Fourth Quarter
Fiscal Year 2020
Earnings
Presentation
November 19, 2020
Nasdaq: OCSI
Forward Looking Statements
Some of the statements in this presentation constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this presentation may include statements as to: our future operating results and distribution projections; the ability of Oaktree Fund Advisors, LLC ("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 presentation 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 "Risk Factors" and elsewhere in our annual report on Form 10-K for the fiscal year ended September 30, 2020. 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; general considerations associated with the COVID-19 pandemic; the ability of the parties to consummate the two-step merger (the "Mergers") of OCSI with and into Oaktree Specialty Lending Corporation ("OCSL") on the expected timeline, or at all; the ability to realize the anticipated benefits of the Mergers; the effects of disruption on our business from the proposed Mergers; the combined company's plans, expectations, objectives and intentions, as a result of the Mergers; any potential termination of the Merger Agreement; the actions of our stockholders or the stockholders of OCSL with respect to the proposals submitted for their approval in connection with the Mergers; 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 presentation on information available to us on the date of this presentation, 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 SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Additional Information and Where to Find It
In connection with the Mergers, OCSI and OCSL plan to file with the SEC and mail to their respective stockholders a joint proxy statement on Schedule 14A (the "Joint Proxy Statement"), and OCSL plans to file with the SEC a registration statement on Form N-14 (the "Registration Statement") that will include the Joint Proxy Statement and a prospectus of OCSL. The Joint Proxy Statement and the Registration Statement will each contain important information about OCSI, OCSL, the Mergers and related matters. This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. STOCKHOLDERS OF OCSI AND OCSL ARE URGED TO READ THE JOINT PROXY STATEMENT AND REGISTRATION STATEMENT, AND
OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT OCSI, OCSL, THE MERGERS AND RELATED MATTERS. Investors and security holders will be able to obtain the documents filed with the SEC free of charge at the SEC's website,http://www.sec.govor, for documents filed by OCSI, from OCSI's website athttp://www.oaktreestrategicincome.comand, for documents filed by OCSL, from OCSL's website athttp://www.oaktreespecialtylending.com.
Participants in the Solicitation
OCSI, its directors, certain of its executive officers and certain employees and officers of Oaktree and its affiliates may be deemed to be participants in the solicitation of proxies in connection with the Mergers. Information about the directors and executive officers of OCSI is set forth in its proxy statement for its 2020 Annual Meeting of Stockholders, which was filed with the SEC on January 13, 2020. OCSL, its directors, certain of its executive officers and certain employees and officers of Oaktree and its affiliates may be deemed to be participants in the solicitation of proxies in connection with the Mergers. Information about the directors and executive officers of OCSL is set forth in its proxy statement for its 2020 Annual Meeting of Stockholders, which was filed with the SEC on January 13, 2020. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the OCSI and OCSL stockholders in connection with the Mergers will be contained in the Joint Proxy Statement when such document becomes available. These documents may be obtained free of charge from the sources indicated above.
No Offer or Solicitation
This presentation is not, and under no circumstances is it to be construed as, a prospectus or an advertisement and the communication of this presentation is not, and under no circumstances is it to be construed as, an offer to sell or a solicitation of an offer to purchase any securities in OCSI, OCSL or in any fund or other investment vehicle managed by Oaktree or any of its affiliates.
Unless otherwise indicated, data provided herein are dated as of September 30, 2020.
1
Summary of Results for the Quarter Ended September 30, 2020
Net Investment Income
Dividend
Net Asset Value
Investment Activity
Capital Structure &
Liquidity
OCSL-OCSI
Merger Agreement
- $0.13 per share as of September 30, 2020, up 18% as compared to $0.11 per share as of June 30, 2020
- Increase primarily driven by higher yields on new originations, higher make-whole interest and prepayment fees and lower interest expense
- Declared a cash distribution of $0.145 per share, an increase of 16% ($0.02 per share) from the prior distribution
- Distribution will be payable on December 31, 2020 to stockholders of record as of December 15, 2020
- $9.05 per share as of September 30, 2020, up 7% as compared to $8.47 per share as of June 30, 2020
- Increase primarily due to unrealized gains resulting from price increases on liquid debt investments
- $54 million of new investment commitments across 12 companies
- 9.5% weighted average yield on new investment commitments; 86% first lien, 10% second lien
- Received $72 million of proceeds from prepayments, exits, other paydowns and sales, primarily driven by active sales of lower yielding investments
- $268 million of total debt outstanding as of September 30, 2020; 1.00x total debt to equity
- Liquidity was composed of $25 million of unrestricted cash and $83 million of undrawn capacity on credit facilities1; unfunded commitments were $20 million, approximately $14 million of which can be drawn immediately2
- On October 28, 2020, the Company entered into an agreement to merge with and into OCSL, an affiliated business development company managed by Oaktree, with OCSL as the surviving company. Under the terms of the proposed merger, the Company's shareholders will receive an amount of shares of OCSL common stock with a NAV equal to the NAV of shares of the Company's common stock that they hold at the time of closing. The transaction is subject to approval by OCSL and the Company's stockholders and other customary closing conditions. Assuming these conditions are satisfied, the transaction is expected to close in the first calendar quarter of 2021
- Credit facility availability subject to borrowing base and other limitations.
- Excludes unfunded commitments to OCSI Glick JV LLC (the "Glick JV"), a joint venture that invests primarily in middle market and other corporate debt securities. Approximately $5 million of unfunded
commitments were ineligible to be immediately drawn due to certain milestones. | 2 |
Portfolio Summary as of September 30, 2020
Portfolio Characteristics
(At fair value)
4% | 10% | First Lien - $432 |
$502 million | 78 | Second Lien - $18 | ||||
Total Investments | Portfolio Companies | |||||
Glick JV - $49 | ||||||
86% | Equity - $2 | |||||
7.0% | $142 million | Top Ten Industries4 | ||||
Weighted Average Yield on | Median Debt Portfolio | |||||
Debt Investments | Company EBITDA2 | (As % of total portfolio at fair value) | ||||
(Excluding the Glick JV)1 | ||||||
Application Software | 11.1% | |||||
Aerospace & Defense | 5.7% | |||||
Diversified Support Services | 5.0% | |||||
90% | 0 | Advertising | 4.4% | |||
Movies & Entertainment | 3.3% | |||||
Senior Secured | Non-Accruals | |||||
Commercial Printing | 2.9% | |||||
Debt Investments | (Excluding the Glick JV)3 | |||||
Integrated Telecom. Svcs. | 2.9% | |||||
Personal Products | 2.7% | |||||
Note: Numbers may not sum due to rounding. | Data Processing & Outsourced Svcs. | 2.7% | ||||
1 | Excludes OCSI's share of the return on debt investments in the Glick JV. | Health Care Supplies | 2.7% | |||
2 | Excludes negative EBITDA borrowers and recurring revenue software investments. | |||||
3 | Excludes OCSI's investment in the Glick JV, which was restructured during the quarter ended March 31, 2020 and placed on non-accrual status. Including the Glick | JV, non-accruals represented 9.9% of the debt portfolio | ||||
at fair value as of September 30, 2020. | ||||||
4 | Based on GICS sub-industry classification. Excludes multi-sector holdings, which is composed of investments in the Glick JV. | 3 | ||||
Portfolio Diversity
Diversity by Investment Size
(As % of total portfolio at fair value)
Glick JV | Top 10 |
10% | |
Investments | |
24% |
Remaining 52 | Next 15 |
Investments | |
42% | Investments |
24% |
Portfolio by Industry1
(As % of total portfolio at fair value)
Industry | % of Portfolio |
Software | 13.1% |
Commercial Services & Supplies | 8.7% |
Media | 6.4% |
Aerospace & Defense | 5.7% |
Diversified Telecommunication Services | 4.5% |
IT Services | 4.4% |
Chemicals | 3.6% |
Entertainment | 3.3% |
Hotels, Restaurants & Leisure | 3.2% |
Oil, Gas & Consumable Fuels | 3.1% |
Health Care Providers & Services | 3.1% |
Personal Products | 2.7% |
Remaining 20 Industries | 28.5% |
Glick JV | 9.8% |
OCSI's portfolio is diverse across borrowers and industries
As of September 30, 2020
Note: Numbers may not sum due to rounding.
1 Based on GICS industry classification.
4
Portfolio Originations
New Investment Highlights
$54 million | $52 million |
New Investment | New Investment |
Commitments | Fundings |
9.5% | 100% |
Weighted Average Yield on | Also Held by Other |
New Debt Commitments | Oaktree Funds |
$49 million | $5 million |
New Investment | New Investment |
Commitments in New | Commitments in Existing |
Portfolio Companies | Portfolio Companies |
Note: Numbers rounded to the nearest million or percentage point and may not sum due to rounding.
- New funded investments includes drawdowns on existing revolver commitments.
- Investment exits includes proceeds from prepayments, exits, other paydowns and sales.
New Investment Composition
(As % of new investment commitments; $ in millions)
4%
10%
First Lien - $47
Second Lien - $5 Equity - $2
86%
Historical Originations and Exits
($ in millions)
$101 | $91 | |||
$84 | ||||
$72 | ||||
$51 | $46 | $52 | ||
$40 | $38 | $35 | ||
9/30/19 | 12/31/19 | 3/31/20 | 6/30/20 | 9/30/20 | ||
New Funded Investments1 | Investment Exits2 | |||||
5
Non-Core Investment Portfolio Detail
Portfolio Repositioning Progress1
($ in millions; at fair value)
Non-Core | -87% | Non-Core |
Investments: | Non-Core Investments | Investments: |
58% | +98% | 8% |
of portfolio | of portfolio | |
Core Investments |
$43 | |
$59 | $37 |
$293 | |
$440 | $500 |
$415 | |
$209 |
9/30/17 | 9/30/18 | 9/30/19 | 9/30/20 | |
Core Investments | Non-Core Investments | |||
Only four non-core investments remained as of September 30, 2020
As of September 30, 2020
Note: Numbers may not sum due to rounding.
1 Excludes investments in the Glick JV.
Non-core Investments by Type
(As % of non-core investment portfolio at fair value; $ in millions)
First Lien - $37
100%
Non-core Portfolio Composition
(At fair value; $ in millions)
$37
$10
Liquid Debt
$27 | Private Loans | |
9/30/20
6
Financial Highlights
As of | |||||
($ in thousands, except per share amounts) | 9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 |
Net Investment Income per Share | $0.13 | $0.11 | $0.15 | $0.16 | $0.17 |
Net Realized and Unrealized Gains (Losses) per Share | $0.57 | $1.32 | $(2.53) | $0.05 | $(0.07) |
Earnings (Loss) per Share | $0.70 | $1.43 | $(2.38) | $0.21 | $0.10 |
Distributions per Share | $0.125 | $0.125 | $0.155 | $0.155 | $0.155 |
NAV per Share | $9.05 | $8.47 | $7.17 | $9.71 | $9.65 |
Weighted Average Shares Outstanding | 29,466,768 | 29,466,768 | 29,466,768 | 29,466,768 | 29,466,768 |
Investment Portfolio (at Fair Value) | $502,293 | $506,452 | $524,379 | $584,454 | $597,104 |
Cash and Cash Equivalents | $25,073 | $30,103 | $21,931 | $9,525 | $5,647 |
Total Assets | $544,370 | $579,325 | $589,794 | $613,134 | $623,334 |
Total Debt Outstanding | $267,586 | $312,157 | $327,157 | $306,157 | $294,657 |
Net Assets | $266,681 | $249,709 | $211,234 | $286,017 | $284,450 |
Total Debt to Equity Ratio | 1.00x | 1.25x | 1.55x | 1.07x | 1.04x |
Net Debt to Equity Ratio | 0.91x | 1.13x | 1.44x | 1.04x | 1.02x |
Weighted Average Interest Rate on Debt Outstanding | 2.6% | 3.0% | 3.8% | 4.0% | 4.2% |
7
Portfolio Highlights
As of | |||||
($ in thousands; at fair value) | 9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 |
Investments at Fair Value | $502,293 | $506,452 | $524,379 | $584,454 | $597,104 |
Number of Portfolio Companies | 78 | 76 | 88 | 84 | 84 |
Average Portfolio Company Debt Investment Size | $6,600 | $6,700 | $6,000 | $7,100 | $7,200 |
Asset Class: | |||||
First Lien | 86.0% | 88.4% | 90.6% | 88.0% | 88.5% |
Second Lien | 3.7% | 2.5% | 2.2% | 2.7% | 2.4% |
Glick JV | 9.8% | 9.1% | 7.2% | 9.3% | 9.1% |
Equity | 0.5% | 0.0% | 0.0% | 0.0% | 0.0% |
Interest Rate Type for Debt Investments: | |||||
% Floating Rate | 98.1% | 98.7% | 100.0% | 100.0% | 100.0% |
% Fixed Rate | 1.9% | 1.3% | -% | -% | -% |
Yields | |||||
Weighted Average Yield on Debt Investments1 | 6.3% | 5.9% | 6.0% | 7.2% | 7.4% |
Weighted Average Yield on Debt Investments (Excluding the Glick JV)2 | 7.0% | 6.5% | 6.5% | 7.1% | 7.3% |
Cash Component of Weighted Average Yield on Debt Investments | 5.3% | 5.1% | 5.5% | 7.0% | 7.3% |
Weighted Average Yield on Total Portfolio Investments3 | 6.3% | 5.9% | 6.0% | 7.2% | 7.4% |
Note: Numbers may not sum due to rounding.
- Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments, including our share of the return on the debt investments in the Glick JV.
- Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments, excluding our share of the return on the debt investments in the Glick JV.
- Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments and dividend income, including our share of the return on the debt investments in the Glick JV.
8
Investment Activity
($ in thousands)
New Investment Commitments New Funded Investment Activity1
Proceeds from Prepayments, Exits, Other Paydowns and Sales Net New Investments2
New Investment Commitments in New Portfolio Companies New Investment Commitments in Existing Portfolio Companies Portfolio Company Exits
Weighted Average Yield at Cost on New Debt Investment Commitments
As of
9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 |
$54,100 | $41,600 | $93,900 | $34,900 | $50,800 |
$51,900 | $34,900 | $101,300 | $37,900 | $51,100 |
$71,600 | $90,700 | $83,800 | $46,000 | $40,200 |
$(19,700) | $(55,800) | $17,500 | $(8,100) | $10,900 |
9 | 7 | 18 | 9 | 7 |
3 | 2 | 9 | 2 | 1 |
6 | 19 | 14 | 9 | 5 |
9.5% | 9.5% | 6.6% | 6.6% | 6.8% |
- New funded investment activity includes drawdowns on existing revolver commitments.
- Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and sales.
9
Historical Statement of Operations
For the three months ended | |||||
($ in thousands, except per share data) | 9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 |
Interest income | $7,730 | $7,783 | $9,666 | $11,212 | $11,976 |
PIK interest income | 939 | 744 | 297 | 4 | 10 |
Fee income | 277 | 109 | 380 | 388 | 93 |
Dividend income | 6 | - | - | - | - |
Total investment income | 8,952 | 8,636 | 10,343 | 11,603 | 12,078 |
Base management fee | 1,320 | 1,375 | 1,442 | 1,506 | 1,511 |
Part I incentive fee | 343 | 267 | 272 | 992 | 1,049 |
Interest expense | 2,533 | 2,995 | 3,477 | 3,427 | 3,673 |
Other operating expenses1 | 1,010 | 830 | 862 | 1,002 | 901 |
Total expenses | 5,207 | 5,468 | 6,052 | 6,926 | 7,134 |
Fees waived | - | - | (272) | (51) | (198) |
Net expenses | 5,207 | 5,468 | 5,781 | 6,876 | 6,937 |
Net investment income | 3,746 | 3,169 | 4,562 | 4,728 | 5,142 |
Net unrealized appreciation (depreciation) | 16,405 | 41,928 | (67,418) | 1,926 | (148) |
Net realized gains (losses) | 505 | (2,938) | (7,359) | (520) | (1,997) |
Net increase (decrease) in net assets resulting from operations | $20,656 | $42,159 | $(70,216) | $6,134 | $2,996 |
Note: Numbers may not sum due to rounding
1 Includes professional fees, directors fees, administrator expenses and general and administrative expenses.
10
Net Asset Value Per Share Bridge
$0.02 | $(0.125) | |
$0.13 | $0.55 | |
$8.47 | $9.05 | |
6/30/20 NAV | Net Investment Income | Net Unrealized | Net Realized Gain / | Dividends Paid | 9/30/20 NAV |
Appreciation / | (Loss)1 | ||||
(Depreciation) 1 |
Note: Net asset value per share amounts are based on the shares outstanding at each respective quarter end. Net investment income per share, net unrealized appreciation / (depreciation), and net realized gain / (loss) are based on the weighted average number of shares outstanding for the period.
1 Excludes reclassifications of net unrealized appreciation / (depreciation) to net realized gains / (losses) as a result of investments exited during the quarter.
11
Capital Structure & Liquidity Overview
Funding Sources
($ in millions)
Principal | ||||
Committed | Outstanding | Interest Rate | Maturity | |
Deutsche Bank | $160 | $138 | LIBOR+2.65% | 3/30/2022 |
Facility | ||||
Citibank Revolving | 180 | 119 | LIBOR+1.70% | 7/18/2023 |
Credit Facility | / 2.25%1 | |||
Short-Term Secured | 11 | 11 | 3.30% | N/A |
Borrowings | ||||
Total | $351 | $268 | ||
- Revised leverage target to 1.0x to 1.4x from 1.2x to 1.6x
- 2.6% weighted average interest rate on debt outstanding
- On September 29, 2020, amended Deutsche Bank Facility to, among other things, extend the reinvestment period and maturity date to September 30, 2021 and March 30, 2022, respectively, and decrease the size from $200 million to $160 million
- On September 30, 2020, repaid all amounts outstanding under $25 million senior secured revolving credit facility with East West Bank, following which the facility was terminated
Liquidity Rollforward2
($ in millions)
3/31/2020 | 6/30/2020 | 9/30/2020 | |
Credit Facility Committed | $405 | $405 | $351 |
Credit Facility Drawn | (327) | (312) | (257) |
Secured Borrowings | - | - | (11) |
Cash and Cash Equivalents | 22 | 30 | 25 |
Total Liquidity | 100 | 123 | 108 | |||||||||
Total Unfunded Commitments3 | 6 | 18 | 20 | |||||||||
Adjusted Liquidity | $94 | $105 | $88 | |||||||||
Historical Leverage Utilization2 | ||||||||||||
($ in millions) | ||||||||||||
$405 | $405 | $351 | ||||||||||
Undrawn Capacity | $78 | $93 | ||||||||||
$83 | ||||||||||||
Total Debt Outstanding | ||||||||||||
$327 | $312 | $268 | ||||||||||
3/31/20 | 6/30/20 | 9/30/20 | ||||||||||
Cash | $22 | $30 | $25 | |||||||||
Net Assets | $211 | $250 | $267 | |||||||||
Net Leverage | 1.44x | 1.13x | 0.91x | |||||||||
Total Leverage | 1.55x | 1.25x | 1.00x | |||||||||
As of September 30, 2020
Note: 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.
- Interest rate spread depends on asset type.
- Credit facility availability subject to borrowing base and other limitations.
3 Excludes unfunded commitments to the Glick JV. | 12 |
Joint Venture Summary
Joint Venture with GF Equity Funding ("Glick")
- Primarily invests in senior secured loans of middle market companies as well as other corporate debt securities
- Joint venture structure
- Equity ownership: 87.5% OCSI and 12.5% Glick
- Shared voting control: 50% OCSI and 50% Glick
- Funded by $90 million credit facility
- OCSI's investments in the Glick JV (at fair value):
9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | |
Subordinated Note (L+4.5%)1 | $49 | $46 | $38 | $54 |
Subordinated Note % Par | 76% | 70% | 57% | 82% |
87.5% Equity Interest | $ - | $ - | $ - | $ - |
Portfolio Summary
($ in millions; at fair value)
9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | |
Total Investments | $131 | $128 | $137 | $158 |
First Lien | 95% | 95% | 95% | 92% |
Second Lien & Other | 5% | 5% | 5% | 8% |
Number of Debt Investments | 40 | 41 | 44 | 42 |
Average Investment Size | $3 | $3 | $3 | $4 |
Non-Accruals | 1.7% | 1.6% | 4.2% | 0.0% |
Wt. Avg. Debt Portfolio Yield | 5.6% | 5.6% | 5.6% | 6.7% |
Cash Flows & Distributions
($ in millions)
Subordinated Notes Restructuring
- During the quarter ended March 31, 2020, OCSI's subordinated note investment in the Glick JV was restructured and placed on non-accrual in response to the more volatile market environment
9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | |
Net Investment Income | $1.4 | $1.1 | $2.0 | $1.82 |
Cash Distributions: |
- While the Company did not recognize interest income from the Glick JV, the underlying investment portfolio generated net investment income of $1.4 million during the quarter ended September 30, 2020
OCSI (87.5%) | $1.0 | $1.0 | - | $1.4 | |
Glick (12.5%) | $0.1 | $0.1 | - | $0.2 | |
Total Distributions | $1.1 | $1.1 | $ - | $1.6 | |
- Subsequent to September 30, 2020, the Glick JV used these proceeds to make a $1.1 million repayment of outstanding principal on the subordinated notes, of which $1.0 million was paid to OCSI
As of September 30, 2020
- Interest rate on subordinated notes was LIBOR + 6.5% prior to the subordinated notes restructuring, which occurred during the quarter ended March 31, 2020.
- Excludes interest paid on the Company's subordinated notes.
Distributions were | Placed on non- |
used to pay down | accrual status; |
outstanding principal | NII was |
on subordinated notes | retained to |
support NAV |
13
Appendix
Illustrative OCSL-OCSI Merger Consideration
Merger Consideration Highlights
Total merger consideration will be based on the NAVs of OCSL and OCSI determined within 48 hours of closing
OCSL to acquire 100% of OCSI in a stock-for-stock transaction, with shares to be exchanged on a NAV- for-NAV basis
Illustrative Example1
($ and share amounts in millions, except per share data)
$9.05 | $6.49 |
OCSI NAV | OCSL NAV |
Per Share | Per Share |
Merger will result in an ownership split of the combined company proportional to each of OCSL's and OCSI's respective NAVs
At closing, NAV used in determining the exchange ratio will reflect transaction expenses and any tax- related distributions
1.39
Exchange Ratio
OCSI | OCSL | Combined | |
Total NAV | $266.7 | $914.9 | $1,181.6 |
Shares Outstanding | 29.5 | 141.0 | 182.1 |
NAV Per Share | $9.05 | $6.49 | $6.49 |
1 Based on NAVs as of September 30, 2020. NAVs do not include the impact of expenses related to the merger or any tax-related distributions.
15
OCSI & OCSL Comparison
Portfolio and Balance Sheet Metrics
(At fair value, $ in thousands)
OCSL | OCSI | Combined | |
Portfolio: | |||
Investments at Fair Value | $1,573,851 | $502,293 | $2,076,145 |
Top 10 Investments1 (%) | 23% | 24% | 20% |
Number of Portfolio Companies | 113 | 78 | 141 |
First Lien (%) | 62% | 86% | 68% |
Second Lien (%) | 22% | 4% | 17% |
Unsecured (%) | 4% | - | 3% |
Equity (%) | 4% | 0.5% | 3% |
Joint Venture Interests (%) | 7% | 10% | 8% |
Non-Accruals at Fair Value (% of debt portfolio) | 0.1% | 0.0%2 | 0.1% |
Debt Investment Overlap1 ($) | $727,907 | $258,604 | |
Debt Investment Overlap1 (%) | 52% | 57% | |
Balance Sheet: | |||
Total Assets | $1,640,712 | $544,370 | $2,185,082 |
Cash and Cash Equivalents | $39,096 | $25,073 | $64,169 |
Total Debt Outstanding3 | $709,315 | $267,586 | $976,901 |
Net Assets | $914,879 | $266,681 | $1,181,560 |
Total Debt to Equity Ratio | 0.78x | 1.00x | 0.83x |
Net Debt to Equity Ratio | 0.74x | 0.91x | 0.78x |
Unsecured Borrowings3 (%) | 42% | - | 30% |
Weighted Average Interest Rate on Debt Outstanding | 2.7% | 2.6% | 2.7% |
As of September 30, 2020
- Excludes investments in Senior Loan Fund JV I LLC and the Glick JV.
- Excludes OCSI's investment in the Glick JV, which was restructured during the quarter ended March 31, 2020 and placed on non-accrual status. Including the Glick JV, non-accruals represented 9.9% of the debt portfolio at fair value as of September 30, 2020.
3 Net of unamortized financing costs. | 16 |
Contact:
Michael Mosticchio, Investor Relations ocsi-ir@oaktreecapital.com
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Oaktree Strategic Income Corporation published this content on 19 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 December 2020 20:20:07 UTC