outsourced Services
|
|
|
7,194
|
|
|
5,683
|
|
(4)
|
|
Total C5 Technology Holdings, LLC
|
|
|
|
|
|
7,194
|
|
|
5,683
|
|
|
|
Carrols Restaurant Group, Inc.
|
First Lien Term Loan, LIBOR+6.25% cash due 4/30/2026
|
7.25
|
%
|
Restaurants
|
3,990
|
|
|
3,792
|
|
|
3,960
|
|
|
|
CITGO Petroleum Corp.
|
First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024
|
6.00
|
%
|
Oil & Gas Refining & Marketing
|
7,184
|
|
|
7,112
|
|
|
6,842
|
|
(4)
|
|
Clear Channel Outdoor Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.50% cash due 8/21/2026
|
3.76
|
%
|
Advertising
|
331
|
|
|
290
|
|
|
302
|
|
|
|
Connect U.S. Finco LLC
|
First Lien Term Loan, LIBOR+4.50% cash due 12/11/2026
|
5.50
|
%
|
Alternative Carriers
|
7,437
|
|
|
7,262
|
|
|
7,228
|
|
|
|
Curium Bidco S.à.r.l.
|
First Lien Term Loan, LIBOR+3.75% cash due 7/9/2026
|
3.97
|
%
|
Biotechnology
|
5,940
|
|
|
5,895
|
|
|
5,895
|
|
|
|
Dcert Buyer, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 10/16/2026
|
4.15
|
%
|
Internet Services & Infrastructure
|
7,960
|
|
|
7,940
|
|
|
7,879
|
|
|
|
Dealer Tire, LLC
|
First Lien Term Loan, LIBOR+4.25% cash due 12/12/2025
|
4.40
|
%
|
Distributors
|
943
|
|
|
902
|
|
|
924
|
|
|
|
eResearch Technology, Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027
|
5.50
|
%
|
Application Software
|
7,481
|
|
|
7,406
|
|
|
7,461
|
|
|
|
Frontier Communications Corporation
|
First Lien Term Loan, PRIME+2.75% cash due 6/15/2024
|
6.00
|
%
|
Integrated Telecommunication Services
|
3,939
|
|
|
3,901
|
|
|
3,887
|
|
|
|
Gigamon, Inc.
|
First Lien Term Loan, LIBOR+4.25% cash due 12/27/2024
|
5.25
|
%
|
Systems Software
|
7,781
|
|
|
7,734
|
|
|
7,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Global Medical Response, Inc.
|
First Lien Term Loan, LIBOR+4.75% cash due 10/2/2025
|
5.75
|
%
|
Health Care Services
|
$
|
2,231
|
|
|
$
|
2,187
|
|
|
$
|
2,185
|
|
|
|
Guidehouse LLP
|
Second Lien Term Loan, LIBOR+8.00% cash due 5/1/2026
|
8.15
|
%
|
Research & Consulting Services
|
6,000
|
|
|
5,979
|
|
|
5,790
|
|
(4)
|
|
Helios Software Holdings, Inc.
|
First Lien Term Loan, LIBOR+4.25% cash due 10/24/2025
|
4.52
|
%
|
Systems Software
|
3,970
|
|
|
3,930
|
|
|
3,923
|
|
|
|
Intelsat Jackson Holdings S.A.
|
First Lien Term Loan, PRIME+4.75% cash due 11/27/2023
|
8.00
|
%
|
Alternative Carriers
|
3,568
|
|
|
3,541
|
|
|
3,598
|
|
|
|
Intelsat Jackson Holdings S.A.
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 7/13/2022
|
6.50
|
%
|
Alternative Carriers
|
971
|
|
|
801
|
|
|
1,011
|
|
(5)
|
|
Total Intelsat Jackson Holdings S.A.
|
|
|
|
4,539
|
|
|
4,342
|
|
|
4,609
|
|
|
|
KIK Custom Products Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 5/15/2023
|
5.00
|
%
|
Household Products
|
5,322
|
|
|
5,308
|
|
|
5,302
|
|
|
|
LogMeIn, Inc.
|
First Lien Term Loan, LIBOR+4.75% cash due 8/31/2027
|
4.91
|
%
|
Application Software
|
5,000
|
|
|
4,876
|
|
|
4,842
|
|
|
|
Mindbody, Inc.
|
First Lien Term Loan, LIBOR+7.00% cash 1.5% PIK due 2/14/2025
|
8.00
|
%
|
Internet Services & Infrastructure
|
4,546
|
|
|
4,481
|
|
|
4,192
|
|
(4)
|
|
Mindbody, Inc.
|
First Lien Revolver, LIBOR+8.00% cash due 2/14/2025
|
|
Internet Services & Infrastructure
|
—
|
|
|
(7)
|
|
|
(38)
|
|
(4)(5)
|
|
Total Mindbody, Inc.
|
|
|
|
4,546
|
|
|
4,474
|
|
|
4,154
|
|
|
|
MRI Software LLC
|
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026
|
6.50
|
%
|
Application Software
|
3,830
|
|
|
3,795
|
|
|
3,737
|
|
(4)
|
|
MRI Software LLC
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(1)
|
|
|
(4)
|
|
(4)(5)
|
|
MRI Software LLC
|
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(3)
|
|
|
(8)
|
|
(4)(5)
|
|
Total MRI Software LLC
|
|
|
|
3,830
|
|
|
3,791
|
|
|
3,725
|
|
|
|
Navicure, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026
|
4.15
|
%
|
Health Care Technology
|
5,970
|
|
|
5,940
|
|
|
5,849
|
|
|
|
New IPT, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021
|
6.00
|
%
|
Oil & Gas Equipment & Services
|
1,006
|
|
|
1,006
|
|
|
786
|
|
(4)
|
|
New IPT, Inc.
|
21.876 Class A Common Units in New IPT Holdings, LLC
|
|
Oil & Gas Equipment & Services
|
|
|
—
|
|
|
—
|
|
(4)
|
|
Total New IPT, Inc.
|
|
|
|
1,006
|
|
|
1,006
|
|
|
786
|
|
|
|
Northern Star Industries Inc.
|
First Lien Term Loan, LIBOR+4.75% cash due 3/31/2025
|
5.75
|
%
|
Electrical Components & Equipment
|
6,825
|
|
|
6,803
|
|
|
6,518
|
|
|
|
Northwest Fiber, LLC
|
First Lien Term Loan, LIBOR+5.50% cash due 4/30/2027
|
5.66
|
%
|
Integrated Telecommunication Services
|
2,400
|
|
|
2,314
|
|
|
2,403
|
|
|
|
Novetta Solutions, LLC
|
First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022
|
6.00
|
%
|
Application Software
|
5,931
|
|
|
5,909
|
|
|
5,827
|
|
|
|
OEConnection LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026
|
4.15
|
%
|
Application Software
|
7,455
|
|
|
7,418
|
|
|
7,371
|
|
|
|
OEConnection LLC
|
First Lien Delayed Draw Term Loan, LIBOR+4.00% cash due 9/25/2026
|
|
Application Software
|
—
|
|
|
(2)
|
|
|
(5)
|
|
(5)
|
|
Total OEConnection LLC
|
|
|
|
7,455
|
|
|
7,416
|
|
|
7,366
|
|
|
|
Olaplex, Inc.
|
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026
|
7.50
|
%
|
Personal Products
|
4,938
|
|
|
4,851
|
|
|
4,938
|
|
(4)
|
|
Olaplex, Inc.
|
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025
|
7.50
|
%
|
Personal Products
|
270
|
|
|
261
|
|
|
270
|
|
(4)(5)
|
|
Total Olaplex, Inc.
|
|
|
|
5,208
|
|
|
5,112
|
|
|
5,208
|
|
|
|
PetVet Care Centers, LLC
|
First Lien Term Loan, LIBOR+4.25% cash due 2/14/2025
|
5.25
|
%
|
Specialized Consumer Services
|
2,743
|
|
|
2,736
|
|
|
2,747
|
|
|
|
PG&E Corporation
|
First Lien Term Loan, LIBOR+4.50% cash due 6/23/2025
|
5.50
|
%
|
Electric Utilities
|
5,985
|
|
|
5,899
|
|
|
5,875
|
|
|
|
Recorded Books, Inc.
|
First Lien Term Loan, LIBOR+4.25% cash due 8/31/2025
|
4.75
|
%
|
Publishing
|
6,000
|
|
|
5,940
|
|
|
5,940
|
|
|
|
Sabert Corporation
|
First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026
|
5.50
|
%
|
Metal & Glass Containers
|
2,828
|
|
|
2,800
|
|
|
2,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Salient CRGT, Inc.
|
First Lien Term Loan, LIBOR+6.50% cash due 2/28/2022
|
7.50
|
%
|
Aerospace & Defense
|
$
|
2,111
|
|
|
$
|
2,099
|
|
|
$
|
1,963
|
|
(4)
|
|
SHO Holding I Corporation
|
First Lien Term Loan, LIBOR+3.00% cash PIK 2.25% due 4/27/2024
|
4.00
|
%
|
Footwear
|
8,396
|
|
|
8,380
|
|
|
5,898
|
|
|
|
Signify Health, LLC
|
First Lien Term Loan, LIBOR+4.50% cash due 12/23/2024
|
5.50
|
%
|
Health Care Services
|
9,750
|
|
|
9,690
|
|
|
9,409
|
|
|
|
Sirva Worldwide, Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 8/4/2025
|
5.65
|
%
|
Diversified Support Services
|
4,781
|
|
|
4,709
|
|
|
3,992
|
|
|
|
Star US Bidco LLC
|
First Lien Term Loan, LIBOR+4.25% cash due 3/17/2027
|
5.25
|
%
|
Industrial Machinery
|
3,718
|
|
|
3,532
|
|
|
3,551
|
|
|
|
Sunshine Luxembourg VII SARL
|
First Lien Term Loan, LIBOR+4.25% cash due 10/1/2026
|
5.25
|
%
|
Personal Products
|
7,940
|
|
|
7,900
|
|
|
7,911
|
|
|
|
Supermoose Borrower, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025
|
3.90
|
%
|
Application Software
|
4,888
|
|
|
4,575
|
|
|
4,407
|
|
(4)
|
|
Surgery Center Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.25% cash due 9/3/2024
|
4.25
|
%
|
Health Care Facilities
|
4,962
|
|
|
4,943
|
|
|
4,691
|
|
(4)
|
|
Uber Technologies, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025
|
5.00
|
%
|
Application Software
|
2,997
|
|
|
2,959
|
|
|
2,980
|
|
|
|
UFC Holdings, LLC
|
First Lien Term Loan, LIBOR+3.25% cash due 4/29/2026
|
4.25
|
%
|
Movies & Entertainment
|
2,856
|
|
|
2,816
|
|
|
2,814
|
|
|
|
Veritas US Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 9/1/2025
|
6.50
|
%
|
Application Software
|
6,500
|
|
|
6,371
|
|
|
6,375
|
|
|
|
Verscend Holding Corp.
|
First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025
|
4.65
|
%
|
Health Care Technology
|
4,112
|
|
|
4,080
|
|
|
4,084
|
|
(4)
|
|
VM Consolidated, Inc.
|
First Lien Term Loan, LIBOR+3.25% cash due 2/28/2025
|
3.40
|
%
|
Data Processing & Outsourced Services
|
10,487
|
|
|
10,495
|
|
|
10,291
|
|
|
|
Windstream Services II, LLC
|
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027
|
7.25
|
%
|
Integrated Telecommunication Services
|
7,980
|
|
|
7,662
|
|
|
7,744
|
|
(4)
|
|
WP CPP Holdings, LLC
|
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026
|
8.75
|
%
|
Aerospace & Defense
|
6,000
|
|
|
5,956
|
|
|
4,680
|
|
(4)
|
|
Total Portfolio Investments
|
|
|
|
$
|
307,579
|
|
|
$
|
311,428
|
|
|
$
|
298,771
|
|
|
__________________
(1) Represents the interest rate as of September 30, 2020. All interest rates are payable in cash, unless otherwise noted.
(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, we have provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All the LIBOR shown above is in U.S. dollars. As of September 30, 2020, the reference rates for SLF JV I's variable rate loans were the 30-day LIBOR at 0.15%, the 60-day LIBOR at 0.19%, the 90-day LIBOR at 0.22%, the 180-day LIBOR at 0.27% and the PRIME at 3.25%. Most loans include an interest floor, which generally ranges from 0% to 1%.
(3) Represents the current determination of fair value as of September 30, 2020 utilizing a similar technique as us in accordance with ASC 820. However, the determination of such fair value is not included in our Board of Directors' valuation process described elsewhere herein.
(4) This investment was held by both us and SLF JV I as of September 30, 2020.
(5) Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
(6) This investment was on cash non-accrual status as of September 30, 2020. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.
Both the cost and fair value of our debt investment in the SLF JV I were $96.3 million as of each of June 30, 2021 and September 30, 2020. We earned interest income of $1.9 million and $5.4 million on our investment in the SLF JV I Notes for the three and nine months ended June 30, 2021, respectively. We earned interest income of $2.0 million and $6.3 million on our investment in the SLF JV I Notes for the three and nine months ended June 30, 2020, respectively. As of June 30, 2021, the SLF JV I Notes bore interest at a rate of one-month LIBOR plus 7.0% per annum with a LIBOR floor of 1.00% and will mature on December 29, 2028.
The cost and fair value of the LLC equity interests in SLF JV I held by us was $49.3 million and $36.7 million, respectively, as of June 30, 2021 and $49.3 million and $21.2 million, respectively, as of September 30, 2020. We earned $0.5 million in dividend income for the three and nine months ended June 30, 2021 with respect to our investment in the LLC equity interests of SLF JV I. We did not earn dividend income for the three and nine months ended June 30, 2020 with respect to our investment in the LLC equity interests of SLF JV I. The LLC equity interests of SLF JV I are dividend producing to the extent SLF JV I has residual cash to be distributed on a quarterly basis.
Below is certain summarized financial information for SLF JV I as of June 30, 2021 and September 30, 2020 and for the three and nine months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Selected Balance Sheet Information:
|
|
|
|
|
|
Investments at fair value (cost June 30, 2021: $360,570; cost September 30, 2020: $311,428)
|
|
$
|
361,246
|
|
|
$
|
298,771
|
|
|
Cash and cash equivalents
|
|
14,620
|
|
|
5,389
|
|
|
Restricted cash
|
|
4,438
|
|
|
4,211
|
|
|
Other assets
|
|
6,191
|
|
|
5,093
|
|
|
Total assets
|
|
$
|
386,495
|
|
|
$
|
313,464
|
|
|
|
|
|
|
|
|
Senior credit facility payable
|
|
$
|
209,620
|
|
|
$
|
167,910
|
|
|
Debt securities payable at fair value (proceeds June 30, 2021: $110,000; proceeds September 30, 2020: $110,000)
|
|
110,000
|
|
|
110,000
|
|
|
Other liabilities
|
|
24,941
|
|
|
11,336
|
|
|
Total liabilities
|
|
344,561
|
|
|
289,246
|
|
|
Members' equity
|
|
41,934
|
|
|
24,218
|
|
|
Total liabilities and members' equity
|
|
$
|
386,495
|
|
|
$
|
313,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2021
|
|
Three months ended June 30, 2020
|
|
Nine months ended June 30, 2021
|
|
Nine months ended June 30, 2020
|
|
Selected Statements of Operations Information:
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
5,247
|
|
|
$
|
4,419
|
|
|
$
|
14,535
|
|
|
$
|
15,358
|
|
|
Other income
|
|
19
|
|
|
—
|
|
|
546
|
|
|
297
|
|
|
Total investment income
|
|
5,266
|
|
|
4,419
|
|
|
15,081
|
|
|
15,655
|
|
|
Senior credit facility interest expense
|
|
1,430
|
|
|
1,847
|
|
|
4,222
|
|
|
6,019
|
|
|
Subordinated notes interest expense
|
|
2,224
|
|
|
2,229
|
|
|
6,195
|
|
|
7,191
|
|
|
Other expenses
|
|
56
|
|
|
47
|
|
|
193
|
|
|
178
|
|
|
Total expenses (1)
|
|
3,710
|
|
|
4,123
|
|
|
10,610
|
|
|
13,388
|
|
|
Net unrealized appreciation (depreciation)
|
|
1,407
|
|
|
16,829
|
|
|
13,334
|
|
|
(17,721)
|
|
|
Net realized gains (losses)
|
|
426
|
|
|
(1,285)
|
|
|
427
|
|
|
(3,052)
|
|
|
Net income (loss)
|
|
$
|
3,389
|
|
|
$
|
15,840
|
|
|
$
|
18,232
|
|
|
$
|
(18,506)
|
|
__________
(1) There are no management fees or incentive fees charged at SLF JV I.
SLF JV I has elected to fair value the debt securities issued to us and Kemper under FASB ASC Topic 825,
Financial Instruments - Fair Value Option
. The debt securities are valued based on the total assets less the total liabilities senior to the SLF JV I Notes in an amount not exceeding par under the EV technique.
During the three and nine months ended June 30, 2021, we sold $10.5 million and $45.5 million, respectively, of senior secured debt investments to SLF JV I, for $10.3 million and $44.8 million cash consideration, respectively, which represented the fair value at the time of sale. During the nine months ended June 30, 2021, we did not sell any debt investments to SLF JV I.
Glick JV
On March 19, 2021, as a result of the consummation of the Mergers, we became party to the LLC agreement of Glick JV. The Glick JV invests primarily in senior secured loans of middle-market companies. We co-invest in these securities with GF Equity Funding through the Glick JV. The Glick JV is managed by a four person Board of Directors, two of whom are selected by us and two of whom are selected by GF Equity Funding. The Glick JV is capitalized as transactions are completed, and portfolio decisions and investment decisions in respect of the Glick JV must be approved by the Glick JV investment committee, consisting of one representative selected by us and one representative selected by GF Equity Funding (with approval from a representative of each required). The members provide capital to the Glick JV in exchange for LLC equity interests, and we and GF Debt Funding 2014 LLC, or GF Debt Funding, an entity advised by affiliates of GF Equity Funding, provide capital to the Glick JV in exchange for subordinated notes issued by the Glick JV, or the Glick JV Notes. As of June 30, 2021, we and GF Equity Funding owned 87.5% and 12.5%, respectively, of the outstanding LLC equity interests, and we and GF Debt Funding owned 87.5% and 12.5%, respectively, of the Glick JV Notes. The Glick JV is not an "eligible portfolio company" as defined in section 2(a)(46) of the Investment Company Act.
The Glick JV's portfolio consisted of middle-market and other corporate debt securities of 38 portfolio companies as of June 30, 2021. The portfolio companies in the Glick JV are in industries similar to those in which we may invest directly.
The Glick JV has a senior revolving credit facility with Deutsche Bank AG, New York Branch (the "Glick JV Deutsche Bank Facility"), which, as of June 30, 2021, had a reinvestment period end date and maturity date of May 3, 2023 and May 3, 2028, respectively, and permitted borrowings of up to $90.0 million (subject to borrowing base and other limitations). Borrowings under the Glick JV Deutsche Bank Facility are secured by all of the assets of the Glick JV and all of the equity interests in the Glick JV and, as of June 30, 2021, bore interest at a rate equal to 3-month LIBOR plus 2.25% per annum during the reinvestment period, 3-month LIBOR plus 2.40% for the first year after the end of the reinvestment period, 3-month LIBOR plus 2.50% for the following year and 2.75% thereafter, in each case with a 0.125% LIBOR floor. Under the Glick JV Deutsche Bank Facility, $71.9 million of borrowings were outstanding as of June 30, 2021.
As of June 30, 2021, the Glick JV had total assets of $148.1 million. Our investment in the Glick JV consisted of LLC equity interests and Glick JV Notes of $55.4 million in the aggregate at fair value as of June 30, 2021. The Glick JV Notes are junior in right of payment to the repayment of temporary contributions made by us to fund investments of the Glick JV that are repaid when GF Equity Funding and GF Debt Funding make their capital contributions and fund their Glick JV Notes, respectively.
As of June 30, 2021, the Glick JV had total capital commitments of $100.0 million, $87.5 million of which was from us and the remaining $12.5 million from GF Equity Funding and GF Debt Funding. Approximately $84.0 million in aggregate commitments was funded as of June 30, 2021, of which $73.5 million was from us. As of June 30, 2021, we had commitments to fund Glick JV Notes of $78.8 million, of which $12.4 million was unfunded. As of June 30, 2021, we had commitments to fund LLC equity interests in the Glick JV of $8.7 million, of which $1.6 million was unfunded as of each such date.
Below is a summary of the Glick JV's portfolio, followed by a listing of the individual loans in the Glick JV's portfolio as of June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
Senior secured loans (1)
|
|
$131,675
|
|
Weighted average current interest rate on senior secured loans (2)
|
|
5.92%
|
|
Number of borrowers in the Glick JV
|
|
38
|
|
Largest loan exposure to a single borrower (1)
|
|
$6,995
|
|
Total of five largest loan exposures to borrowers (1)
|
|
$29,305
|
__________
(1) At principal amount.
(2) Computed using the weighted average annual interest rate on accruing senior secured loans at fair value.
Glick JV Portfolio as of June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
ADB Companies, LLC
|
First Lien Term Loan, LIBOR+6.25% cash due 12/18/2025
|
7.25%
|
Construction & Engineering
|
$
|
3,915
|
|
|
$
|
3,827
|
|
|
$
|
3,856
|
|
(4)
|
|
AI Ladder (Luxembourg) Subco S.a.r.l.
|
First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025
|
4.58%
|
Electrical Components & Equipment
|
2,636
|
|
|
2,591
|
|
|
2,639
|
|
(4)
|
|
Alvogen Pharma US, Inc.
|
First Lien Term Loan, LIBOR+5.25% cash due 12/31/2023
|
6.25%
|
Pharmaceuticals
|
6,995
|
|
|
6,852
|
|
|
6,903
|
|
|
|
Amplify Finco Pty Ltd.
|
First Lien Term Loan, LIBOR+4.25% cash due 11/26/2026
|
5.00%
|
Movies & Entertainment
|
2,963
|
|
|
2,933
|
|
|
2,911
|
|
(4)
|
|
Anastasia Parent, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/11/2025
|
|
Personal Products
|
1,672
|
|
|
1,313
|
|
|
1,344
|
|
|
|
Aurora Lux Finco S.À.R.L.
|
First Lien Term Loan, LIBOR+6.00% cash due 12/24/2026
|
7.00%
|
Airport Services
|
3,703
|
|
|
3,631
|
|
|
3,485
|
|
(4)
|
|
BAART Programs, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 6/11/2027
|
6.00%
|
Health Care Equipment
|
3,600
|
|
|
3,564
|
|
|
3,582
|
|
|
|
BAART Programs, Inc.
|
First Lien Delayed Draw Term Loan, LIBOR+5.00% cash due 6/11/2027
|
|
Health Care Equipment
|
—
|
|
|
(4)
|
|
|
(2)
|
|
(5)
|
|
Total BAART Programs, Inc.
|
|
|
|
3,600
|
|
|
3,560
|
|
|
3,580
|
|
|
|
Brazos Delaware II, LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 5/21/2025
|
4.09%
|
Oil & Gas Equipment & Services
|
4,848
|
|
|
4,835
|
|
|
4,741
|
|
|
|
CITGO Petroleum Corp.
|
First Lien Term Loan, LIBOR+6.25% cash due 3/28/2024
|
7.25%
|
Oil & Gas Refining & Marketing
|
3,564
|
|
|
3,529
|
|
|
3,593
|
|
(4)
|
|
Curium Bidco S.à.r.l.
|
First Lien Term Loan, LIBOR+4.00% cash due 7/9/2026
|
4.15%
|
Biotechnology
|
4,913
|
|
|
4,876
|
|
|
4,906
|
|
|
|
Enviva Holdings, LP
|
First Lien Term Loan, LIBOR+5.50% cash due 2/17/2026
|
6.50%
|
Forest Products
|
3,929
|
|
|
3,889
|
|
|
3,973
|
|
|
|
eResearch Technology, Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 2/4/2027
|
5.50%
|
Application Software
|
2,475
|
|
|
2,450
|
|
|
2,489
|
|
|
|
Gibson Brands, Inc.
|
First Lien Term Loan, LIBOR+5.00% cash due 6/25/2028
|
5.75%
|
Leisure Products
|
4,000
|
|
|
3,960
|
|
|
4,001
|
|
|
|
Houghton Mifflin Harcourt Publishers Inc.
|
First Lien Term Loan, LIBOR+6.25% cash due 11/22/2024
|
7.25%
|
Education Services
|
431
|
|
|
420
|
|
|
434
|
|
(4)
|
|
Indivior Finance S.À.R.L.
|
First Lien Term Loan, LIBOR+5.25% cash due 6/28/2026
|
6.00%
|
Pharmaceuticals
|
4,000
|
|
|
3,920
|
|
|
3,920
|
|
|
|
Integro Parent, Inc.
|
First Lien Term Loan, LIBOR+5.75% cash due 10/31/2022
|
6.75%
|
Insurance Brokers
|
3,241
|
|
|
3,228
|
|
|
3,185
|
|
|
|
Intelsat Jackson Holdings S.A.
|
First Lien Term Loan, LIBOR+5.50% cash due 7/13/2022
|
6.50%
|
Alternative Carriers
|
797
|
|
|
725
|
|
|
803
|
|
|
|
INW Manufacturing, LLC
|
First Lien Term Loan, LIBOR+5.75% cash due 5/7/2027
|
6.50%
|
Personal Products
|
2,484
|
|
|
2,411
|
|
|
2,435
|
|
(4)
|
|
Lightstone Holdco LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 1/30/2024
|
4.75%
|
Electric Utilities
|
3,439
|
|
|
3,079
|
|
|
2,667
|
|
|
|
LTI Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.50% cash due 9/6/2025
|
3.60%
|
Electronic Components
|
1,376
|
|
|
1,135
|
|
|
1,359
|
|
|
|
MHE Intermediate Holdings, LLC
|
First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024
|
6.00%
|
Diversified Support Services
|
4,892
|
|
|
4,847
|
|
|
4,783
|
|
(4)
|
|
MRI Software LLC
|
First Lien Term Loan, LIBOR+5.50% cash due 2/10/2026
|
6.50%
|
Application Software
|
1,621
|
|
|
1,607
|
|
|
1,623
|
|
(4)
|
|
MRI Software LLC
|
First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(1)
|
|
|
—
|
|
(4)(5)
|
|
MRI Software LLC
|
First Lien Revolver, LIBOR+5.50% cash due 2/10/2026
|
|
Application Software
|
—
|
|
|
(1)
|
|
|
—
|
|
(4)(5)
|
|
Total MRI Software LLC
|
|
|
|
1,621
|
|
|
1,605
|
|
|
1,623
|
|
|
|
Navicure, Inc.
|
First Lien Term Loan, LIBOR+4.00% cash due 10/22/2026
|
4.10%
|
Health Care Technology
|
3,950
|
|
|
3,930
|
|
|
3,962
|
|
|
|
Northern Star Industries Inc.
|
First Lien Term Loan, LIBOR+4.50% cash due 3/31/2025
|
5.50%
|
Electrical Components & Equipment
|
5,321
|
|
|
5,307
|
|
|
5,308
|
|
|
|
Novetta Solutions, LLC
|
First Lien Term Loan, LIBOR+5.00% cash due 10/17/2022
|
6.00%
|
Application Software
|
5,762
|
|
|
5,730
|
|
|
5,769
|
|
|
|
OEConnection LLC
|
First Lien Term Loan, LIBOR+4.00% cash due 9/25/2026
|
4.10%
|
Application Software
|
3,936
|
|
|
3,918
|
|
|
3,936
|
|
(4)
|
|
Olaplex, Inc.
|
First Lien Term Loan, LIBOR+6.50% cash due 1/8/2026
|
7.50%
|
Personal Products
|
3,524
|
|
|
3,474
|
|
|
3,524
|
|
(4)
|
|
Olaplex, Inc.
|
First Lien Revolver, LIBOR+6.50% cash due 1/8/2025
|
|
Personal Products
|
—
|
|
|
(5)
|
|
|
(3)
|
|
(4)(5)
|
|
Total Olaplex, Inc.
|
|
|
|
3,524
|
|
|
3,469
|
|
|
3,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Company
|
Investment Type
|
Cash Interest Rate (1)(2)
|
Industry
|
Principal
|
|
Cost
|
|
Fair Value (3)
|
Notes
|
|
Planview Parent, Inc.
|
Second Lien Term Loan, LIBOR+7.25% cash due 12/18/2028
|
8.00%
|
Application Software
|
$
|
2,842
|
|
|
$
|
2,799
|
|
|
$
|
2,849
|
|
(4)
|
|
Pluralsight, LLC
|
First Lien Term Loan, LIBOR+8.00% cash due 4/6/2027
|
9.00%
|
Application Software
|
3,706
|
|
|
3,635
|
|
|
3,632
|
|
(4)
|
|
Pluralsight, LLC
|
First Lien Revolver, LIBOR+8.00% cash due 4/6/2027
|
|
Application Software
|
—
|
|
|
(6)
|
|
|
(6)
|
|
(4)(5)
|
|
Total Pluralsight, LLC
|
|
|
|
3,706
|
|
|
3,629
|
|
|
3,626
|
|
|
|
RS Ivy Holdco, Inc.
|
First Lien Term Loan, LIBOR+5.50% cash due 12/23/2027
|
6.50%
|
Oil & Gas Exploration & Production
|
3,980
|
|
|
3,920
|
|
|
3,982
|
|
(4)
|
|
Sabert Corporation
|
First Lien Term Loan, LIBOR+4.50% cash due 12/10/2026
|
5.50%
|
Metal & Glass Containers
|
1,823
|
|
|
1,805
|
|
|
1,825
|
|
(4)
|
|
SHO Holding I Corporation
|
First Lien Term Loan, LIBOR+5.25% cash due 4/27/2024
|
6.25%
|
Footwear
|
6,175
|
|
|
6,154
|
|
|
5,805
|
|
|
|
SHO Holding I Corporation
|
First Lien Term Loan, LIBOR+5.23% cash due 4/27/2024
|
6.23%
|
Footwear
|
102
|
|
|
102
|
|
|
96
|
|
|
|
Total SHO Holding I Corporation
|
|
|
|
6,277
|
|
|
6,256
|
|
|
5,901
|
|
|
|
Supermoose Borrower, LLC
|
First Lien Term Loan, LIBOR+3.75% cash due 8/29/2025
|
3.90%
|
Application Software
|
2,857
|
|
|
2,700
|
|
|
2,678
|
|
(4)
|
|
Surgery Center Holdings, Inc.
|
First Lien Term Loan, LIBOR+3.75% cash due 8/31/2026
|
4.50%
|
Health Care Facilities
|
4,924
|
|
|
4,908
|
|
|
4,950
|
|
|
|
Tribe Buyer LLC
|
First Lien Term Loan, LIBOR+4.50% cash due 2/16/2024
|
5.50%
|
Human Resource & Employment Services
|
1,604
|
|
|
1,602
|
|
|
1,402
|
|
|
|
Verscend Holding Corp.
|
First Lien Term Loan, LIBOR+4.00% cash due 8/27/2025
|
4.10%
|
Health Care Technology
|
1,725
|
|
|
1,712
|
|
|
1,732
|
|
|
|
Windstream Services II, LLC
|
First Lien Term Loan, LIBOR+6.25% cash due 9/21/2027
|
7.25%
|
Integrated Telecommunication Services
|
4,950
|
|
|
4,774
|
|
|
4,973
|
|
(4)
|
|
WP CPP Holdings, LLC
|
Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026
|
8.75%
|
Aerospace & Defense
|
3,000
|
|
|
2,981
|
|
|
2,935
|
|
(4)
|
|
Total Portfolio Investments
|
|
|
|
$
|
131,675
|
|
|
$
|
129,056
|
|
|
$
|
128,979
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
(1) Represents the interest rate as of June 30, 2021. All interest rates are payable in cash, unless otherwise noted.
(2) The interest rate on the principal balance outstanding for all floating rate loans is indexed to LIBOR and/or an alternate base rate (e.g., prime rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each of these loans, we have provided the applicable margin over LIBOR or the alternate base rate based on each respective credit agreement and the cash interest rate as of period end. All LIBOR shown above is in U.S. dollars. As of June 30, 2021, the reference rates for the Glick JV's variable rate loans were the 30-day LIBOR at 0.10%, the 60-day LIBOR at 0.13%, the 90-day LIBOR at 0.15%, the 180-day LIBOR at 0.17% and the 360-day LIBOR at 0.25%. Most loans include an interest floor, which generally ranges from 0% to 1%.
(3) Represents the current determination of fair value as of June 30, 2021 utilizing a similar technique as us in accordance with ASC 820. However, the determination of such fair value is not included in our Board of Directors' valuation process described elsewhere herein.
(4) This investment was held by both us and the Glick JV as of June 30, 2021.
(5) Investment had undrawn commitments. Unamortized fees are classified as unearned income which reduces cost basis, which may result in a negative cost basis. A negative fair value may result from the unfunded commitment being valued below par.
The cost and fair value of our aggregate investment in the Glick JV was $50.7 million and $55.4 million, respectively, as of June 30, 2021
.
For the three months ended June 30, 2021, our investment in the Glick JV Notes earned cash interest income of $0.7 million. For the period from March 19, 2021 to June 30, 2021, our investment in the Glick JV Notes earned cash interest income of $0.8 million. We did not earn any dividend income for the period from March 19, 2021 to June 30, 2021 with respect to our investment in the LLC equity interests of the Glick JV. The LLC equity interests of the Glick JV are income producing to the extent there is residual cash to be distributed on a quarterly basis.
Below is certain summarized financial information for the Glick JV as of June 30, 2021, for the three months ended June 30, 2021 and for the period from March 19, 2021 to June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
Selected Balance Sheet Information:
|
|
|
|
Investments at fair value (cost June 30, 2021: $129,056)
|
|
$
|
128,979
|
|
|
Cash and cash equivalents
|
|
15,218
|
|
|
Restricted cash
|
|
1,389
|
|
|
Other assets
|
|
2,534
|
|
|
Total assets
|
|
$
|
148,120
|
|
|
|
|
|
|
Senior credit facility payable
|
|
$
|
71,882
|
|
|
Glick JV Notes payable at fair value (proceeds June 30, 2021: $71,195)
|
|
63,311
|
|
|
Other liabilities
|
|
12,927
|
|
|
Total liabilities
|
|
$
|
148,120
|
|
|
Members' equity
|
|
—
|
|
|
Total liabilities and members' equity
|
|
$
|
148,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2021
|
|
For the period from March 19, 2021 to June 30, 2021
|
|
Selected Statements of Operations Information:
|
|
|
|
|
|
Interest income
|
|
$
|
2,161
|
|
|
$
|
2,465
|
|
|
Fee income
|
|
56
|
|
|
59
|
|
|
Total investment income
|
|
2,217
|
|
|
2,524
|
|
|
Senior credit facility interest expense
|
|
557
|
|
|
646
|
|
|
Glick JV Notes interest expense
|
|
830
|
|
|
950
|
|
|
Other expenses
|
|
48
|
|
|
54
|
|
|
Total expenses (1)
|
|
1,435
|
|
|
1,650
|
|
|
Net unrealized appreciation (depreciation)
|
|
(778)
|
|
|
(902)
|
|
|
Realized gain (loss)
|
|
(4)
|
|
|
28
|
|
|
Net income (loss)
|
|
$
|
—
|
|
|
$
|
—
|
|
__________
(1) There are no management fees or incentive fees charged at the Glick JV.
The Glick JV has elected to fair value the Glick JV Notes issued to us and GF Debt Funding under FASB ASC Topic 825,
Financial Instruments - Fair Value Option
. The Glick JV Notes are valued based on the total assets less the liabilities senior to the Glick JV Notes in an amount not exceeding par under the EV technique.
During the period from March 19, 2021 to June 30, 2021, we did not sell any debt investments to the Glick JV.
Discussion and Analysis of Results and Operations
Results of Operations
Net increase (decrease) in net assets resulting from operations includes net investment income, net realized gains (losses) and net unrealized appreciation (depreciation). Net investment income is the difference between our income from interest, dividends and fees and net expenses. Net realized gains (losses) is the difference between the proceeds received from dispositions of investment related assets and liabilities and their stated costs. Net unrealized appreciation (depreciation) is the
net change in the fair value of our investment related assets and liabilities carried at fair value during the reporting period, including the reversal of previously recorded unrealized appreciation (depreciation) when gains or losses are realized.
On March 19, 2021, we completed our previously announced acquisition of OCSI pursuant to the Merger Agreement. We were the accounting survivor of the Mergers. The Mergers were accounted for as an asset acquisition in accordance with the asset acquisition method of accounting as detailed in ASC 805-50,
Business Combinations—Related Issues
, or ASC 805. We determined the fair value of the shares of our common stock that were issued to former OCSI stockholders pursuant to the Merger Agreement plus transaction costs to be the consideration paid in connection with the Mergers under ASC 805. The consideration paid to OCSI stockholders was less than the aggregate fair values of the assets acquired and liabilities assumed, which resulted in a purchase discount (the “purchase discount”). The consideration paid was allocated to the individual assets acquired and liabilities assumed based on the relative fair values of net identifiable assets acquired other than “non-qualifying” assets (for example, cash) and did not give rise to goodwill. As a result, the purchase discount was allocated to the cost basis of the OCSI investments acquired by us on a pro-rata basis based on their relative fair values as of the effective time of the Mergers. Immediately following the Mergers, the investments were marked to their respective fair values in accordance with ASC 820, which resulted in $34.1 million of unrealized appreciation in the Consolidated Statement of Operations as a result of the Mergers. The purchase discount allocated to the debt investments acquired will accrete over the life of each respective debt investment through interest income, with a corresponding adjustment recorded to unrealized appreciation on such investment acquired through its ultimate disposition. The purchase discount allocated to equity investments acquired will not amortize over the life of such investments through interest income and, assuming no subsequent change to the fair value of the equity investments acquired and disposition of such equity investments at fair value, we will recognize a realized gain with a corresponding reversal of the unrealized appreciation on disposition of such equity investments acquired. The Mergers were considered a tax-free reorganization and we have elected to carry forward the historical cost basis of the acquired OCSI investments for tax purposes.
Comparison of three and nine months ended June 30, 2021 and June 30, 2020
Total Investment Income
Total investment income includes interest on our investments, fee income and dividend income.
Total investment income for the three months ended June 30, 2021 and 2020 was $65.4 million and $34.4 million, respectively. For the three months ended June 30, 2021, this amount consisted of $56.6 million of interest income from portfolio investments (which included $4.6 million of PIK interest), $7.8 million of fee income and $1.0 million of dividend income. For the three months ended June 30, 2020, this amount consisted of $32.3 million of interest income from portfolio investments (which included $2.2 million of PIK interest), $1.8 million of fee income and $0.3 million of dividend income. The increase of $31.0 million, or 90.2%, in our total investment income for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020, was due primarily to (1) a $24.3 million increase in interest income, which was due to a larger investment portfolio, primarily driven by the first full quarter of interest income earned on the assets acquired from the Merger and new originations, original issue discount ("OID") accretion that resulted from merger-related accounting adjustments and higher OID acceleration resulting from exits of investments, and (2) a $6.0 million increase in fee income primarily due to higher prepayment fees and amendment fees.
Total investment income for the nine months ended June 30, 2021 and 2020 was $145.6 million and $99.5 million, respectively. For the nine months ended June 30, 2021, this amount consisted of $130.8 million of interest income from portfolio investments (which included $11.5 million of PIK interest), $13.5 million of fee income and $1.4 million of dividend income. For the nine months ended June 30, 2020, this amount consisted of $93.7 million of interest income from portfolio investments (which included $5.3 million of PIK interest), $4.9 million of fee income and $0.9 million of dividend income. The increase of $46.1 million, or 46.3%, in our total investment income for the nine months ended June 30, 2021, as compared to the nine months ended June 30, 2020, was due primarily to (1) a $37.1 million increase in interest income, which was primarily driven by a larger investment portfolio primarily due to the increase in assets resulting from the Mergers and new originations, OID accretion that resulted from merger-related accounting adjustments and higher OID acceleration resulting from exits of investments, and (2) a $8.5 million increase in fee income primarily due to higher prepayment fees and amendment fees.
Expenses
Net expenses (expenses net of fee waivers) for the three months ended June 30, 2021 and 2020 were $29.1 million and $17.6 million, respectively. Net expenses increased for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020, by $11.5 million, or 65.3%, primarily due to (1) a $3.4 million increase in Part I incentive fees mainly due to higher investment income, (2) a $2.8 million increase in Part II fees as a result of higher cumulative capital gains earned, (3) a $2.4 million increase in interest expense due to higher borrowings outstanding, (4) a $2.2 million increase in management fees (net of waivers) as a result of a larger investment portfolio and (5) a $0.5 million increase in professional fees.
Net expenses (expenses net of fee waivers) for the nine months ended June 30, 2021 and 2020 were $81.2 million and $52.1 million, respectively. Net expenses increased for the nine months ended June 30, 2021, as compared to the nine months ended June 30, 2020, by $29.1 million, or 55.8%, primarily due to (1) a $16.3 million increase in Part II fees (net of waivers) as a result of higher cumulative capital gains earned and the impact of the waiver reversal in the prior year, (2) a $5.6 million increase in Part I incentive fees mainly due to higher investment income, (3) a $4.8 million increase in management fees (net of management fee waivers) primarily as a result of a larger investment portfolio, (4) $1.3 million increase in interest expense due to higher borrowings outstanding, and (5) a $1.1 million increase in professional fees.
Net Investment Income
As a result of the $31.0 million increase in total investment income and the $11.5 million increase in net expenses, net investment income for the three months ended June 30, 2021 increased by $19.2 million, or 114.3%, compared to the three months ended June 30, 2020.
As a result of the $46.1 million increase in total investment income and the $29.1 million increase in net expenses, net investment income for the nine months ended June 30, 2021 increased by $16.6 million, or 35.0%, compared to the nine months ended June 30, 2020.
Realized Gain (Loss)
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of investments and foreign currency and the cost basis without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period, net of recoveries. Realized losses may also be recorded in connection with our determination that certain investments are considered worthless securities and/or meet the conditions for loss recognition per the applicable tax rules.
During the three months ended June 30, 2021 and 2020, we recorded aggregate net realized gains (losses) of $8.6 million and $2.8 million, respectively, in connection with the exits or restructurings of various investments. During the nine months ended June 30, 2021 and 2020, we recorded aggregate net realized gains (losses) of $22.7 million and $(20.4) million, respectively, in connection with the exits or restructurings of various investments. See “
Note 9. Realized Gains or Losses and Net Unrealized Appreciation or Depreciation
” in the notes to the accompanying Consolidated Financial Statements for more details regarding investment realization events for the three and nine months ended June 30, 2021 and 2020.
Net Unrealized Appreciation (Depreciation)
Net unrealized appreciation or depreciation is the net change in the fair value of our investments and foreign currency during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.
During the three months ended June 30, 2021 and 2020, we recorded net unrealized appreciation of $3.9 million and $100.6 million, respectively. For the three months ended June 30, 2021, this consisted of $12.3 million of net unrealized appreciation on debt investments, $3.8 million of net unrealized appreciation on equity investments and $1.1 million of net unrealized appreciation of foreign currency forward contracts, partially offset by $13.3 million of net unrealized depreciation related to exited investments (a portion of which resulted in a reclassification to realized gains). For the three months ended June 30, 2020, this consisted of $85.2 million of net unrealized appreciation on debt investments, $11.8 million of net unrealized appreciation on equity investments and $3.9 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses), partially offset by $0.4 million of net unrealized depreciation of foreign currency forward contracts.
During the nine months ended June 30, 2021 and 2020, we recorded net unrealized appreciation (depreciation) of $116.6 million and $(60.1) million, respectively. For the nine months ended June 30, 2021, this consisted of $79.7 million of net unrealized appreciation on debt investments, $30.7 million of net unrealized appreciation on equity investments, $4.0 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses) and $2.2 million of net unrealized appreciation of foreign currency forward contracts. For the nine months ended June 30, 2020, this consisted of $42.5 million of net unrealized depreciation on debt investments and $39.3 million of net unrealized depreciation on equity investments, partially offset by $21.3 million of net unrealized appreciation related to exited investments (a portion of which resulted in a reclassification to realized losses) and $0.4 million of net unrealized appreciation of foreign currency forward contracts.
For the three and nine months ended June 30, 2021, there were $(5.0) million and $28.4 million of net realized and unrealized gains (losses) that resulted solely from accounting adjustments related to the Mergers.
Financial Condition, Liquidity and Capital Resources
We have a number of alternatives available to fund our investment portfolio and our operations, including raising equity, increasing or refinancing debt and funding from operational cash flow. We generally expect to fund the growth of our investment portfolio through additional debt and equity capital, which may include securitizing a portion of our investments. We cannot assure you, however, that our efforts to grow our portfolio will be successful. For example, our common stock has generally traded at prices below net asset value for the past several years, and we are currently limited in our ability to raise additional equity at prices below the then-current net asset value per share. We intend to continue to generate cash primarily from cash flows from operations, including interest earned, and future borrowings. We intend to fund our future distribution obligations through operating cash flow or with funds obtained through future equity and debt offerings or credit facilities, as we deem appropriate.
Our primary uses of funds are investments in our targeted asset classes and cash distributions to holders of our common stock. We may also from time to time repurchase or redeem some or all of our outstanding notes. At a special meeting of our stockholders held on June 28, 2019, our stockholders approved the application of the reduced asset coverage requirements in Section 61(a)(2) of the Investment Company Act to us effective as of June 29, 2019. As a result of the reduced asset coverage requirement, we can incur $2 of debt for each $1 of equity as compared to $1 of debt for each $1 of equity. As of June 30, 2021, we had $1,114.1 million in senior securities and our asset coverage ratio was 216.0%. As of June 30, 2021, our debt to equity ratio was 0.86x. Our target debt to equity ratio is 0.85x to 1.0x (i.e., one dollar of equity for each $0.85 to $1.00 of debt outstanding) as we plan to continue to opportunistically deploy capital into the markets.
For the nine months ended June 30, 2021, we experienced a net increase in cash and cash equivalents (including restricted cash) of $48.4 million. During that period, we used $35.9 million of net cash from operating activities, primarily from funding $714.8 million of investments, partially offset by $586.8 million of principal payments and sale proceeds received, $20.9 million of cash acquired in the Mergers, the cash activities related to $64.1 million of net investment income and $18.3 million of net increase in payables from unsettled transactions. During the same period, net cash provided by financing activities was $85.4 million, primarily consisting of $349.0 million of borrowings of unsecured notes (net of OID), partially offset by $190.5 million of net repayments under the credit facilities, $54.3 million of cash distributions paid to our stockholders, $9.3 million of repayments of secured borrowings, $1.6 million of repurchases of common stock under our dividend reinvestment plan, or DRIP, and $7.8 million of deferred financing costs paid.
For the nine months ended June 30, 2020, we experienced a net increase in cash and cash equivalents of $35.3 million. During that period, we used $207.7 million of net cash from operating activities, primarily from funding $576.9 million of investments, a $61.9 million of net decrease in payables from unsettled transactions, partially offset by $388.3 million of principal payments and sale proceeds received and the cash activities related to $47.4 million of net investment income. During the same period, net cash provided by financing activities was $243.1 million, primarily consisting of $152.0 million of net borrowings under the Credit Facility (as defined below) and $136.2 million net incurrence of unsecured notes, partially offset by $38.8 million of cash distributions paid to our stockholders, $4.8 million of deferred financing costs paid and $1.4 million of repurchases of common stock under our dividend reinvestment plan, or DRIP.
As of June 30, 2021, we had $87.5 million in cash and cash equivalents (including $2.8 million of restricted cash), portfolio investments (at fair value) of $2.3 billion, $15.4 million of interest, dividends and fees receivable, $635.9 million of undrawn capacity on our credit facilities (subject to borrowing base and other limitations), $8.1 million of net payables from unsettled transactions, $464.1 million of borrowings outstanding under our credit facilities, $640.0 million of unsecured notes payable (net of unamortized financing costs and unaccreted discount) and unfunded commitments to portfolio companies of $288.0 million. As of June 30, 2021, we have analyzed cash and cash equivalents, availability under our credit facilities, the ability to rotate out of certain assets and amounts of unfunded commitments that could be drawn and believe our liquidity and capital resources are sufficient to take advantage of market opportunities in the current economic climate.
As of September 30, 2020, we had $39.1 million in cash and cash equivalents, portfolio investments (at fair value) of $1.6 billion, $6.9 million of interest, dividends and fees receivable, $285.2 million of undrawn capacity on the Syndicated Facility (as defined below) (subject to borrowing base and other limitations), $8.6 million of net receivables from unsettled transactions, $414.8 million of borrowings outstanding under our Syndicated Facility, $294.5 million of unsecured notes payable (net of unamortized financing costs and unaccreted discount) and unfunded commitments to portfolio companies of $157.5 million.
Equity Issuances
On March 19, 2021, in connection with the Mergers, we issued an aggregate of 39,400,011 shares of our common stock to former OCSI stockholders. There were no other common stock issuances during the nine months ended June 30, 2021 and 2020.
Significant Capital Transactions
The following table reflects the distributions per share that we have paid, including shares issued under our DRIP, on our common stock since October 1, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date Declared
|
|
Record Date
|
|
Payment Date
|
|
Amount
per Share
|
|
Cash
Distribution
|
|
DRIP Shares
Issued (1)
|
|
|
|
DRIP Shares
Value
|
|
November 19, 2018
|
|
December 17, 2018
|
|
December 28, 2018
|
|
$
|
0.095
|
|
|
$ 13.0 million
|
|
87,429
|
|
|
|
|
$ 0.4 million
|
|
February 1, 2019
|
|
March 15, 2019
|
|
March 29, 2019
|
|
0.095
|
|
|
13.1 million
|
|
59,603
|
|
|
|
|
0.3 million
|
|
May 3, 2019
|
|
June 14, 2019
|
|
June 28, 2019
|
|
0.095
|
|
|
13.1 million
|
|
61,093
|
|
|
|
|
0.3 million
|
|
August 2, 2019
|
|
September 13, 2019
|
|
September 30, 2019
|
|
0.095
|
|
|
13.1 million
|
|
61,205
|
|
|
|
|
0.3 million
|
|
November 12, 2019
|
|
December 13, 2019
|
|
December 31, 2019
|
|
0.095
|
|
|
12.9 million
|
|
87,747
|
|
|
|
|
0.5 million
|
|
January 31, 2020
|
|
March 13, 2020
|
|
March 31, 2020
|
|
0.095
|
|
|
12.9 million
|
|
157,523
|
|
|
|
|
0.5 million
|
|
April 30, 2020
|
|
June 15, 2020
|
|
June 30, 2020
|
|
0.095
|
|
|
13.0 million
|
|
87,351
|
|
|
|
|
0.4 million
|
|
July 31, 2020
|
|
September 15, 2020
|
|
September 30, 2020
|
|
0.105
|
|
|
14.3 million
|
|
102,404
|
|
|
|
|
0.5 million
|
|
November 13, 2020
|
|
December 15, 2020
|
|
December 31, 2020
|
|
0.11
|
|
|
15.0 million
|
|
93,964
|
|
|
|
|
0.5 million
|
|
January 29, 2021
|
|
March 15, 2021
|
|
March 31, 2021
|
|
0.12
|
|
|
16.4 million
|
|
81,702
|
|
|
|
|
0.5 million
|
|
April 30, 2021
|
|
June 15, 2021
|
|
June 30, 2021
|
|
0.13
|
|
|
22.9 million
|
|
76,979
|
|
|
|
|
0.5 million
|
______________
(1)
Shares were purchased on the open market and distributed.
Indebtedness
See “
Note 6. Borrowings
” in the Consolidated Financial Statements for more details regarding our indebtedness.
Syndicated Facility
As of June 30, 2021, (i) the size of our senior secured revolving credit facility, or, as amended and restated, the Syndicated Facility, pursuant to a senior secured revolving credit agreement, with the lenders party thereto, ING Capital LLC, as administrative agent, ING Capital LLC, JPMorgan Chase Bank, N.A. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank, N.A. and Bank of America, N.A., as syndication agents, was $950 million (with an “accordion” feature that permits us, under certain circumstances, to increase the size of the facility to up to the greater of $1.25 billion and our net worth (as defined in the Syndicated Facility) on the date of such increase), (ii) the period during which we may make drawings will expire on May 4, 2025 and the maturity date was May 4, 2026 and (iii) the interest rate margin for (a) LIBOR loans (which may be 1-, 2-, 3- or 6-month, at our option) was 2.00% and (b) alternate base rate loans was 1.00%.
Each loan or letter of credit originated or assumed under the Syndicated Facility is subject to the satisfaction of certain conditions. Borrowings under the Syndicated Facility are subject to the facility’s various covenants and the leverage restrictions contained in the Investment Company Act. We cannot assure you that we will be able to borrow funds under the Syndicated Facility at any particular time or at all.
The following table describes significant financial covenants, as of June 30, 2021, with which we must comply under the Syndicated Facility on a quarterly basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Covenant
|
|
Description
|
|
Target Value
|
|
March 31, 2021 Reported Value (1)
|
|
Minimum shareholders' equity
|
|
Net assets shall not be less than the sum of (x) $600 million, plus (y) 50% of the aggregate net proceeds of all sales of equity interests after May 6, 2020
|
|
$600 million
|
|
$1,279 million
|
|
Asset coverage ratio
|
|
Asset coverage ratio shall not be less than the greater of 1.50:1 and the statutory test applicable to us
|
|
1.50:1
|
|
2.14:1
|
|
Interest coverage ratio
|
|
Interest coverage ratio shall not be less than 2.00:1 until March 31, 2022 and 2.25:1 thereafter
|
|
2.00:1
|
|
3.61:1
|
|
Minimum net worth
|
|
Net worth shall not be less than $550 million
|
|
$550 million
|
|
$1,074 million
|
___________
(1) As contractually required, we report financial covenants based on the last filed quarterly or annual report, in this case our Quarterly Report on Form 10-Q for the quarter ended March
31, 2021
. We were in compliance with all financial covenants under the Syndicated Facility based on the financial information contained in this Quarterly Report on Form 10-Q.
As of June 30, 2021 and September 30, 2020, we had $350.0 million and $414.8 million of borrowings outstanding under the Syndicated Facility, respectively, which had a fair value of $350.0 million and $414.8 million, respectively. Our borrowings under the Syndicated Facility bore interest at a weighted average interest rate of 2.202% and 3.325% for the nine months ended June 30, 2021 and 2020, respectively. For the three and nine months ended June 30, 2021, we recorded interest expense (inclusive of fees) of $4.0 million and $10.5 million, respectively, related to the Syndicated Facility. For the three and nine months ended June 30, 2020, we recorded interest expense (inclusive of fees) of $3.5 million and $11.7 million, respectively, related to the Syndicated Facility.
Citibank Facility
On March 19, 2021, as a result of the consummation of the Mergers, we became party to a revolving credit facility, or, as amended and/or restated from time to time, the Citibank Facility, with OCSL Senior Funding II LLC (formerly OCSI Senior Funding II LLC), our wholly-owned, special purpose financing subsidiary, as the borrower, us, as collateral manager and seller, each of the lenders from time to time party thereto, Citibank, N.A., as administrative agent, and Wells Fargo Bank, National Association, as collateral agent and custodian.
As of June 30, 2021, we were able to borrow up to $150 million under the Citibank Facility (subject to borrowing base and other limitations). As of June 30, 2021, the reinvestment period under the Citibank Facility was scheduled to expire on July 19, 2021 and the maturity date for the Citibank Facility was July 18, 2023. See "Note 16. Subsequent Events - Citibank Facility Amendment".
As of June 30, 2021, borrowings under the Citibank Facility are subject to certain customary advance rates and accrue interest at a rate equal to LIBOR plus 1.70% per annum on broadly syndicated loans and LIBOR plus 2.25% per annum on all other eligible loans during the reinvestment period. Following termination of the reinvestment period, borrowings under the Citibank Facility will accrue interest at rates equal to LIBOR plus 3.50% per annum during the first year after the reinvestment period and LIBOR plus 4.00% per annum during the subsequent two years, respectively. In addition, as of June 30, 2021, for the duration of the reinvestment period there is a non-usage fee payable of 0.50% per annum on the undrawn amount under the Citibank Facility. The minimum asset coverage ratio applicable to us under the Citibank Facility is 150% as determined in accordance with the requirements of the Investment Company Act. Borrowings under the Citibank Facility are secured by all of the assets of OCSL Senior Funding II LLC and all of our equity interests in OCSL Senior Funding II LLC. We may use the Citibank Facility to fund a portion of our loan origination activities and for general corporate purposes. Each loan origination under the Citibank Facility is subject to the satisfaction of certain conditions.
As of June 30, 2021, we had $114.1 million outstanding under the Citibank Facility. Our borrowings under the Citibank Facility bore interest at a weighted average interest rate of 2.198% for the period from March 19, 2021 to June 30, 2021. For the three months ended June 30, 2021 and the period from March 19, 2021 to June 30, 2021, we recorded interest expense (inclusive of fees) of $0.8 million and $0.9 million, respectively, related to the Citibank Facility.
Deutsche Bank Facility
On March 19, 2021, as a result of the consummation of the Mergers, we became party a loan financing and servicing agreement, or, as amended, the Deutsche Bank Facility, with OCSI Senior Funding Ltd., our wholly-owned, special purpose financing subsidiary, as borrower, us, as equityholder and as servicer, the lenders from time to time party thereto, Deutsche Bank AG, New York Branch, as facility agent, and Wells Fargo Bank, National Association, as collateral agent and as collateral custodian.
On May 4, 2021, we repaid all outstanding borrowings under the Deutsche Bank Facility using borrowings under the Syndicated Credit Facility, following which the Deutsche Bank Facility was terminated. For the period from March 19, 2021 to May 4, 2021, our borrowings under the Deutsche Bank Facility bore interest at a weighted average interest rate of 2.900%. For the three months ended June 30, 2021 and the period from March 19, 2021 to June 30, 2021, we recorded interest expense (inclusive of fees) of $0.2 million and $0.3 million, respectively, related to the Deutsche Bank Facility.
2025 Notes
On February 25, 2020, we issued $300.0 million in aggregate principal amount of our 3.500% notes due 2025, or the 2025 Notes, for net proceeds of $293.8 million after deducting OID of $2.5 million, underwriting commissions and discounts of $3.0 million and offering costs of $0.7 million. The OID on the 2025 Notes is amortized based on the effective interest method over the term of the notes.
2027 Notes
On May 18, 2021, we issued $350.0 million in aggregate principal amount of our 2.700% notes due 2027, or the 2027 Notes, for net proceeds of $344.8 million after deducting OID of $1.0 million, underwriting commissions and discounts of $3.5 million and offering costs of $0.7 million. The OID on the 2027 Notes is amortized based on the effective interest method over the term of the notes.
In connection with the 2027 Notes, we entered into an interest rate swap to more closely align the interest rates of our liabilities with our investment portfolio, which consists of predominately floating rate loans. Under the interest rate swap agreement, we receive a fixed interest rate of 2.7% and pay a floating interest rate of the three-month LIBOR plus 1.658% on a notional amount of $350 million. We designated the interest rate swap as the hedging instrument in an effective hedge accounting relationship.
The below table presents the components of the carrying value of the 2025 Notes and the 2027 Notes as of June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2021
|
|
($ in millions)
|
|
2025 Notes
|
|
2027 Notes
|
|
Principal
|
|
$
|
300.0
|
|
|
$
|
350.0
|
|
|
Unamortized financing costs
|
|
(2.7)
|
|
|
(4.1)
|
|
|
Unaccreted discount
|
|
(1.9)
|
|
|
(1.0)
|
|
|
Interest rate swap fair value adjustment
|
|
—
|
|
|
(0.3)
|
|
|
Net carrying value
|
|
$
|
295.4
|
|
|
$
|
344.6
|
|
|
Fair Value
|
|
$
|
315.2
|
|
|
$
|
356.6
|
|
The below table presents the components of the carrying value of the 2025 Notes as of September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2020
|
|
($ in millions)
|
|
2025 Notes
|
|
Principal
|
|
$
|
300.0
|
|
|
Unamortized financing costs
|
|
(3.3)
|
|
|
Unaccreted discount
|
|
(2.2)
|
|
|
Net carrying value
|
|
$
|
294.5
|
|
|
Fair Value
|
|
$
|
301.4
|
|
The below table presents the components of interest and other debt expenses related to the 2025 Notes and the 2027 Notes for the three and nine months ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 Notes
|
|
2027 Notes
|
|
($ in millions)
|
|
Three Months Ended June 30, 2021
|
|
Nine Months Ended June 30, 2021
|
|
Three Months Ended June 30, 2021
|
|
Nine Months Ended June 30, 2021
|
|
Coupon interest
|
|
$
|
2.6
|
|
|
$
|
7.9
|
|
|
$
|
1.1
|
|
|
$
|
1.1
|
|
|
Amortization of financing costs and discount
|
|
0.3
|
|
|
0.9
|
|
|
0.1
|
|
|
0.1
|
|
|
Interest rate swap fair value adjustment
|
|
—
|
|
|
—
|
|
|
(0.3)
|
|
|
(0.3)
|
|
|
Total interest expense
|
|
$
|
2.9
|
|
|
$
|
8.8
|
|
|
$
|
0.9
|
|
|
$
|
0.9
|
|
|
Coupon interest rate (net of effect of interest rate swap for 2027 Notes)
|
|
3.500
|
%
|
|
3.500
|
%
|
|
1.813
|
%
|
|
1.813
|
%
|
The below table presents the components of interest and other debt expenses related to the 2025 Notes for the three and nine months ended June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2025 Notes
|
|
($ in millions)
|
|
Three Months Ended June 30, 2020
|
|
Nine Months Ended June 30, 2020
|
|
Coupon interest
|
|
$
|
2.6
|
|
|
$
|
3.6
|
|
|
Amortization of financing costs and discount
|
|
0.3
|
|
|
0.4
|
|
|
Total interest expense
|
|
$
|
2.9
|
|
|
$
|
4.0
|
|
|
Coupon interest rate
|
|
3.500
|
%
|
|
3.500
|
%
|
2024 Notes
For the nine months ended June 30, 2020, we recorded interest expense of $1.9 million (inclusive of fees) related to our 5.875% notes due 2024, or the 2024 Notes.
On March 2, 2020, we redeemed 100%, or $75.0 million aggregate principal amount, of the issued and outstanding 2024 Notes. The redemption price per 2024 Note was $25 plus accrued and unpaid interest. We recognized a loss of $1.0 million in connection with the redemption of the 2024 Notes during the nine months ended June 30, 2020. As of June 30, 2021 and September 30, 2020, there were no 2024 Notes outstanding.
2028 Notes
For the nine months ended June 30, 2020, we recorded interest expense of $2.5 million (inclusive of fees) related to our 6.125% notes due 2028, or the 2028 Notes.
On March 13, 2020, we redeemed 100%, or $86.3 million aggregate principal amount, of the issued and outstanding 2028 Notes. The redemption price per 2028 Note was $25 plus accrued and unpaid interest. We recognized a loss of $1.5 million in connection with the redemption of the 2028 Notes during each of the nine months ended June 30, 2020. As of June 30, 2021 and September 30, 2020, there were no 2028 Notes outstanding.
Secured Borrowings
As of June 30, 2021 and September 30, 2020, we did not have any secured borrowings outstanding. On March 19, 2021, as a result of the consummation of the Mergers, we became party to a secured borrowing arrangement under which certain securities were sold and simultaneously repurchased at a premium. The amounts due under the secured borrowing arrangement were settled prior to June 30, 2021. For the period from March 19, 2021 to June 30, 2021, we recorded less than $0.1 million of interest expense in connection with secured borrowings. Our secured borrowings bore interest at a weighted average rate of 3.123% for the period from March 19, 2021 to June 30, 2021.
Off-Balance Sheet Arrangements
We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As of June 30, 2021, our only off-balance sheet arrangements consisted of $288.0 million of unfunded commitments, which was comprised of $235.5 million to provide debt financing to certain of our portfolio companies, $49.0 million to provide financing to the JVs and $3.5 million related to unfunded limited partnership interests. As of September 30, 2020, our only off-balance sheet arrangements consisted of $157.5 million of unfunded commitments, which was comprised of $152.7 million to provide debt financing to certain of our portfolio companies, $1.3 million to provide equity financing to SLF JV I and $3.5 million related to unfunded limited partnership interests. Such commitments are subject to our portfolio companies' satisfaction of certain financial and nonfinancial covenants and may involve, to varying degrees, elements of credit risk in excess of the amount recognized in our Consolidated Statements of Assets and Liabilities.
A list of unfunded commitments by investment (consisting of revolvers, term loans with delayed draw components, subordinated notes and LLC equity interests in the JVs, preferred stock and limited partnership interests) as of June 30, 2021 and September 30, 2020 is shown in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
Senior Loan Fund JV I, LLC
|
|
$
|
35,000
|
|
|
$
|
1,328
|
|
|
Assembled Brands Capital LLC
|
|
28,842
|
|
|
36,079
|
|
|
WPEngine, Inc.
|
|
26,348
|
|
|
26,348
|
|
|
Marinus Pharmaceuticals, Inc.
|
|
25,230
|
|
|
—
|
|
|
Athenex, Inc.
|
|
21,072
|
|
|
22,780
|
|
|
Thrasio, LLC
|
|
20,864
|
|
|
—
|
|
|
OCSI Glick JV LLC
|
|
13,998
|
|
|
—
|
|
|
Jazz Acquisition, Inc.
|
|
13,825
|
|
|
—
|
|
|
Dominion Diagnostics, LLC
|
|
11,148
|
|
|
5,887
|
|
|
Gulf Operating, LLC
|
|
10,064
|
|
|
—
|
|
|
Coty Inc.
|
|
9,886
|
|
|
—
|
|
|
Latam Airlines Group S.A.
|
|
7,267
|
|
|
—
|
|
|
NeuAG, LLC
|
|
5,441
|
|
|
4,382
|
|
|
MHE Intermediate Holdings, LLC
|
|
5,255
|
|
|
—
|
|
|
SumUp Holdings Luxembourg S.À.R.L.
|
|
5,154
|
|
|
—
|
|
|
Olaplex, Inc.
|
|
4,806
|
|
|
1,917
|
|
|
MRI Software LLC
|
|
4,723
|
|
|
7,239
|
|
|
Mindbody, Inc.
|
|
4,000
|
|
|
3,048
|
|
|
CorEvitas, LLC
|
|
3,968
|
|
|
5,189
|
|
|
Pluralsight, LLC
|
|
3,532
|
|
|
—
|
|
|
Pingora MSR Opportunity Fund I-A, LP
|
|
3,500
|
|
|
3,500
|
|
|
The Avery
|
|
3,257
|
|
|
—
|
|
|
Accupac, Inc.
|
|
3,063
|
|
|
2,346
|
|
|
PRGX Global, Inc.
|
|
2,518
|
|
|
—
|
|
|
Relativity ODA LLC
|
|
2,218
|
|
|
—
|
|
|
Acquia Inc.
|
|
2,061
|
|
|
2,240
|
|
|
Telestream Holdings Corporation
|
|
1,759
|
|
|
—
|
|
|
Apptio, Inc.
|
|
1,338
|
|
|
1,538
|
|
|
Coyote Buyer, LLC
|
|
1,333
|
|
|
942
|
|
|
Sunland Asphalt & Construction, LLC
|
|
1,258
|
|
|
—
|
|
|
4 Over International, LLC
|
|
1,183
|
|
|
—
|
|
|
109 Montgomery Owner LLC
|
|
1,104
|
|
|
—
|
|
|
Ministry Brands, LLC
|
|
1,100
|
|
|
425
|
|
|
Digital.AI Software Holdings, Inc.
|
|
1,077
|
|
|
—
|
|
|
Thermacell Repellents, Inc.
|
|
438
|
|
|
—
|
|
|
GKD Index Partners, LLC
|
|
320
|
|
|
231
|
|
|
CircusTrix Holdings, LLC
|
|
61
|
|
|
—
|
|
|
NuStar Logistics, L.P.
|
|
—
|
|
|
17,911
|
|
|
A.T. Holdings II SÀRL
|
|
—
|
|
|
7,541
|
|
|
Ardonagh Midco 3 PLC
|
|
—
|
|
|
3,007
|
|
|
New IPT, Inc.
|
|
—
|
|
|
2,229
|
|
|
iCIMs, Inc.
|
|
—
|
|
|
882
|
|
|
Immucor, Inc.
|
|
—
|
|
|
541
|
|
|
Total
|
|
$
|
288,011
|
|
|
$
|
157,530
|
|
Contractual Obligations
The following table reflects information pertaining to our principal debt outstanding under the Syndicated Facility, Citibank Facility, Deutsche Bank Facility, 2025 Notes, 2027 Notes and secured borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt Outstanding
as of September 30, 2020
|
|
Debt Outstanding
as of June 30, 2021
|
|
Weighted average debt
outstanding for the
nine months ended
June 30, 2021
|
|
Maximum debt
outstanding for the nine months ended
June 30, 2021
|
|
Syndicated Facility
|
|
$
|
414,825
|
|
|
$
|
350,000
|
|
|
$
|
467,754
|
|
|
$
|
700,025
|
|
|
Citibank Facility
|
|
—
|
|
|
114,057
|
|
|
42,699
|
|
|
134,057
|
|
|
Deutsche Bank Facility
|
|
—
|
|
|
—
|
|
|
17,525
|
|
|
115,700
|
|
|
2025 Notes
|
|
300,000
|
|
|
300,000
|
|
|
300,000
|
|
|
300,000
|
|
|
2027 Notes
|
|
—
|
|
|
350,000
|
|
|
56,410
|
|
|
350,000
|
|
|
Secured borrowings
|
|
—
|
|
|
—
|
|
|
137
|
|
|
9,341
|
|
|
Total debt
|
|
$
|
714,825
|
|
|
$
|
1,114,057
|
|
|
$
|
884,525
|
|
|
|
The following table reflects our contractual obligations arising from the Syndicated Facility, Citibank Facility, 2025 Notes and 2027 Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period as of June 30, 2021
|
|
Contractual Obligations
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
|
Syndicated Facility
|
|
$
|
350,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
350,000
|
|
|
$
|
—
|
|
|
Interest due on Syndicated Facility
|
|
36,046
|
|
|
7,438
|
|
|
14,876
|
|
|
13,732
|
|
|
—
|
|
|
Citibank Facility
|
|
114,057
|
|
|
—
|
|
|
114,057
|
|
|
—
|
|
|
—
|
|
|
Interest due on Citibank Facility
|
|
5,103
|
|
|
2,490
|
|
|
2,613
|
|
|
—
|
|
|
—
|
|
|
2025 Notes
|
|
300,000
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|
—
|
|
|
Interest due on 2025 Notes
|
|
38,433
|
|
|
10,500
|
|
|
21,000
|
|
|
6,933
|
|
|
—
|
|
|
2027 Notes
|
|
350,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
350,000
|
|
|
Interest due on 2027 Notes (a)
|
|
35,207
|
|
|
6,346
|
|
|
12,692
|
|
|
12,692
|
|
|
3,477
|
|
|
Total
|
|
$
|
1,228,846
|
|
|
$
|
26,774
|
|
|
$
|
165,238
|
|
|
$
|
683,357
|
|
|
$
|
353,477
|
|
__________
(a)
The interest due on the 2027 Notes was calculated net of the interest rate swap.
Regulated Investment Company Status and Distributions
We have qualified and elected to be treated as a RIC under Subchapter M of the Code for tax purposes. As long as we continue to qualify as a RIC, we will not be subject to tax on our investment company taxable income (determined without regard to any deduction for dividends paid) or realized net capital gains, to the extent that such taxable income or gains is distributed, or deemed to be distributed as dividends, to stockholders on a timely basis.
Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation. Distributions declared and paid by us in a taxable year may differ from taxable income for that taxable year as such distributions may include the distribution of taxable income derived from the current taxable year or the distribution of taxable income derived from the prior taxable year carried forward into and distributed in the current taxable year. Distributions also may include returns of capital.
To maintain RIC tax treatment, we must, among other things, distribute dividends, with respect to each taxable year, of an amount at least equal to 90% of our investment company taxable income (i.e., our net ordinary income and our realized net short-term capital gains in excess of realized net long-term capital losses, if any), determined without regard to any deduction for dividends paid. As a RIC, we are also subject to a federal excise tax, based on distribution requirements of our taxable income on a calendar year basis. We anticipate timely distribution of our taxable income in accordance with tax rules. We did not incur a U.S. federal excise tax for calendar years 2019 and 2020. We may incur a federal excise tax in future years.
We intend to distribute at least 90% of our annual taxable income (which includes our taxable interest and fee income) to our stockholders. The covenants contained in our credit facilities may prohibit us from making distributions to our stockholders, and, as a result, could hinder our ability to satisfy the distribution requirement associated with our ability to be subject to tax as a RIC. In addition, we may retain for investment some or all of our net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) and treat such amounts as deemed distributions to our stockholders. If we do this, our stockholders will be treated as if they received actual distributions of the capital gains we retained and then reinvested the net after-tax proceeds in our common stock. Our stockholders also may be eligible to claim tax credits (or, in certain circumstances, tax refunds) equal to their allocable share of the tax we paid on the capital gains deemed distributed to them. To the extent our taxable earnings for a fiscal and taxable year fall below the total amount of our dividend distributions for that fiscal and taxable year, a portion of those distributions may be deemed a return of capital to our stockholders.
We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage test for borrowings applicable to us as a Business Development Company under the Investment Company Act and due to provisions in our credit facilities and debt instruments. If we do not distribute a certain percentage of our taxable income annually, we will suffer adverse tax consequences, including possible loss of our ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions or distributions at a particular level.
A RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder elects to receive his or her entire distribution in either cash or stock of the RIC, subject to certain limitations regarding the aggregate amount of cash to be distributed to all stockholders. If these and certain other requirements are met, for U.S federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock.
We may generate qualified net interest income or qualified net short-term capital gains that may be exempt from U.S. withholding tax when distributed to foreign stockholders. A RIC is permitted to designate distributions of qualified net interest income and qualified short-term capital gains as exempt from U.S. withholding tax when paid to non-U.S. shareholders with proper documentation. The following table, which may be subject to change as we finalize our annual tax filings, lists the percentage of qualified net interest income and qualified short-term capital gains for the year ended September 30, 2020, our last tax year end.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Qualified Net Interest Income
|
Qualified Short-Term Capital Gains
|
|
September 30, 2020
|
|
83.4
|
%
|
—
|
|
We have adopted a DRIP that provides for the reinvestment of any distributions that we declare in cash on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, if our Board of Directors declares a cash distribution, then our stockholders who have not “opted out” of the DRIP will have their cash distributions automatically reinvested in additional shares of our common stock, rather than receiving a cash distribution. If our shares are trading at a premium to net asset value, we typically issue new shares to implement the DRIP, with such shares issued at the greater of the most recently computed net asset value per share of our common stock or 95% of the current market value per share of our common stock on the payment date for such distribution. If our shares are trading at a discount to net asset value, we typically purchase shares in the open market in connection with our obligations under the DRIP.
Related Party Transactions
We have entered into the Investment Advisory Agreement with Oaktree and the Administration Agreement with Oaktree Administrator, an affiliate of Oaktree. Mr. John B. Frank, an interested member of our Board of Directors, has an indirect pecuniary interest in Oaktree. Oaktree is a registered investment adviser under the Investment Advisers Act of 1940, as amended, that is partially and indirectly owned by OCG. See “
Note 11. Related Party Transactions – Investment Advisory Agreement
” and “
– Administrative Services
” in the notes to the accompanying Consolidated Financial Statements.
Recent Developments
Distribution Declaration
On July 30, 2021, our Board of Directors declared a quarterly distribution of $0.145 per share, payable in cash on September 30, 2021 to stockholders of record on September 15, 2021.
Citibank Facility Amendment
On July 2, 2021, we amended the Citibank Facility to, among other things, (1) reduce the size of the facility from $180 million to $150 million, (2) extend the reinvestment period to July 18, 2023, (3) extend the maturity date to July 18, 2024, (4) modify the interest rate on outstanding borrowings to LIBOR plus between 1.25% and 2.20% per annum on broadly syndicated loans subject to the observable market depth and pricing and LIBOR plus 2.25% per annum on all other eligible loans during the reinvestment period and (5) add provisions relating to the transition from LIBOR to the Secured Overnight Financing Rate.
Chief Financial Officer and Treasurer Transition
On August 4, 2021, Mel Carlisle notified the Company of his resignation as Chief Financial Officer and Treasurer effective on November 30, 2021. Mr. Carlisle’s resignation is not the result of any disagreement with the Company. He will remain with Oaktree Capital Management, L.P. as part of its Global Opportunities strategy.
The Company expects to appoint Christopher McKown, age 40, as its Chief Financial Officer and Treasurer effective upon Mr. Carlisle’s resignation, subject to approval by the Company’s Board of Directors. Mr. McKown would also be expected to succeed Mr. Carlisle as Chief Financial Officer and Treasurer of Oaktree Strategic Income II, Inc. Mr. McKown joined Oaktree Capital Management, L.P. in 2011 and currently serves as a Managing Director responsible for fund accounting and reporting for Oaktree’s Strategic Credit strategy and as the Assistant Treasurer of the Company and Oaktree Strategic Income II, Inc. Prior to joining Oaktree Capital Management, L.P., he worked in the audit practice at KPMG LLP. Mr. McKown received a B.A. degree in business economics with a minor in accounting cum laude from the University of California, Los Angeles and is a Certified Public Accountant (inactive).
Mr. McKown has no family relationships with any current director, executive officer, or person nominated to become a director or executive officer, of the Company, and there are no transactions or proposed transactions, to which the Company is a party, or intended to be a party, in which Mr. McKown has, or will have, a material interest subject to disclosure under Item 404(a) of Regulation S-K.
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
We are subject to financial market risks, including changes in the valuations of our investment portfolio and interest rates.
Valuation Risk
Our investments may not have a readily available market price, and we value these investments at fair value as determined in good faith by our Board of Directors, with the assistance of the Audit Committee and Oaktree. There is no single standard for determining fair value in good faith and valuation methodologies involve a significant degree of management judgment. In addition, our valuation methodology utilizes discount rates in part in valuing our investments, and changes in those discount rates may have an impact on the valuation of our investments. Accordingly, valuations by us do not necessarily represent the amounts which may eventually be realized from sales or other dispositions of investments. Estimated fair values may differ from the values that would have been used had a ready market for the investment existed, and the differences could be material to the financial statements.
Interest Rate Risk
We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments, cash and cash equivalents and idle fund investments. Our risk management procedures are designed to identify and analyze our risk, to set appropriate policies and to continually monitor these risks. Our investment income will be affected by changes in various interest rates, including LIBOR and prime rates, to the extent our debt investments include floating interest rates.
As of June 30, 2021, 91.4% of our debt investment portfolio (at fair value) and 91.8% of our debt investment portfolio (at cost) bore interest at floating rates. As of September 30, 2020, 88.3% of our debt investment portfolio (at fair value) and 88.8% of our debt investment portfolio (at cost) bore interest at floating rates. The composition of our floating rate debt investments by interest rate floor as of June 30, 2021 and September 30, 2020, was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
|
|
($ in thousands)
|
|
Fair Value
|
|
% of Floating Rate Portfolio
|
|
Fair Value
|
|
% of Floating Rate Portfolio
|
|
|
|
|
|
0%
|
|
$
|
424,496
|
|
|
21.0
|
%
|
|
$
|
553,829
|
|
|
42.2
|
%
|
|
|
|
|
|
>0% and <1%
|
|
256,416
|
|
|
12.7
|
%
|
|
39,789
|
|
|
3.0
|
%
|
|
|
|
|
|
1%
|
|
1,258,979
|
|
|
62.3
|
%
|
|
672,529
|
|
|
51.3
|
%
|
|
|
|
|
|
>1%
|
|
81,120
|
|
|
4.0
|
%
|
|
45,362
|
|
|
3.5
|
%
|
|
|
|
|
|
Total Floating Rate Investments
|
|
$
|
2,021,011
|
|
|
100.0
|
%
|
|
$
|
1,311,509
|
|
|
100.0
|
%
|
|
|
|
|
Based on our Consolidated Statement of Assets and Liabilities as of June 30, 2021, the following table shows the approximate annualized net increase (decrease) in net assets resulting from operations of hypothetical base rate changes in interest rates, assuming no changes in our investment and capital structure. However, there can be no assurances our portfolio companies will be able to meet their contractual obligations at any or all levels on increases in interest rates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
|
|
|
|
|
|
Basis point increase
|
|
Increase in Interest Income
|
|
(Increase) in Interest Expense
|
|
Net increase (decrease) in net assets resulting from operations
|
|
250
|
|
$
|
38,251
|
|
|
$
|
(20,351)
|
|
|
$
|
17,900
|
|
|
200
|
|
27,957
|
|
|
(16,281)
|
|
|
11,676
|
|
|
150
|
|
17,730
|
|
|
(12,211)
|
|
|
5,519
|
|
|
100
|
|
7,678
|
|
|
(8,141)
|
|
|
(463)
|
|
|
50
|
|
2,680
|
|
|
(4,070)
|
|
|
(1,390)
|
|
The net effect of any decrease in interest rates is limited and would not be of significance due to interest rate floors on investments and borrowings outstanding.
We regularly measure exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on this review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates. The following table shows a comparison of the interest rate base for our interest-bearing cash and outstanding investments, at principal, and our outstanding borrowings as of June 30, 2021 and September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021
|
|
September 30, 2020
|
|
($ in thousands)
|
|
Interest Bearing
Cash and
Investments
|
|
Borrowings
|
|
Interest Bearing
Cash and
Investments
|
|
Borrowings
|
|
Money market rate
|
|
$
|
72,406
|
|
|
$
|
—
|
|
|
$
|
35,248
|
|
|
$
|
—
|
|
|
Prime rate
|
|
13,611
|
|
|
—
|
|
|
305
|
|
|
—
|
|
|
LIBOR
|
|
|
|
|
|
|
|
|
|
30 day
|
|
812,358
|
|
|
350,000
|
|
|
717,576
|
|
|
414,825
|
|
|
60 day
|
|
27,419
|
|
|
—
|
|
|
6,861
|
|
|
—
|
|
|
90 day (a)
|
|
710,072
|
|
|
464,057
|
|
|
362,141
|
|
|
—
|
|
|
180 day
|
|
292,742
|
|
|
—
|
|
|
201,699
|
|
|
—
|
|
|
360 day
|
|
81,245
|
|
|
—
|
|
|
23,351
|
|
|
—
|
|
|
EURIBOR
|
|
|
|
|
|
|
|
|
|
30 day
|
|
29,455
|
|
|
—
|
|
|
29,126
|
|
|
—
|
|
|
90 day
|
|
14,707
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
180 day
|
|
23,403
|
|
|
—
|
|
|
1,689
|
|
|
—
|
|
|
UK LIBOR
|
|
|
|
|
|
|
|
|
|
30 day
|
|
29,702
|
|
|
—
|
|
|
23,270
|
|
|
—
|
|
|
180 day
|
|
25,486
|
|
|
—
|
|
|
14,612
|
|
|
—
|
|
|
Fixed rate
|
|
183,232
|
|
|
300,000
|
|
|
171,976
|
|
|
300,000
|
|
|
Total
|
|
$
|
2,315,838
|
|
|
$
|
1,114,057
|
|
|
$
|
1,587,854
|
|
|
$
|
714,825
|
|
__________
(a)
Borrowings include the 2027 Notes, which pay interest at a floating rate under the terms of the interest rate swap.
Item 4.
Controls and Procedures
Management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Based on the evaluation of our disclosure controls and procedures as of June 30, 2021, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, in timely identifying, recording, processing, summarizing and reporting any material information relating to us that is required to be disclosed in the reports we file or submit under the Exchange Act.
There were no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II
Item 1.
Legal Proceedings
Other than as described below, we are currently not a party to any pending material legal proceedings.
On December 18, 2020, putative stockholder Oklahoma Firefighters Pension and Retirement System filed a complaint on behalf of itself and all other similarly situated holders of our common stock and derivatively on behalf of us as nominal defendant in the Delaware Court of Chancery, captioned
Oklahoma Firefighters Pension and Retirement System v. Frank, et al.
, No. 2020-1075-VCM (Del. Ch.). This lawsuit is referred to herein as the “Merger Litigation”. The Merger Litigation alleges a direct breach of fiduciary duty claim against our board of directors in connection with the solicitation of the approval by our stockholders of
the issuance of shares of our common stock to be issued pursuant to the Merger Agreement
and a derivative breach of fiduciary duty claim against our board of directors in connection with its negotiation and approval of the Mergers. The Merger Litigation alleges, among other things, that the members of our board of directors had certain conflicts of interest in the negotiation and approval of the Mergers and that the initial filing of the joint proxy statement/prospectus relating to the Mergers omitted certain information that the plaintiff claims is material. The Merger Litigation, among other things, requested that the court enjoin the vote of our stockholders with respect to the approval of the
issuance of shares of our common stock to be issued pursuant to the Merger Agreement
and award attorneys’ fees and damages in an unspecified amount. On February 16, 2021, the plaintiff withdrew the request that the court enjoin the vote of our stockholders. On April 26, 2021, the plaintiff filed a proposed order voluntarily dismissing its claims, with prejudice as to the plaintiff and without prejudice as to any of our other stockholders.
The court entered the order of dismissal on May 10, 2021. The Court retained jurisdiction solely for the purpose of adjudicating the anticipated application of plaintiff’s counsel for an award of attorneys’ fees and reimbursement of expenses in connection with the supplemental disclosures included in the amended joint proxy statement/prospectus. We subsequently agreed to pay $435,000 to plaintiff’s counsel for attorneys’ fees and expenses in full satisfaction of the claim for attorneys’ fees and expenses in the action.
Item 1A.
Risk Factors
Except as set forth below, there have been no material changes during the three and nine months ended June 30, 2021 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended September 30, 2020.
Our investments may include “covenant-lite” loans, which may give us fewer rights and subject us to greater risk of loss than loans with financial maintenance covenants.
Although the loans in which we expect to invest will generally have financial maintenance covenants, which are used to proactively address materially adverse changes in a portfolio company’s financial performance, we do invest to a lesser extent in “covenant-lite” loans. We use the term “covenant-lite” to refer generally to loans that do not have 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 or operating results. 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.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Other Information
None.
Item 6.
Exhibits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixth Supplemental Indenture, dated as of May 18, 2021, relating to the 2.700% Notes due 2027, between the Company and Deutsche Bank Trust Company Americas, as trustee (Incorporated by reference to Exhibit 4.1 filed with the Company’s Current Report on Form 8-K (File No. 814-00755) filed on May 18, 2021)
|
|
|
|
|
Form of 2.700% Notes due 2027 (contained in the Sixth Supplemental Indenture filed as Exhibit 4.1 hereto)
|
|
|
|
|
Amendment No. 4 to Amended and Restated Senior Secured Revolving Credit Agreement and Amendment No. 1 to Amended and Restated Guarantee, Pledge and Security Agreement, dated May 4, 2021, among the Company, as borrower, OCSL SRNE, LLC, as subsidiary guarantor, FSFC Holdings, Inc., as subsidiary guarantor, the lenders party thereto, and ING Capital LLC, as administrative agent.
|
|
|
|
|
Sixth Amendment to the Amended and Restated Loan and Security Agreement by and among the Company, as collateral manager, OCSL Senior Funding II LLC, as borrower, and Citibank, N.A., as administrative agent and sole lender, dated as of July 2, 2021 (Incorporated by reference to Exhibit 10.1 filed with the Registrant’s Current Report on Form 8-K (File No. 814-00755) filed on July 9, 2021)
|
|
|
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
|
|
|
|
|
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OAKTREE SPECIALTY LENDING CORPORATION
|
|
|
|
|
By:
|
|
/s/ Armen Panossian
|
|
|
|
Armen Panossian
|
|
|
|
Chief Executive Officer
|
|
|
|
|
By:
|
|
/s/ Mel Carlisle
|
|
|
|
Mel Carlisle
|
|
|
|
Chief Financial Officer and Treasurer
|
Date: August 4, 2021