497
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Filed Pursuant to Rule 497
Registration No. 333-234798

 

PROSPECTUS SUPPLEMENT

(to Prospectus dated January 13, 2020)

$300,000,000

Oaktree Specialty Lending Corporation

3.500% Notes due 2025

We are offering $300,000,000 in aggregate principal amount of 3.500% notes due 2025, which we refer to as the Notes. The Notes will mature on February 25, 2025. We will pay interest on the Notes on February 25 and August 25 of each year, beginning August 25, 2020. We may redeem the Notes in whole or in part at any time or from time to time at the redemption price discussed under the caption “Description of the Notes—Optional Redemption” in this prospectus supplement. In addition, holders of the Notes can require us to repurchase the Notes at 100% of their principal amount upon the occurrence of a Change of Control Repurchase Event (as defined herein). The Notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

The Notes will be our direct, unsecured obligation and rank pari passu, or equal in right of payment, with all outstanding and future unsecured unsubordinated indebtedness issued by us. As of December 31, 2019, we had $539.1 million of debt outstanding of which $161.3 million was unsecured and unsubordinated indebtedness and $377.8 million was secured indebtedness. None of our current indebtedness will be subordinated to the Notes.

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 were formed in late 2007 and operate 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 of 1940, as amended. We seek 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. 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.

An investment in the Notes involves certain risks, including, among other things, the risk of leverage and risks relating to investments in securities of small, private and developing businesses. You should review carefully the risks and uncertainties, including the risk of leverage, described in the section titled “Risk Factors” beginning on page S-9 of this prospectus supplement, page 5 of the accompanying prospectus or otherwise included in or incorporated by reference herein or the accompanying prospectus and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar headings in the other documents that are incorporated by reference into this prospectus supplement and the accompanying prospectus before investing in our securities.

This prospectus supplement and the accompanying prospectus contain important information about us that a prospective investor should know before investing in the Notes. Please read this prospectus supplement and the accompanying prospectus before investing and keep them for future reference. We file periodic reports, current reports, proxy statements and other information with the Securities and Exchange Commission. You may obtain this information free of charge or make an investor inquiry by contacting us at 333 South Grand Ave., 28th Floor, Los Angeles, CA 90071 or by calling us collect at (213) 830-6300 or on our website at oaktreespecialtylending.com. Except for the documents incorporated by reference into this prospectus supplement or the accompanying prospectus, information on our website is not incorporated into or a part of this prospectus supplement or the accompanying prospectus. The Securities and Exchange Commission also maintains a website at www.sec.gov that contains such information.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

     Per Note     Total  

Public offering price(1)

     99.153   $ 297,459,000  

Underwriting discount (sales load)

     1.000   $ 3,000,000  

Proceeds to us before expenses(2)

     98.153   $ 294,459,000  

 

 

(1)

The public offering price set forth above does not include accrued interest, if any. Interest on the Notes will accrue from February 25, 2020 and must be paid by the purchaser if the Notes are delivered after February 25, 2020.

(2)

Before deducting estimated offering expenses of $0.4 million payable by us in connection with this offering. See “Underwriting”.

THE NOTES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.

Delivery of the Notes in book-entry form through The Depository Trust Company will be made on or about February 25, 2020.

Joint Book-Running Managers

 

J.P. Morgan   BofA Securities     

RBC Capital Markets

 

ING

Co-Managers

 

Barclays   Deutsche Bank Securities   Goldman Sachs & Co. LLC      KeyBanc Capital Markets   MUFG
Citigroup    HSBC    Morgan Stanley
CIT Capital Securities    R. Seelaus & Co., LLC
Janney Montgomery             Scott    Jefferies    JMP Securities     

Keefe, Bruyette, & Woods

A Stifel Company

   Wells Fargo Securities

Prospectus Supplement dated February 13, 2020


Table of Contents

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

 

ABOUT THIS PROSPECTUS SUPPLEMENT

     ii  

PROSPECTUS SUPPLEMENT SUMMARY

     S-1  

SPECIFIC TERMS OF THE NOTES AND THE OFFERING

     S-5  

RISK FACTORS

     S-9  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     S-14  

USE OF PROCEEDS

     S-15  

CAPITALIZATION

     S-16  

DESCRIPTION OF THE NOTES

     S-17  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     S-30  

UNDERWRITING

     S-34  

LEGAL MATTERS

     S-41  

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     S-41  
PROSPECTUS

 

ABOUT THIS PROSPECTUS

     i  

PROSPECTUS SUMMARY

     1  

RISK FACTORS

     5  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     6  

USE OF PROCEEDS

     7  

PORTFOLIO COMPANIES

     8  

PORTFOLIO MANAGEMENT

     24  

DIVIDEND REINVESTMENT PLAN

     25  

DESCRIPTION OF OUR CAPITAL STOCK

     27  

DESCRIPTION OF OUR DEBT SECURITIES

     30  

DESCRIPTION OF OUR WARRANTS

     44  

DESCRIPTION OF OUR SUBSCRIPTION RIGHTS

     46  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     48  

PLAN OF DISTRIBUTION

     58  

CUSTODIAN, TRANSFER AND DISTRIBUTION PAYING AGENT AND REGISTRAR

     60  

BROKERAGE ALLOCATION AND OTHER PRACTICES

     60  

LEGAL MATTERS

     61  

EXPERTS

     61  

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     62  

AVAILABLE INFORMATION

     63  

 

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ABOUT THIS PROSPECTUS SUPPLEMENT

You should rely only on the information contained in this prospectus supplement, the accompanying prospectus, any free writing prospectus, and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus, or any other information to which we have referred you when considering whether to purchase any securities offered by this prospectus supplement. We have not, and the underwriters have not, authorized any other person to provide you with different or additional information from that contained in this prospectus supplement, the accompanying prospectus, or any free writing prospectus. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.

This document is in two parts. The first part is this prospectus supplement, which describes the terms of this offering and also adds to and updates information contained in the accompanying prospectus. The second part is the accompanying prospectus, which gives more general information and disclosure. To the extent the information contained in this prospectus supplement differs from the information contained in the accompanying prospectus, the information in this prospectus supplement shall control. The information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus is accurate as of their respective dates. Our financial condition, results of operations and prospects may have changed since that date. To the extent required by law, we will amend or supplement the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus to reflect any material changes to such information subsequent to the date of the prospectus supplement and the accompanying prospectus and prior to the completion of this offering.

 

 

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PROSPECTUS SUPPLEMENT SUMMARY

This summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read this entire prospectus supplement and the accompanying prospectus carefully, including the section in this prospectus supplement and the accompanying prospectus entitled “Risk Factors” before making a decision to invest in our securities.

Unless otherwise noted, the terms:

 

   

“we,” “us” and “our” refer to Oaktree Specialty Lending Corporation;

 

   

“Oaktree” and “our Adviser” refer to Oaktree Capital Management, L.P., our external investment adviser;

 

   

“Oaktree Administrator” refers to Oaktree Fund Administration, LLC, our administrator;

 

   

“Credit Facility” refers to our secured syndicated revolving credit facility, as most recently amended on February 25, 2019, with certain lenders party thereto from time to time and ING Capital LLC, as administrative agent, which, as of December 31, 2019, permitted up to $700 million of borrowings;

 

   

“2024 Notes” refers to our 5.875% unsecured notes issued in October 2012 in an aggregate principal amount of $75.0 million, which we have called for redemption and expect to redeem on March 2, 2020, but would otherwise have matured on October 30, 2024; and

 

   

“2028 Notes” refers to our 6.125% unsecured notes issued in April and May 2013 in an aggregate principal amount of $86.3 million, which we have called for redemption and expect to redeem on March 13, 2020, but would otherwise have matured on April 30, 2028.

Oaktree Specialty Lending Corporation

We are a specialty finance company dedicated to providing customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. We were formed in late 2007 and currently operate 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 of 1940, as amended, or the Investment Company Act. In addition, we have qualified and elected to be treated as a regulated investment company, or RIC, under the Internal Revenue Code of 1986, as amended, or the Code, for tax purposes. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any net ordinary income or net realized capital gains that we distribute to our stockholders if we meet certain source-of-income, income distribution and asset diversification requirements.

As of October 17, 2017, we are externally managed by Oaktree pursuant to an investment advisory agreement, as amended from time to time, or the Investment Advisory Agreement, between us and Oaktree. Oaktree is a subsidiary of Oaktree Capital Group, LLC, or OCG. In 2019, Brookfield Asset Management Inc., or 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. Oaktree Administrator, a subsidiary of our Adviser, provides certain administrative and other services necessary for us to operate.

We seek 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. We invest in companies that typically possess business models we expect to be resilient in the future with underlying fundamentals that will provide strength in future downturns. 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



 

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dislocations in the financial markets and other situations that may benefit from our Adviser’s credit and structuring expertise. 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.

Our Adviser intends to continue to reposition our portfolio into investments that are better aligned with our Adviser’s overall approach to credit investing and that it believes have the potential to generate attractive returns across market cycles. Our Adviser is generally focused on middle-market companies, which we define as companies with enterprise values of between $100 million and $750 million. We expect our portfolio to include a mix of first and second lien loans, including asset backed loans, unitranche loans, mezzanine loans, unsecured loans, bonds, preferred equity and certain equity co-investments. Our portfolio may also include certain structured finance and other non-traditional structures. 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.

Our portfolio totaled $1.5 billion at fair value as of December 31, 2019 and was comprised of 106 portfolio companies. These included debt investments in 81 companies, equity investments in 33 companies, including our limited partnership interests in two private equity funds, and our investment in Senior Loan Fund JV I, LLC, or the SLF JV I. Nine of these equity investments were in companies in which we also had a debt investment. At fair value, 90.9% of our portfolio consisted of debt investments and 79.5% of our portfolio consisted of senior secured loans as of December 31, 2019. The weighted average annual yield of our debt investments at fair value as of December 31, 2019, including our share of the return on our debt investment in SLF JV I, was approximately 8.6%, including 7.8% representing cash payments. The weighted average annual yield of our debt investments is determined before the payment of, and therefore does not take into account, our expenses and the payment by an investor of any stockholder transaction expenses, and does not represent the return on investment for our stockholders.

We are permitted to, and expect to continue to, finance our investments through borrowings. However, as a Business Development Company, subject to certain limited exceptions, we are only allowed to borrow amounts in accordance with the current asset coverage requirements in the Investment Company Act. We generally expect to target a long-term debt to equity ratio of 0.70x to 0.85x (i.e., one dollar of equity for each $0.70 to $0.85 of debt outstanding). As of December 31, 2019, we had a debt to equity ratio of 0.58x (i.e., one dollar of equity for each $0.58 of debt outstanding). 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. The reduced asset coverage requirements permit us to double the maximum amount of leverage that we are permitted to incur by reducing the asset coverage requirements applicable to us from 200% to 150%. 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.

Our Adviser

We are externally managed and advised by Oaktree, a registered investment adviser under the Investment Advisers Act of 1940, as amended. Oaktree, subject to the overall supervision of our Board of Directors, manages our day-to-day operations, and provides investment advisory services to us pursuant to the Investment Advisory Agreement.

Our Adviser is a leading global investment management firm headquartered in Los Angeles, California, focused on less efficient markets and alternative investments. A number of our Adviser’s senior executives and investment professionals have been investing together for over 33 years and have generated impressive investment performance through multiple market cycles. As of December 31, 2019, our Adviser (together with



 

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its affiliates) had approximately $125 billion in assets under management1. Our Adviser emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, corporate debt (including high-yield debt and senior loans), control investing, real estate, convertible securities and listed equities.

In 2019, 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. Brookfield is a leading global alternative asset manager with a 120-year history and over $500 billion of assets under management (inclusive of Oaktree) across a broad portfolio of real estate, infrastructure, renewable power, credit and private equity assets. Commencing in 2022, OCG’s founders, senior management and current and former employee-unitholders of OCG will be able to sell their remaining OCG units to Brookfield over time pursuant to an agreed upon liquidity schedule and approach to valuing such units at the time of liquidation. Pursuant to this liquidity schedule, the earliest year in which Brookfield could own 100% of the OCG business is 2029.

Our Adviser’s primary firm-wide goal is to achieve attractive returns while bearing less than commensurate risk. Our Adviser believes that it can achieve this goal by taking advantage of market inefficiencies in which financial markets and their participants fail to accurately value assets or fail to make available to companies the capital that they reasonably require.

Our Adviser believes that its defining characteristic is its adherence to the highest professional standards, which has yielded several important benefits. First and foremost, this characteristic has allowed our Adviser to attract and retain an extremely talented group of investment professionals, or the Investment Professionals. As of December 31, 2019, our Adviser had over 950 professionals in 18 cities and 13 countries, 39 portfolio managers with an average experience of 24 years and approximately 950 years of combined industry experience. Specifically, the Strategic Credit group that is primarily responsible for implementing our investment strategy consists of over 20 Investment Professionals led by Armen Panossian, our Chief Executive Officer and Chief Investment Officer, who focus on the investment strategy employed by our Adviser and certain of its affiliates. Second, it has permitted the investment team to build strong relationships with brokers, banks and other market participants. These institutional relationships have been instrumental in strengthening access to trading opportunities, to understanding the current market, and to executing the investment team’s investment strategies.

Our Adviser and its affiliates provide discretionary investment management services to other managed accounts and investment funds, which may have overlapping investment objectives and strategies with our own and, accordingly, may invest in asset classes similar to those targeted by us. The activities of such managed accounts and investment funds may raise actual or potential conflicts of interest.

 

1 

References to “assets under management” or “AUM” represent assets managed by our Adviser and a proportionate amount of the AUM reported by DoubleLine Capital LP, or Doubleline, in which our Adviser owns a 20% minority interest. Our Adviser’s methodology for calculating AUM includes (i) the net asset value of assets managed directly by our Adviser, (ii) the leverage on which management fees are charged, (iii) undrawn capital that our Adviser is entitled to call from investors in Oaktree funds pursuant to their capital commitments, (iv) for collateralized loan obligation vehicles, the aggregate par value of collateral assets and principal cash, (v) for publicly-traded Business Development Companies, gross assets (including assets acquired with leverage), net of cash, and (vi) our Adviser’s pro rata portion of the AUM reported by DoubleLine. Our Adviser’s calculation of AUM may differ from the calculations of other asset managers and, as a result, our Adviser’s measurements of AUM may not be comparable to similar measures presented by other asset managers. Our Adviser’s definition of AUM is not based on the definitions of AUM that may be set forth in agreements governing the investment funds, vehicles or accounts that it manages and is not calculated pursuant to regulatory definitions.



 

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Strategic Credit

Our Adviser officially launched its Strategic Credit strategy in early 2013 as a step-out from its Distressed Debt strategy, to capture attractive investment opportunities that appear to offer too little return for distressed debt investors, but may pose too much uncertainty for high-yield bond creditors. The strategy seeks to achieve an attractive total return by investing in public and private performing (i.e., revenue-generating) debt.

Strategic Credit focuses on U.S. and non-U.S. investment opportunities that arise from pricing inefficiencies that occur in the primary and secondary markets or from the financing needs of healthy companies with limited access to traditional lenders or public markets. Typical investments will be in high yield bonds and senior secured loans for borrowers that are in need of direct loans, rescue financings, or other capital solutions or that have had challenged or unsuccessful primary offerings.

The Investment Professionals employ a fundamental, value-driven opportunistic approach to credit investing, which seeks to benefit from the resources, relationships and proprietary information of our Adviser’s global investment platform.

Our Administrator

We entered into an administration agreement, as amended from time to time, or the Administration Agreement, with Oaktree Administrator, a Delaware limited liability company and a wholly owned subsidiary of Oaktree. The principal executive offices of Oaktree Administrator are located at 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071. Pursuant to the Administration Agreement, Oaktree Administrator provides services to us, and we reimburse Oaktree Administrator for costs and expenses incurred by Oaktree Administrator in performing its obligations under the Administration Agreement and providing personnel and facilities thereunder.

Corporate Information

Our principal executive offices are located at 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071, and our telephone number is (213) 830-6300. Our corporate website is located at www.oaktreespecialtylending.com. Except for the documents incorporated by reference into this prospectus supplement or the accompanying prospectus, information on our website is not incorporated into or a part of this prospectus supplement or the accompanying prospectus.



 

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SPECIFIC TERMS OF THE NOTES AND THE OFFERING

This section outlines certain legal and financial terms of the Notes. You should read this section together with the more detailed description of the Notes under the heading “Description of the Notes” in this prospectus supplement before investing in the Notes.

 

Issuer   Oaktree Specialty Lending Corporation
Title of the Securities   3.500% Notes due 2025
Initial Aggregate Principal Amount Being Offered   $300,000,000
Initial Public Offering Price   99.153% of the aggregate principal amount of Notes
Interest Rate   3.500%
Yield to Maturity   3.687%
Trade Date   February 13, 2020
Issue Date   February 25, 2020
Maturity Date   February 25, 2025
Interest Payment Dates   Each February 25 and August 25, commencing August 25, 2020. If an interest payment date falls on a non-business day, the applicable interest payment will be made on the next business day and no additional interest will accrue as a result of such delayed payment
Ranking of Notes   The Notes will be our direct, general unsecured obligations and will rank:
 

•   senior in right of payment to all of our future indebtedness or other obligations that are expressly subordinated, or junior, in right of payment to the Notes;

 

•   pari passu, or equal, in right of payment with all of our existing and future indebtedness or other obligations that are not so subordinated, including our 2024 Notes, of which $75 million in aggregate principal amount was outstanding as of December 31, 2019 and which we have called for redemption, and our 2028 Notes, of which $86.3 million in aggregate principal amount was outstanding as of December 31, 2019;

 

•   effectively subordinated to any of our secured indebtedness or other obligations (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility, of which $377.8 million was outstanding as of December 31, 2019; and



 

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•   structurally subordinated, or junior, to all future indebtedness and other obligations (including trade payables) incurred by our subsidiaries, financing vehicles or similar.

  As of December 31, 2019, our total consolidated indebtedness was $539.1 million, of which $377.8 million was secured indebtedness, all of which was unsubordinated indebtedness and none of which was indebtedness of our subsidiaries. See “Capitalization” in this prospectus supplement.
Denominations   We will issue the Notes in denominations of $2,000 and integral multiples of $1,000 in excess thereof.
Optional Redemption   We may redeem some or all of the Notes at any time, or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the Notes to be redeemed through January 25, 2025 (the date falling one month prior to the maturity date of the Notes), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 35 basis points, plus, in each case, accrued and unpaid interest to, but excluding, the redemption date; provided, however, that if we redeem any Notes on or after January 25, 2025 (the date falling one month prior to the maturity date of the Notes), the redemption price for the Notes will be equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. Any exercise of our option to redeem the Notes will be done in compliance with the Investment Company Act.
Sinking Fund   The Notes will not be subject to any sinking fund. A sinking fund is a reserve fund accumulated over a period of time for the retirement of debt.

Offer to Purchase upon a Change of Control Repurchase Event

  If a Change of Control Repurchase Event (as described under “Description of the Notes”) occurs prior to maturity, unless we have exercised our right to redeem the Notes in full, holders will have the right, at their option, to require us to repurchase for cash some or all of the Notes at a repurchase price equal to 100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date.


 

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Full Defeasance   If there is a change in U.S. tax law or we obtain an U.S. Internal Revenue Service, or IRS, ruling described herein, the Notes will be subject to “defeasance” or “full defeasance” by us, which means that, if we put in place certain arrangements for you to be repaid and subject to the satisfaction of certain conditions, we can legally release ourselves from all payment and other obligations on the Notes.
Covenant Defeasance   Under current U.S. tax law and the indenture (as defined under “Description of the Notes”), the Notes are subject to covenant defeasance by us, which means that, subject to the satisfaction of certain conditions, we will be released from some of the restrictive covenants in the indenture.
Form of Notes   The Notes will be represented by global securities that will be deposited and registered in the name of The Depository Trust Company, or DTC, or its nominee. This means that, except in limited circumstances, you will not receive certificates for the Notes. Beneficial interests in the Notes will be represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in DTC. Investors may elect to hold interests in the Notes through either DTC, if they are a participant, or indirectly through organizations that are participants in DTC.
Trustee, Paying Agent and Registrar   Deutsche Bank Trust Company Americas
Events of Default   If an event of default (as described under “Description of the Notes”) on the Notes occurs, the principal amount of the Notes, plus accrued and unpaid interest, may be declared immediately due and payable, subject to conditions set forth in the indenture. These amounts automatically become due and payable in the case of certain types of bankruptcy or insolvency events involving us.
Other Covenants   In addition to the covenants described in the accompanying prospectus, the following covenants apply to the Notes:
 

•   We agree that for the period of time during which the Notes are outstanding, we will not violate, whether or not we are subject thereto, 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 us by the SEC.



 

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•   If, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, to file any periodic reports with the Securities and Exchange Commission, or the SEC, we agree to furnish to holders of the Notes and the trustee, for the period of time during which the Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance with applicable United States generally accepted accounting principles, or GAAP.

No Established Trading Market   The Notes are a new issue of securities with no established trading market. The Notes will not be listed on any securities exchange or quoted on any automated dealer quotation system. Although the underwriters have informed us that they currently intend to make a market in the Notes, as permitted by applicable laws and regulations, they are not obligated to do so and may discontinue any such market making activities at any time without notice. See “Underwriting”. Accordingly, we cannot assure you that a liquid market for the Notes will develop or be maintained.
Governing Law   The Notes and the indenture will be governed by and construed in accordance with the laws of the State of New York.


 

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RISK FACTORS

Investing in the Notes involves substantial risks. You should carefully consider the following risks in addition to the risk factors incorporated by reference herein from our most recent Annual Report on Form 10-K and the other information contained in this prospectus supplement and the risk factors and other information contained in or incorporated by reference into the accompanying prospectus or any free writing prospectus before acquiring any Notes. The occurrence of any of these risks could materially and adversely affect our business, prospects, financial condition, results of operations and cash flow and might cause you to lose all or part of your investment in the Notes. The risks described in these documents are not the only risks we face, and there may be additional risks that we do not presently know of or that we currently consider not likely to have a significant impact. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our business or our financial performance.

Risks Related to the Notes

The Notes will be unsecured and therefore are effectively subordinated to any secured indebtedness we have incurred or may incur in the future.

The Notes will not be secured by any of our assets or any of the assets of our subsidiaries. As a result, the Notes will be effectively subordinated to any secured indebtedness we or our subsidiaries have outstanding as of the date of this prospectus supplement or that we or our subsidiaries may incur in the future (or any indebtedness that is initially unsecured in respect of which we subsequently grant security) to the extent of the value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes. As of December 31, 2019, we had $377.8 million of outstanding borrowings under the Credit Facility, all of which is secured and thus effectively senior to the Notes.

The Notes will be structurally subordinated to the indebtedness and other liabilities of our subsidiaries.

The Notes are obligations exclusively of Oaktree Specialty Lending Corporation and not of any of our subsidiaries. None of our subsidiaries is a guarantor of the Notes and the Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future. The assets of such subsidiaries are not directly available to satisfy the claims of our creditors, including holders of the Notes.

Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors (including trade creditors) and holders of preferred stock, if any, of our subsidiaries have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of the Notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our claims are effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims. Consequently, the Notes are structurally subordinated to all indebtedness and other liabilities (including trade payables) of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish as financing vehicles or otherwise.

In addition, our subsidiaries may incur substantial additional indebtedness in the future, all of which would be structurally senior to the Notes.

The indenture governing the Notes will contain limited protection for holders of the Notes.

The indenture governing the Notes will offer limited protection to holders of the Notes. The terms of the indenture and the Notes will not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a

 

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party to, a variety of corporate transactions, circumstances or events that could have a material adverse impact on an investment in the Notes. In particular, the terms of the indenture and the Notes will not place any restrictions on our or our subsidiaries’ ability to:

 

   

issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Notes with respect to the assets of our subsidiaries, in each case other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) of the Investment Company Act as modified by Section 61(a)(1) and (2) of the Investment Company Act or any successor provisions, whether or not we continue to be subject to such provisions of the Investment Company Act, but giving effect, in either case, to any exemptive relief granted to us by the SEC;

 

   

pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the Notes;

 

   

sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);

 

   

enter into transactions with affiliates;

 

   

create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;

 

   

make investments; or

 

   

create restrictions on the payment of dividends or other amounts to us from our subsidiaries.

Furthermore, the terms of the indenture and the Notes do not protect holders of the Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow or liquidity other than as described under “Description of the Notes—Events of Default”.

Our ability to recapitalize, incur additional debt and take a number of other actions are not limited by the terms of the Notes and may have important consequences for holders of the Notes, including making it more difficult for us to satisfy our obligations with respect to the Notes or negatively affecting the trading value of the Notes.

Certain of our current debt instruments include more protections for their holders than the indenture and the Notes. In addition, other debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of the Notes.

Our amount of debt outstanding may increase as a result of this offering. Our current indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations under the Notes and our other debt.

The use of debt could have significant consequences on our future operations, including:

 

   

making it more difficult for us to meet our payment and other obligations under the Notes and our other outstanding debt;

 

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resulting in an event of default if we fail to comply with the financial and other restrictive covenants contained in our financing arrangements, which event of default could result in substantially all of our debt becoming immediately due and payable;

 

   

reducing the availability of our cash flow to fund investments, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes;

 

   

subjecting us to the risk of increased sensitivity to interest rate increases on our indebtedness with variable interest rates, including borrowings under our financing arrangements; and

 

   

limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy.

Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations under the Notes and our other debt.

Our ability to meet our payment and other obligations under our financing arrangements depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available to us under our financing arrangements or otherwise, in an amount sufficient to enable us to meet our payment obligations under the Notes and our other debt and to fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, including the Notes, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under the Notes and our other debt.

If an active trading market does not develop for the Notes, you may not be able to resell them.

The Notes are a new issue of debt securities and there currently is no trading market for the Notes. We do not intend to apply for listing of the Notes on any securities exchange or for quotation of the Notes on any automated dealer quotation system. If no active trading market develops, you may not be able to resell the Notes at their fair market value or at all. If the Notes are traded after their initial issuance, they may trade at a discount from their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors. The underwriters have advised us that they currently intend to make a market in the Notes after the offering, but they are not obligated to do so. Such underwriters may discontinue any market-making in the Notes at any time at their sole discretion. In addition, any market-making activity will be subject to limits imposed by law. Accordingly, we cannot assure you that a liquid trading market will develop for the Notes, that you will be able to sell the Notes at a particular time or that the price you receive when you sell will be favorable. To the extent an active trading market does not develop, the liquidity and trading price for the Notes may be harmed. Accordingly, you may be required to bear the financial risk of an investment in the Notes for an indefinite period of time.

Our current indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations under the Notes and our other debt.

The use of debt could have significant consequences on our future operations, including:

 

   

making it more difficult for us to meet our payment and other obligations under the Notes and our other outstanding indebtedness;

 

   

resulting in an event of default if we fail to comply with the financial and other restrictive covenants contained in our debt agreements, which event of default could result in substantially all of our debt becoming immediately due and payable;

 

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reducing the availability of our cash flow to fund investments, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes;

 

   

subjecting us to the risk of increased sensitivity to interest rate increases on our indebtedness with variable interest rates; and

 

   

limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy.

Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations under the Notes and our other debt.

Our ability to meet our payment and other obligations under our debt instruments depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our financing arrangements or otherwise in an amount sufficient to enable us to pay our indebtedness, including the Notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the Notes, on or before its maturity. The conditions of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets or seeking additional equity. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all, or on terms that would not be disadvantageous to our shareholders or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements, including our payment obligations under the Notes.

If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Notes.

Any default under the agreements governing our indebtedness, including the Credit Facility, the 2024 Notes and the 2028 Notes, or other indebtedness to which we may be a party that is not waived by the required lenders or holders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal, premium, if any, and interest on the Notes and substantially decrease the market value of the Notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under the Credit Facility or other debt we may incur in the future could elect to terminate their commitments, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in the future need to seek to obtain waivers from the required lenders under the Credit Facility or the required holders of the 2024 Notes and the 2028 Notes or other debt that we may incur in the future to avoid being in default. If we breach our covenants under the Credit Facility, the 2024 Notes and the 2028 Notes or other debt and seek a waiver, we may not be able to obtain a waiver from the required lenders or holders. If this occurs, we would be in default and our lenders or debt holders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations, including the lenders under the Credit Facility, could proceed against the collateral securing the debt. Because the Credit Facility has, and any future credit facilities will likely have, customary cross-default provisions, if the indebtedness thereunder or under any future credit facility is accelerated, we may be unable to repay or finance the amounts due. In the event holders of any debt securities we

 

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have outstanding exercise their rights to accelerate following a cross-default, those holders would be entitled to receive the principal amount of their investment, subject to any subordination arrangements that may be in place. We cannot assure you that we will have sufficient liquidity to be able to repay such amounts, in which case we would be in default under the accelerated debt and holders would have the ability to sue us to recover amounts then owing.

A downgrade, suspension or withdrawal of the credit rating assigned by a rating agency to us or the Notes, if any, or change in the debt markets, could cause the liquidity or market value of the Notes to decline significantly.

Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the Notes. These credit ratings may not reflect the potential impact of risks relating to the structure or marketing of the Notes. Credit ratings are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. Neither we nor any underwriter undertakes any obligation to maintain our credit ratings or to advise holders of Notes of any changes in our credit ratings.

An increase in market interest rates could result in a decrease in the market value of the Notes.

The condition of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future, which could have an adverse effect on the market prices of the Notes. In general, as market interest rates rise, debt securities bearing interest at fixed rates of interest decline in value. Consequently, if you purchase Notes bearing interest at fixed rates and market interest rates increase, the market values of those Notes may decline. We cannot predict the future level of market interest rates.

The optional redemption provision may materially adversely affect your return on the Notes.

The Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our option. We may choose to redeem the Notes at times when prevailing interest rates are lower than the interest rate paid on the Notes. In this circumstance, you may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the Notes being redeemed.

We may not be able to repurchase the Notes upon a Change of Control Repurchase Event.

We may not be able to repurchase the Notes upon a Change of Control Repurchase Event because we may not have sufficient funds. Upon a Change of Control Repurchase Event, holders of the Notes may require us to repurchase for cash some or all of the Notes at a repurchase price equal to 100% of the aggregate principal amount of the Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date. Our failure to purchase such tendered Notes upon the occurrence of such Change of Control Repurchase Event would cause an event of default under the indenture governing the Notes and a cross-default under the agreements governing certain of our other indebtedness, which may result in the acceleration of such indebtedness requiring us to repay that indebtedness immediately.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements in this prospectus supplement and the accompanying prospectus constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained this prospectus supplement and the accompanying prospectus may include statements as to:

 

   

our future operating results and distribution projections;

 

   

the ability of Oaktree to reposition our portfolio and to implement Oaktree’s future plans with respect to our business;

 

   

the ability of Oaktree 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 party.

In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this prospectus supplement and the accompanying prospectus, 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 this prospectus supplement and the accompanying prospectus. 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;

 

   

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 and RICs; 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 prospectus supplement and the accompanying prospectus on information available to us on the date of this prospectus supplement and the accompanying prospectus, as appropriate, and we assume no obligation to update any such forward-looking statements, except as required by law. 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. The forward-looking statements contained in this prospectus supplement and the accompanying prospectus are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and the forward looking statements contained in our periodic reports are excluded from the safe-harbor protection provided by Section 21E of the Exchange Act.

 

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USE OF PROCEEDS

The net proceeds from our sale of the $300.0 million aggregate principal amount of Notes in this offering will be $294.1 million, after deducting the underwriting discount of $3.0 million payable by us and estimated offering expenses of approximately $0.4 million payable by us.

We intend to use the net proceeds from this offering to reduce our outstanding debt, including the 2024 Notes, the 2028 Notes and a portion of the borrowings under the Credit Facility, and for general corporate purposes. As of December 31, 2019, our outstanding debt consisted of the following:

 

   

$75.0 million aggregate principal amount of 2024 Notes, which bear interest at a rate of 5.875% per annum and which we have called for redemption and expect to redeem on March 2, 2020, but would otherwise have matured on October 30, 2024;

 

   

$86.3 million aggregate principal amount of 2028 Notes, which bear interest at a rate of 6.125% per annum and which we have called for redemption and expect to redeem on March 13, 2020, but would otherwise have matured on April 30, 2028; and

 

   

$377.8 million under the Credit Facility, which bears interest at a rate equal to (1) the London InterBank Offered Rate (which may be 1-, 2-, 3- or 6-month, at our option) plus 2.25% to 2.00% or (2) an alternate base rate loans plus 1.25% to 1.00%, each depending on our senior debt coverage ratio, and matures on February 25, 2024.

We may reborrow under the Credit Facility to make investments in accordance with our investment objective and strategies described in this prospectus supplement or the accompanying prospectus or general corporate purposes.

Affiliates of certain underwriters are lenders under the Credit Facility and may hold our 2024 Notes and 2028 Notes. Accordingly, affiliates of certain of the underwriters may receive more than 5% of the proceeds of this offering to the extent the proceeds are used to pay down a portion of our existing indebtedness under the Credit Facility or to redeem the 2024 Notes and the 2028 Notes.

 

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CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2019:

 

   

on an actual basis; and

 

   

on an as adjusted basis to reflect the sale of $300.0 million aggregate principal amount of Notes in this offering, after deducting the underwriting discount of $3.0 million payable by us and estimated offering expenses of approximately $0.4 million payable by us, and the application of the net proceeds from the offering as described under “Use of Proceeds.”

 

     As of December 31, 2019
(amounts in thousands)
 
     Actual      As Adjusted  

Cash, cash equivalents and restricted cash

   $ 21,527      $ 21,527  

Long-term debt, including current maturities:

     

Credit Facility payable

     377,825        246,039  

2024 Notes and 2028 Notes payable (net of $2,607 unamortized financing costs)(1)

     158,643        —    

Notes offered hereby

     —          300,000  
  

 

 

    

 

 

 

Total long-term debt

     536,468        546,039  

Net assets:

     

Common stock, $0.01 par value (250,000 shares authorized; 140,961 shares outstanding)

     1,409        1,409  

Additional paid-in-capital

     1,487,774        1,487,774  

Accumulated overdistributed earnings

     (558,101      (558,101
  

 

 

    

 

 

 

Total net assets

     931,082        931,082  
  

 

 

    

 

 

 

Total long-term debt and total net assets

   $ 1,467,550      $ 1,477,121  
  

 

 

    

 

 

 

 

(1)

We have called the 2024 Notes and 2028 Notes for redemption and expect to redeem them on March 2, 2020 and March 13, 2020, respectively.

 

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DESCRIPTION OF THE NOTES

The following description of the particular terms of the 3.500% Notes due 2025 supplements and, to the extent inconsistent therewith, replaces the description of the general terms and provisions of the debt securities set forth in the accompanying prospectus.

We will issue the Notes under a base indenture (the “base indenture”) between us and Deutsche Bank Trust Company Americas, as trustee (the “trustee”), dated as of April 30, 2012, as supplemented by the fifth supplemental indenture between us and the trustee, to be dated as of February 25, 2020 (the “supplemental indenture”). As used in this section, all references to the indenture mean the base indenture as supplemented by the supplemental indenture. The terms of the Notes include those expressly set forth in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended.

The following description is a summary of the material provisions of the Notes and the indenture and does not purport to be complete. This summary is subject to and is qualified by reference to all the provisions of the Notes and the indenture, including the definitions of certain terms used in the indenture. We urge you to read these documents because they, and not this description, define your rights as a holder of the Notes.

For purposes of this description, references to “we,” “our” and “us” refer only to the Oaktree Specialty Lending Corporation and not to any of its current or future subsidiaries and references to “subsidiaries” refer only to consolidated subsidiaries of and exclude any investments held by Oaktree Specialty Lending Corporation in the ordinary course of business which are not, under GAAP, consolidated on the financial statements of Oaktree Specialty Lending Corporation and its subsidiaries.

General

The Notes:

 

   

will be our direct, general unsecured, unsubordinated obligations;

 

   

will initially be issued in an aggregate principal amount of $300.0 million;

 

   

will mature on February 25, 2025, unless earlier redeemed or repurchased, as discussed below;

 

   

will bear cash interest from February 25, 2020, at an annual rate of 3.500% payable semi-annually in arrears on February 25 and August 25 of each year, beginning on August 25, 2020;

 

   

will be subject to redemption at our option as described in this prospectus supplement under “—Optional Redemption;”

 

   

will be subject to repurchase by us at the option of the holders following a Change of Control Repurchase Event (as defined in this prospectus supplement under “—Offer to Repurchase Upon a Change of Control Repurchase Event”), at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the date of repurchase;

 

   

will be issued in denominations of $2,000 and integral multiples of $1,000 thereof; and

 

   

will be represented by one or more registered Notes in global form, but in certain limited circumstances may be represented by Notes in definitive form. See “—Book-Entry, Settlement and Clearance” in this prospectus supplement.

Subject to compliance with covenants regarding the asset coverage requirement of the Investment Company Act, the indenture does not limit the amount of debt that may be issued by us or our subsidiaries under the indenture or otherwise. The indenture does not contain any financial covenants and does not restrict us from paying dividends or distributions or issuing or repurchasing our other securities. Other than restrictions described under “—Offer to Repurchase Upon a Change of Control Repurchase Event” and “—Covenants—Merger,

 

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Consolidation or Sale of Assets” below, the indenture does not contain any covenants or other provisions designed to afford holders of the Notes protection in the event of a highly leveraged transaction involving us or in the event of a decline in our credit rating as the result of a takeover, recapitalization, highly leveraged transaction or similar restructuring involving us that could adversely affect such holders.

We may, without the consent of the holders, issue additional Notes under the indenture with the same terms (except for the issue date, public offering price, and, if applicable, the initial interest payment date) as the Notes offered hereby in an unlimited aggregate principal amount; provided that, if such additional Notes are not fungible with the Notes offered hereby (or any other tranche of additional Notes) for U.S. federal income tax purposes, then such additional Notes will have different CUSIP numbers from the Notes offered hereby (and any such other tranche of additional Notes).

We do not intend to list the Notes on any securities exchange or any automated dealer quotation system.

Payments on the Notes; Paying Agent and Registrar; Transfer and Exchange

We will pay the principal of, and interest on, the Notes in global form registered in the name of or held by DTC or its nominee in immediately available funds to DTC or its nominee, as the case may be, as the registered holder of such Global Note (as defined below).

Payment of principal of (and premium, if any) and any such interest on the Notes will be made at the corporate trust office of the trustee as paying agent, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at our option payment of interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the security register.

A holder of Notes may transfer or exchange Notes at the office of the security registrar in accordance with the indenture. The security registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents. No service charge will be imposed by us, the trustee or the security registrar for any registration of transfer or exchange of Notes, but we or the trustee may require a holder to pay a sum sufficient to cover any transfer tax or other similar governmental charge required by law or permitted by the indenture.

The registered holder of a Note will be treated as its owner for all purposes.

Interest

The Notes will bear cash interest at a rate of 3.500% per year until maturity. Interest on the Notes will accrue from February 25, 2020 or from the most recent date on which interest has been paid or duly provided for. Interest will be payable semiannually in arrears on February 25 and August 25 of each year, beginning on August 25, 2020.

Interest will be paid to the person in whose name a Note is registered at 5:00 p.m. New York City time (the “close of business”) on February 10 or August 10, as the case may be, immediately preceding the relevant interest payment date. Interest on the Notes will be computed on the basis of a 360-day year composed of twelve 30-day months.

If any interest payment date, redemption date, the maturity date or any earlier required repurchase date upon a Change of Control Repurchase Event (defined below) of a Note falls on a day that is not a business day, the required payment will be made on the next succeeding business day and no interest on such payment will accrue in respect of the delay. The term “business day” means, with respect to any Note, any day other than a Saturday, a Sunday or a day on which banking institutions in New York or the city in which the corporate trust office of the trustee is located are authorized or obligated by law or executive order to close.

 

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Ranking

The Notes will be our direct, general unsecured obligations that rank senior in right of payment to all of our future indebtedness or obligations that are expressly subordinated, or junior, in right of payment to the Notes. The Notes rank equally in right of payment with all of our existing and future liabilities that are not so subordinated. The Notes will rank effectively junior to any of our secured indebtedness or other obligations (including unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness. The Notes will rank structurally junior to all future indebtedness or other obligations (including trade payables) incurred by our subsidiaries, financing vehicles or similar facilities. In the event of our bankruptcy, liquidation, reorganization or other winding up, our assets that secure secured debt will be available to pay obligations on the Notes only after all indebtedness under such secured debt has been repaid in full from such assets. We advise you that there may not be sufficient assets remaining to pay amounts due on any or all the Notes then outstanding.

As of December 31, 2019, our total consolidated indebtedness was $539.1 million, of which $377.8 million was secured indebtedness, all of which was unsubordinated indebtedness and none of which was indebtedness of our subsidiaries. After giving effect to the issuance of the Notes and the application of proceeds therefrom as described under “Use of Proceeds”, our total indebtedness would have been approximately $546.0 million outstanding as of December 31, 2019. See “Capitalization” in this prospectus supplement.

Optional Redemption

We may redeem some or all of the Notes at any time, or from time to time. If we choose to redeem any Notes prior to maturity, we will pay a redemption price equal to the greater of the following amounts, plus, in each case, accrued and unpaid interest to, but excluding, the redemption date:

 

   

100% of the principal amount of the Notes to be redeemed, or

 

   

the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of accrued and unpaid interest to the date of redemption) on the Notes to be redeemed through the Par Call Date, discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using the applicable Treasury Rate plus 35 basis points.

Notwithstanding the foregoing, at any time on or after January 25, 2025 (the date falling one month prior to the maturity date of the Notes), we may redeem some or all of the Notes at any time, or from time to time, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus, in each case, accrued and unpaid interest, if any, to, but excluding, the redemption date.

If we choose to redeem any Notes, we will deliver a notice of redemption to holders of the Notes not less than 30 nor more than 60 days before the redemption date. Any exercise of our option to redeem the Notes will be done in compliance with the Investment Company Act, to the extent applicable. If we are redeeming less than all of the Notes, the particular Notes to be redeemed will be selected in accordance with the applicable procedures of the trustee and, so long as the Notes are registered to DTC or its nominee, DTC; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a Note not redeemed to less than $2,000. Unless we default in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the Notes or portions of the Notes called for redemption.

For purposes of calculating the redemption price in connection with the redemption of the Notes, on any redemption date, the following terms have the meanings set forth below:

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield-to-maturity of the Comparable Treasury Issue (computed as of the third business day immediately preceding the redemption), assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. The redemption price and the Treasury Rate will be determined by us.

 

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“Comparable Treasury Issue” means the United States Treasury security selected by the Reference Treasury Dealer as having a maturity comparable to the remaining term of the Notes to be redeemed (assuming the Notes matured on the applicable Par Call Date) that would be utilized, at the time of selection and in accordance with customary financing practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes being redeemed.

“Comparable Treasury Price” means (1) the average of the remaining Reference Treasury Dealer Quotations for the redemption date, after excluding the highest and lowest Reference Treasury Dealer Quotations, or (2) if the Quotation Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

“Par Call Date” means January 25, 2025, which is the date that is one month prior to the maturity date of the Notes.

“Quotation Agent” means a Reference Treasury Dealer selected by us.

“Reference Treasury Dealer” means each of (1) J.P. Morgan Securities LLC, (2) BofA Securities, Inc., (3) a primary U.S. government securities dealer selected by ING Financial Markets LLC, and (4) RBC Capital Markets, LLC, or their respective affiliates which are primary U.S. government securities dealers and their respective successors; provided, however, that if any of the foregoing or its affiliates shall cease to be a primary U.S. government securities dealer in the United States, or a Primary Treasury Dealer, we shall select another Primary Treasury Dealer.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 3:30 p.m. New York City time on the third business day preceding such redemption date.

All determinations made by any Reference Treasury Dealer, including the Quotation Agent, with respect to determining the redemption price will be final and binding absent manifest error.

Offer to Repurchase Upon a Change of Control Repurchase Event

If a Change of Control Repurchase Event occurs, unless we have exercised our right to redeem the Notes in full, we will make an offer to each holder of Notes to repurchase all or any part (in minimum denominations of $2,000 and integral multiples of $1,000 principal amount in excess thereof) of that holder’s Notes at a repurchase price in cash equal to 100% of the aggregate principal amount of Notes repurchased plus any accrued and unpaid interest on the Notes repurchased to, but not including, the date of purchase. Within 30 days following any Change of Control Repurchase Event or, at our option, prior to any Change of Control, but after the public announcement of the Change of Control, we will mail a notice to each holder describing the transaction or transactions that constitute or may constitute the Change of Control Repurchase Event and offering to repurchase Notes on the payment date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed. The notice shall, if mailed prior to the date of consummation of the Change of Control, state that the offer to purchase is conditioned on the Change of Control Repurchase Event occurring on or prior to the payment date specified in the notice. We will comply with the requirements of Rule 14e-1 promulgated under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Repurchase Event. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control Repurchase Event provisions of the Notes, we will comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under the Change of Control Repurchase Event provisions of the Notes by virtue of such conflict.

 

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On the Change of Control Repurchase Event payment date, subject to extension if necessary to comply with the provisions of the Investment Company Act and the rules and regulations promulgated thereunder, we will, to the extent lawful:

 

  (1)

accept for payment all Notes or portions of Notes properly tendered pursuant to our offer;

 

  (2)

deposit with the paying agent an amount equal to the aggregate purchase price in respect of all Notes or portions of Notes properly tendered; and

 

  (3)

deliver or cause to be delivered to the trustee the Notes properly accepted, together with an officers’ certificate stating the aggregate principal amount of Notes being purchased by us.

The paying agent will promptly remit to each holder of Notes properly tendered the purchase price for the Notes, and the trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each holder a new Note equal in principal amount to any unpurchased portion of any Notes surrendered; provided that each new Note will be in a minimum principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.

We will not be required to make an offer to repurchase the Notes upon a Change of Control Repurchase Event if a third party makes an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by us and such third party purchases all Notes properly tendered and not withdrawn under its offer.

The source of funds that will be required to repurchase Notes in the event of a Change of Control Repurchase Event will be our available cash or cash generated from our operations or other potential sources, including funds provided by a purchaser in the Change of Control transaction, borrowings, sales of assets or sales of equity. We cannot assure you that sufficient funds from such sources will be available at the time of any Change of Control Repurchase Event to make required repurchases of Notes tendered. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition, Liquidity and Capital Resources” in our most recent Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 and incorporated by reference herein, as well as any amendments reflected in subsequent filings with the SEC. Before making any such repurchase of the Notes, we would also have to comply with certain requirements under the Credit Facility to the extent any such requirements remain in effect at such time, or otherwise obtain consent from the lenders under the Credit Facility. Our future financing arrangements may contain similar restrictions and provisions. If the holders of the Notes exercise their right to require us to repurchase Notes upon a Change of Control Repurchase Event, the financial effect of this repurchase could cause a default under our future financing arrangements, even if the Change of Control Repurchase Event itself would not cause a default. It is possible that we will not have sufficient funds at the time of the Change of Control Repurchase Event to make the required repurchase of the Notes and/or our other debt. See “Risk Factors—Risks Related to the Notes—We may not be able to repurchase the Notes upon a Change of Control Repurchase Event” in this prospectus supplement for more information.

The definition of “Change of Control” includes a phrase relating to the direct or indirect sale, transfer, conveyance or other disposition of “all or substantially all” of our properties or assets and those of our subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise, established definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require us to repurchase the Notes as a result of a sale, transfer, conveyance or other disposition of less than all of our assets and the assets of our subsidiaries taken as a whole to another person or group may be uncertain.

For purposes of the Notes:

“Below Investment Grade Rating Event” means the Notes are downgraded below Investment Grade by both Rating Agencies on any date from the date of the public notice of an arrangement that results in a Change of Control until the end of the 60-day period following public notice of the occurrence of a Change of Control

 

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(which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by either of the Rating Agencies); provided that a Below Investment Grade Rating Event otherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event hereunder) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment Grade Rating Event).

“Change of Control” means the occurrence of any of the following:

 

  (1)

the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation) in one or a series of related transactions, of all or substantially all of the assets of Oaktree Specialty Lending Corporation and its Controlled Subsidiaries taken as a whole to any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act), other than to any Permitted Holders; provided that, for the avoidance of doubt, a pledge of assets pursuant to any secured debt instrument of Oaktree Specialty Lending Corporation or its Controlled Subsidiaries shall not be deemed to be any such sale, lease, transfer, conveyance or disposition;

 

  (2)

the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act) (other than any Permitted Holders) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 promulgated under the Exchange Act), directly or indirectly, of more than 50% of the outstanding Voting Stock of Oaktree Specialty Lending Corporation, measured by voting power rather than number of shares; or

 

  (3)

the approval by Oaktree Specialty Lending Corporation’s stockholders of any plan or proposal relating to the liquidation or dissolution of Oaktree Specialty Lending Corporation.

“Change of Control Repurchase Event” means the occurrence of a Change of Control and a Below Investment Grade Rating Event.

“Controlled Subsidiary” means any subsidiary of Oaktree Specialty Lending Corporation, 50% or more of the outstanding equity interests of which are owned by Oaktree Specialty Lending Corporation and its direct or indirect subsidiaries and of which Oaktree Specialty Lending Corporation possesses, directly or indirectly, the power to direct or cause the direction of the management or policies, whether through the ownership of voting equity interests, by agreement or otherwise.

“Fitch” means Fitch Ratings, Inc., also known as Fitch Ratings, or any successor thereto.

“Investment Grade” means a rating of BBB- or better by Fitch (or its equivalent under any successor rating categories of Fitch) and Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s) (or, in each case, if such Rating Agency ceases to rate the Notes for reasons outside of our control, the equivalent investment grade credit rating from any Rating Agency selected by us as a replacement Rating Agency).

“Moody’s” means Moody’s Investor Services, Inc. or any successor thereto.

“Permitted Holders” means (i) us, (ii) one or more of our Controlled Subsidiaries and (iii) the Adviser, Brookfield Asset Management Inc., any affiliate of the Adviser or Brookfield Asset Management Inc. or any entity that is managed or advised by the Adviser or Brookfield Asset Management Inc. or any of their affiliates.

 

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“Rating Agency” means:

 

  (1)

each of Fitch and Moody’s; and

 

  (2)

if either of Fitch or Moody’s ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of our control, a “nationally recognized statistical rating organization” as defined in Section 3(a)(62) of the Exchange Act selected by us as a replacement agency for Fitch or Moody’s, or both, as the case may be.

“Voting Stock” as applied to stock of any person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.

Covenants

In addition to the covenants described in the base indenture, the following covenants shall apply to the Notes. To the extent of any conflict or inconsistency between the base indenture and the following covenants, the following covenants shall govern:

Merger, Consolidation or Sale of Assets

The indenture will provide that we will not merge or consolidate with or into any other person (other than a merger of a wholly owned subsidiary into us), or sell, transfer, lease, convey or otherwise dispose of all or substantially all our property (provided that, for the avoidance of doubt, a pledge of assets pursuant to any secured debt instrument of Oaktree Specialty Lending Corporation or its Controlled Subsidiaries shall not be deemed to be any such sale, transfer, lease, conveyance or disposition) in any one transaction or series of related transactions unless:

 

   

we are the surviving person, or the Surviving Person, or the Surviving Person (if other than us) formed by such merger or consolidation or to which such sale, transfer, lease, conveyance or disposition is made shall be a corporation or limited liability company organized and existing under the laws of the United States of America or any state or territory thereof;

 

   

the Surviving Person (if other than us) expressly assumes, by supplemental indenture in form reasonably satisfactory to the trustee, executed and delivered to the trustee by such Surviving Person, the due and punctual payment of the principal of, and premium, if any, and interest on, all the Notes outstanding, and the due and punctual performance and observance of all the covenants and conditions of the indenture to be performed by us;

 

   

immediately after giving effect to such transaction or series of related transactions, no default or event of default shall have occurred and be continuing; and

 

   

we shall deliver, or cause to be delivered, to the trustee, an officers’ certificate and an opinion of counsel, each stating that such transaction and the supplemental indenture, if any, in respect thereto, comply with this covenant and that all conditions precedent in the indenture relating to such transaction have been complied with.

For the purposes of this covenant, the sale, transfer, lease, conveyance or other disposition of all the property of one or more of our subsidiaries, which property, if held by us instead of such subsidiaries, would constitute all or substantially all of our property on a consolidated basis, shall be deemed to be the transfer of all or substantially all of our property.

Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the

 

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properties or assets of a person. As a result, it may be unclear as to whether the merger, consolidation or sale of assets covenant would apply to a particular transaction as described above absent a decision by a court of competent jurisdiction. Although these types of transactions may be permitted under the indenture, certain of the foregoing transactions could constitute a Change of Control that results in a Change of Control Repurchase Event permitting each holder to require us to repurchase the Notes of such holder as described above.

An assumption by any person of obligations under the Notes and the indenture might be deemed for U.S. federal income tax purposes to be an exchange of the Notes for new Notes by the holders thereof, resulting in recognition of gain or loss for such purposes and possibly other adverse tax consequences to the holders. Holders should consult their own tax advisors regarding the tax consequences of such an assumption.

Other Covenants

 

   

We agree that for the period of time during which the Notes are outstanding, we will not violate, whether or not we are subject to, Section 18(a)(1)(A) of the Investment Company Act as modified by Section 61(a)(1) and (2) of the Investment Company Act or any successor provisions, as such obligations may be amended or superseded, giving effect to any exemptive relief granted to us by the SEC.

 

   

If, at any time, we are not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the SEC, we agree to furnish to holders of the Notes and the trustee, for the period of time during which the Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance with GAAP, as applicable.

Events of Default

Each of the following is an event of default:

 

  (1)

default in the payment of any interest upon any Note when due and payable and the default continues for a period of 30 days;

 

  (2)

default in the payment of the principal of (or premium, if any, on) any Note when it becomes due and payable at its maturity including upon any redemption date or required repurchase date;

 

  (3)

default by us in the performance, or breach, of any covenant or agreement in the indenture or the Notes (other than a covenant or agreement a default in whose performance or whose breach is elsewhere in the indenture specifically dealt with or which has expressly been included in the indenture solely for the benefit of a series of securities other than the Notes), and continuance of such default or breach for a period of 60 consecutive days after there has been given, by registered or certified mail, to us by the trustee or to us and the trustee by the holders of at least 25% in principal amount of the Notes, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” under the indenture;

 

  (4)

default by us or any of our significant subsidiaries, as defined in Article 1, Rule 1-02 of Regulation S-X promulgated under the Exchange Act (but excluding any subsidiary which is (a) a non-recourse or limited recourse subsidiary, (b) a bankruptcy remote special purpose vehicle or (c) is not consolidated with Oaktree Specialty Lending Corporation for purposes of GAAP), with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $100 million in the aggregate of us and/or any such subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, unless, in either case, such

 

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  indebtedness is discharged, or such acceleration is rescinded, stayed or annulled, within a period of 30 calendar days after written notice of such failure is given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the Notes then outstanding;

 

  (5)

pursuant to Section 18(a)(1)(C)(ii) and Section 61 of the Investment Company Act, or any successor provisions, on the last business day of each of 24 consecutive calendar months, any class of securities shall have an asset coverage (as such term is used in the Investment Company Act and the rules and regulations promulgated thereunder) of less than 100% giving effect to any amendments to such provisions of the Investment Company Act or any exemptive relief granted to us by the SEC; or

 

  (6)

certain events of bankruptcy, insolvency, or reorganization involving us occur and remain undischarged or unstayed for a period of 90 days.

If an event of default occurs and is continuing, then and in every such case (other than an event of default specified in item (6) above) the trustee or the holders of at least 25% in principal amount of the outstanding Notes may declare the entire principal amount of Notes to be due and immediately payable, by a notice in writing to us (and to the trustee if given by the holders), and upon any such declaration such principal or specified portion thereof shall become immediately due and payable. Notwithstanding the foregoing, in the case of the events of bankruptcy, insolvency or reorganization described in item (6) above, 100% of the principal of and accrued and unpaid interest on the Notes will automatically become due and payable.

At any time after a declaration of acceleration with respect to the Notes has been made and before a judgment or decree for payment of the money due has been obtained by the trustee, the holders of a majority in principal amount of the outstanding Notes, by written notice to us and the trustee, may rescind and annul such declaration and its consequences if (i) we have paid or deposited with the trustee a sum sufficient to pay all overdue installments of interest, if any, on all outstanding Notes, the principal of (and premium, if any, on) all outstanding Notes that have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates borne by or provided for in such Notes, to the extent that payment of such interest is lawful interest upon overdue installments of interest at the rate or rates borne by or provided for in such Notes, and all sums paid or advanced by the trustee and the reasonable compensation, expenses, disbursements and advances of the trustee, its agents and counsel, and (ii) all events of default with respect to the Notes, other than the nonpayment of the principal of (or premium, if any, on) or interest on such Notes that have become due solely by such declaration of acceleration, have been cured or waived. No such rescission will affect any subsequent default or impair any right consequent thereon.

No holder of Notes will have any right to institute any proceeding, judicial or otherwise, with respect to the indenture, or for the appointment of a receiver or trustee, or for any other remedy under the indenture, unless:

 

  (i)

such holder has previously given written notice to the trustee of a continuing event of default with respect to the Notes;

 

  (ii)

the holders of not less than 25% in principal amount of the outstanding Notes shall have made written request to the trustee to institute proceedings in respect of such event of default;

 

  (iii)

such holder or holders have offered to the trustee reasonable indemnity, security, or both, against the costs, expenses and liabilities to be incurred in compliance with such request;

 

  (iv)

the trustee for 60 days after its receipt of such notice, request and offer of indemnity, security or both has failed to institute any such proceeding; and

 

  (v)

no direction inconsistent with such written request has been given to the trustee during such 60-day period by the holders of a majority in principal amount of the outstanding Notes.

Notwithstanding any other provision in the indenture, the holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any, on) and interest, if any, on

 

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such Note on the stated maturity or maturity expressed in such Note (or, in the case of redemption, on the redemption date or, in the case of repayment at the option of the holders, on the repayment date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such holder.

The trustee shall be under no obligation to exercise any of the rights or powers vested in it by the indenture at the request or direction of any of the holders of the Notes unless such holders shall have offered to the trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. Subject to the foregoing, the holders of a majority in principal amount of the outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee with respect to the Notes, provided that (i) such direction shall not be in conflict with any rule of law or with the indenture, (ii) the trustee may take any other action deemed proper by the trustee that is not inconsistent with such direction and (iii) the trustee need not take any action that it determines in good faith may involve it in personal liability or be unjustly prejudicial to the holders of Notes not consenting.

The holders of not less than a majority in principal amount of the outstanding Notes may on behalf of the holders of all of the Notes waive any past default under the indenture with respect to the Notes and its consequences, except a default (i) in the payment of (or premium, if any, on) or interest, if any, on any Note, or (ii) in respect of a covenant or provision of the indenture which cannot be modified or amended without the consent of the holder of each outstanding Note affected. Upon any such waiver, such default shall cease to exist, and any event of default arising therefrom shall be deemed to have been cured, for every purpose, but no such waiver shall extend to any subsequent or other default or event of default or impair any right consequent thereto.

We are required to deliver to the trustee, within 120 days after the end of each fiscal year, an officers’ certificate stating that to the knowledge of the signers whether we are in default in the performance of any of the terms, provisions or conditions of the indenture.

Within 90 days after the occurrence of any default under the indenture with respect to the Notes, the trustee shall transmit notice of such default known to the trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any, on) or interest, if any, on any Note, the trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors of the trustee in good faith determines that withholding of such notice is in the interest of the holders of the Notes.

Satisfaction and Discharge

We may satisfy and discharge our obligations under the indenture by delivering to the security registrar for cancellation all outstanding Notes or by depositing with the trustee or delivering to the holders, as applicable, after the Notes have become due and payable, or otherwise, moneys sufficient to pay all of the outstanding Notes and paying all other sums payable under the indenture by us. Such discharge is subject to terms contained in the indenture.

Defeasance

In addition, the Notes are subject to defeasance and covenant defeasance, in each case, in accordance with the terms of the indenture. “Covenant defeasance” refers to our ability, under current United States federal tax law and the indenture, to be released from some of the restrictive covenants in the indenture if certain conditions are satisfied. See “Description of Debt Securities—Defeasance—Covenant Defeasance” in the accompanying prospectus for more information. “Defeasance” or “full defeasance” refers to our ability, if there is a change in United States federal tax law or if we obtain an IRS ruling, to legally release ourselves from all payment and other obligations on the Notes if we put in place certain arrangements for you to be repaid. See “Description of Debt Securities—Defeasance—Full Defeasance” in the accompanying prospectus for more information.

 

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No Personal Liability of Directors, Officers, Employees and Stockholders

No past, present or future director, officer, employee, incorporator or stockholder of ours, as such, will have any liability for any obligations of ours under the indenture or the Notes or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting any Note, each holder of the Notes will be deemed to waive and release all such liability, and such waiver and release are part of the consideration for the issuance of the Notes.

Trustee

Deutsche Bank Trust Company Americas is the trustee, security registrar and paying agent. Deutsche Bank Trust Company Americas, in each of its capacities, including without limitation as trustee, security registrar and paying agent, assumes no responsibility for the accuracy or completeness of the information concerning us or our affiliates or any other party contained in this prospectus supplement and accompanying prospectus or the related documents or for any failure by us or any other party to disclose events that may have occurred and may affect the significance or accuracy of such information, or for any information provided to it by us, including but not limited to settlement amounts and any other information.

We may maintain banking relationships in the ordinary course of business with the trustee and its affiliates.

Governing Law

The indenture provides that it and the Notes shall be governed by and construed in accordance with the laws of the State of New York.

Book-Entry, Settlement and Clearance

Global Notes

The Notes will be initially issued in the form of one or more registered Notes in global form, without interest coupons, or the Global Notes. Upon issuance, each of the Global Notes will be deposited with the trustee as custodian for DTC and registered in the name of Cede & Co., as nominee of DTC.

Ownership of beneficial interests in a Global Note will be limited to persons who have accounts with DTC, or the DTC participants, or persons who hold interests through DTC participants. We expect that under procedures established by DTC:

 

   

upon deposit of a Global Note with DTC’s custodian, DTC will credit portions of the principal amount of the Global Note to the accounts of the DTC participants designated by the underwriters; and

 

   

ownership of beneficial interests in a Global Note will be shown on, and transfer of ownership of those interests will be effected only through, records maintained by DTC (with respect to interests of DTC participants) and the records of DTC participants (with respect to other owners of beneficial interests in the Global Note).

Beneficial interests in Global Notes may not be exchanged for Notes in physical, certificated form except in the limited circumstances described below.

Book-Entry Procedures for Global Notes

All interests in the Global Notes will be subject to the operations and procedures of DTC. We provide the following summary of those operations and procedures solely for the convenience of investors. The operations and procedures of DTC are controlled by that settlement system and may be changed at any time. Neither we nor the underwriters are responsible for those operations or procedures.

 

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DTC has advised us that it is:

 

   

a limited purpose trust company organized under the laws of the State of New York;

 

   

a “banking organization” within the meaning of the New York State Banking Law;

 

   

a member of the Federal Reserve System;

 

   

a “clearing corporation” within the meaning of the Uniform Commercial Code; and

 

   

a “clearing agency” registered under Section 17A of the Exchange Act.

DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between its participants through electronic book-entry changes to the accounts of its participants. DTC’s participants include securities brokers and dealers, including the underwriters; banks and trust companies; clearing corporations and other organizations. Indirect access to DTC’s system is also available to others such as banks, brokers, dealers and trust companies; these indirect participants clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. Investors who are not DTC participants may beneficially own securities held by or on behalf of DTC only through DTC participants or indirect participants in DTC.

So long as DTC’s nominee is the registered owner of a Global Note, that nominee will be considered the sole owner or holder of the Notes represented by that Global Note for all purposes under the indenture. Except as provided below, owners of beneficial interests in a Global Note:

 

   

will not be entitled to have Notes represented by the Global Note registered in their names;

 

   

will not receive or be entitled to receive physical, certificated Notes; and

 

   

will not be considered the owners or holders of the Notes under the indenture for any purpose, including with respect to receiving notices or the giving of any direction, instruction or approval to the trustee under the indenture.

As a result, each investor who owns a beneficial interest in a Global Note must rely on the procedures of DTC to exercise any rights of a holder of Notes under the indenture (and, if the investor is not a participant or an indirect participant in DTC, on the procedures of the DTC participant through which the investor owns its interest).

Payments of principal and interest with respect to the Notes represented by a Global Note will be made by the trustee to DTC’s nominee as the registered holder of the Global Note. Neither we nor the trustee will have any responsibility or liability for the payment of amounts to owners of beneficial interests in a Global Note, for any aspect of the records relating to or payments made on account of those interests by DTC, or for maintaining, supervising or reviewing any records of DTC relating to those interests.

Payments by participants and indirect participants in DTC to the owners of beneficial interests in a Global Note will be governed by standing instructions and customary industry practice and will be the responsibility of those participants or indirect participants and DTC.

Transfers between participants in DTC will be effected under DTC’s procedures and will be settled in same-day funds.

Cross-market transfers of beneficial interests in Global Notes between DTC participants, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected within DTC through the DTC participants that are acting as depositaries for Euroclear and Clearstream. To deliver or receive an interest in a Global Note held in a Euroclear or Clearstream account, an investor must send transfer instructions to Euroclear or Clearstream, as the case may be, under the rules and procedures of that system and within the established deadlines of that system. If the transaction meets its settlement requirements, Euroclear or Clearstream, as the

 

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case may be, will send instructions to its DTC depositary to take action to effect final settlement by delivering or receiving interests in the relevant Global Notes in DTC, and making or receiving payment under normal procedures for same-day funds settlement applicable to DTC. Euroclear and Clearstream participants may not deliver instructions directly to the DTC depositaries that are acting for Euroclear or Clearstream.

Because the settlement of cross-market transfers takes place during New York business hours, DTC participants may employ their usual procedures for sending securities to the applicable DTC participants acting as depositaries for Euroclear and Clearstream. The sale proceeds will be available to the DTC participant seller on the settlement date. Thus, to a DTC participant, a cross-market transaction will settle no differently from a trade between two DTC participants. Because of time zone differences, the securities account of a Euroclear or Clearstream participant that purchases an interest in a Global Note from a DTC participant will be credited on the business day for Euroclear or Clearstream immediately following the DTC settlement date. Cash received in Euroclear or Clearstream from the sale of an interest in a Global Note to a DTC participant will be reflected in the account of the Euroclear of Clearstream participant the following business day, and receipt of the cash proceeds in the Euroclear or Clearstream participant’s account will be back-valued to the date on which settlement occurs in New York. DTC, Euroclear and Clearstream have agreed to the above procedures to facilitate transfers of interests in the Global Notes among participants in those settlement systems. However, the settlement systems are not obligated to perform these procedures and may discontinue or change these procedures at any time. Neither we nor the trustee will have any responsibility or liability for the performance by DTC, Euroclear or Clearstream or their participants or indirect participants of their obligations under the rules and procedures governing their operations, including maintaining, supervising or reviewing the records relating to, or payments made on account of, beneficial ownership interests in Global Notes.

Certificated Notes

Notes in physical, certificated form will be issued and delivered to each person that DTC identifies as a beneficial owner of the related Notes only if:

 

   

DTC notifies us at any time that it is unwilling or unable to continue as depositary for the Global Notes and a successor depositary is not appointed within 90 days;

 

   

DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days; or

 

   

an event of default with respect to the Notes has occurred and is continuing and such beneficial owner requests that its Notes be issued in physical, certificated form.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a general summary of certain material U.S. federal income tax considerations under the Code related to the acquisition, ownership, and disposition of the Notes.

This discussion does not purport to be a complete description of all of the tax considerations relating thereto. In particular, we have not described certain considerations that may be relevant to certain types of investors subject to special treatment under U.S. federal income tax laws, including investors subject to the alternative minimum tax, tax-exempt organizations, insurance companies, investors that are treated as partnerships for U.S. federal income tax purposes, S corporations, dealers in securities, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, pension plans and trusts, financial institutions, a person that holds the notes as part of a straddle or a hedging or conversion transaction, real estate investment trusts, regulated investment companies, U.S. persons with a functional currency that is not the U.S. dollar, non-U.S. Holders (as defined below) engaged in a trade or business in the United States or who are present in the United States for 183 days or more in the taxable year, persons who have ceased to be U.S. citizens or to be taxed as residents of the United States, controlled foreign corporations, or CFCs, and passive foreign investment companies. This discussion does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. This discussion is limited to investors that hold the Notes as capital assets (within the meaning of the Code), and does not address owners of an investor. This discussion is limited to persons purchasing the Notes for cash in this offering and at their initial offering price. This discussion also does not address the U.S. federal income tax consequences to beneficial owners of the Notes that are subject to the special tax accounting rules under Section 451(b) of the Code. This discussion is based upon the Code, its legislative history, existing and proposed U.S. Treasury regulations, published rulings and court decisions, each as of the date of this prospectus supplement and all of which are subject to change or differing interpretations, possibly retroactively, which could affect the continuing validity of this discussion. We have not sought, and will not seek any ruling from the IRS regarding the offering pursuant to this prospectus supplement and the accompanying prospectus unless expressly stated therein, and this discussion is not binding on the IRS. Accordingly, there can be no assurance that the IRS would not assert, and that a court would not sustain, a position contrary to any of the tax consequences discussed herein.

If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds the Notes, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. Prospective beneficial owners of the Notes that are partnerships or partners in such partnerships should consult their own tax advisers with respect to the purchase, ownership and disposition of the Notes.

Tax matters are very complicated and the tax consequences to an investor of an investment in the Notes will depend on the facts of such investor’s particular situation. Investors are strongly encouraged to consult their own tax advisor regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of the notes, as well as the effect of state, local and foreign tax laws and the effect of any possible changes in tax laws.

Tax Consequences to U.S. Holders of the Notes

The following is a summary of certain material U.S. federal income tax consequences that will apply to a “U.S. Holder” of the Notes. As used herein, the term “U.S. Holder” means a beneficial owner of a Note that is for U.S. federal income tax purposes:

 

   

an individual who is a citizen or resident of the United States;

 

   

a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia;

 

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a trust if a court is able to exercise primary supervision over its administration and one or more U.S. persons (as defined in the Code) have the authority to control all of its substantial decisions, or if the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a domestic trust for U.S. federal income tax purposes; or

 

   

an estate, the income of which is subject to U.S. federal income taxation regardless of its source.

If you are not a U.S. Holder, this section does not apply to you. Please see “—Tax Consequences to Non-U.S. Holders of Notes” below.

Payments of Stated Interest. The following discussion assumes that the Notes will be issued with no original issue discount or a de minimis amount of original issue discount for U.S. federal income tax purposes. Stated interest paid on a Note will be taxable to a U.S. Holder as ordinary interest income at the time it accrues or is received in accordance with the U.S. Holder’s method of accounting for U.S. federal income tax purposes.

Sale, Exchange, Redemption, Retirement or Other Taxable Disposition of the Notes. Upon the sale, exchange, redemption, retirement or other taxable disposition of a Note, a U.S. Holder generally will recognize taxable gain or loss equal to the difference between the amount realized on the disposition and the U.S. Holder’s tax basis in the Note (other than amounts attributable to accrued but unpaid stated interest, which will be taxed as interest income to the extent not previously so taxed, offset by any acquisition premium). A U.S. Holder’s tax basis in a Note generally will be equal to the cost of the Note to such U.S. Holder.

Gain or loss recognized on the sale, exchange, redemption, retirement or other taxable disposition of a Note generally will be capital gain or loss and will be long-term capital gain or loss if at the time of the disposition the note has been held for more than one year. Under current law, long-term capital gains recognized by non-corporate U.S. Holders generally are subject to reduced tax rates. The deductibility of capital losses is subject to limitations.

Net Investment Income Tax. An additional 3.8% surtax generally is applicable in respect of the net investment income of non-corporate U.S. Holders (other than certain trusts) on the lesser of (i) the U.S. Holder’s “net investment income” for a taxable year and (ii) the excess of the U.S. Holder’s modified adjusted gross income for the taxable year over $200,000 ($250,000 in the case of joint filers). “Net investment income” as defined for this purpose generally includes interest payments and gain recognized from the sale or other taxable disposition of the Notes.

Backup Withholding and Information Reporting. We may be required to withhold, for U.S. federal income taxes, a portion of all taxable distributions payable to U.S. Holders (i) who fail to provide us with their correct taxpayer identification numbers, or TINs, or who otherwise fail to make required certifications or (ii) with respect to whom the IRS notifies us that this U.S. Holder is subject to backup withholding. Certain U.S. Holders specified in the Code and the Treasury regulations promulgated thereunder are exempt from backup withholding but may be required to provide documentation to establish their exempt status. Backup withholding is not an additional tax. Any amounts withheld will be allowed as a refund or a credit against the U.S. Holder’s U.S. federal income tax liability if the appropriate information is timely provided to the IRS. Failure by a U.S. Holder to furnish a certified TIN to us could subject the U.S. Holder to a penalty imposed by the IRS.

Tax Consequences to Non-U.S. Holders of the Notes

The following is a summary of certain material U.S. federal income tax consequences that will apply to you if you are a “Non-U.S. Holder” of the Notes. As used herein, the term “Non-U.S. Holder” means a beneficial owner of a Note that is not a U.S. Holder or a partnership (or an entity or arrangement treated as a partnership) for U.S. federal income tax purposes.

If you are not a Non-U.S. Holder, this section does not apply to you.

 

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Payments on the Notes. The following discussion assumes that the Notes will be issued with no original issue discount or a de minimis amount of original issue discount for U.S. federal income tax purposes. Subject to the discussion below concerning backup withholding, payments of principal and interest on the Notes to any Non-U.S. Holder will not be subject to U.S. federal withholding tax, provided that:

 

   

the Non-U.S. Holder does not own, actually or constructively, 10% or more of the total combined voting power of all classes of our stock that are entitled to vote;

 

   

the Non-U.S. Holder is not a CFC related, directly or indirectly, to us through stock ownership;

 

   

the Non-U.S. holder is not a bank that received such Note on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business; and

 

   

the U.S. payor of the interest (including us, or any intermediary who pays the interest on our behalf) does not have actual knowledge or reason to know that a holder is a United States person and such holder certifies to the U.S. payor under penalties of perjury on a properly executed IRS Form W-8BEN or W-8BEN-E that such holder is not (or, in the case of a Non-U.S. Holder that is an estate or trust, such forms certifying that the beneficiary of the estate or trust is not) a United States person.

If a Non-U.S. Holder does not qualify for an exemption under these rules, interest income from the notes may be subject to withholding tax at the rate of 30% (or lower applicable treaty rate).

Sale, Exchange, Redemption, Retirement or Other Disposition of the Notes. Subject to the discussion below on backup withholding and withholding and information reporting on foreign financial accounts, a Non-U.S. Holder generally will not be subject to U.S. federal income tax on gain recognized on a sale, exchange, redemption, retirement, or other disposition of Notes (except with respect to accrued and unpaid interest, which would be taxed as described above under “—Payments on the Notes”) so long as, in the case of a non-U.S. holder who is an individual, such Non-U.S. Holder is not present in the United States for 183 days or more in the taxable year of disposition and certain other requirements are not met.

Backup Withholding and Information Reporting. Information returns will be filed with the IRS in connection with payments on the Notes. Unless the Non-U.S. Holder complies with certification procedures to establish that it is not a United States person, information returns may be filed with the IRS in connection with the proceeds from a sale or other disposition of the Notes and the Non-U.S. Holder may be subject to backup withholding on payments on the Notes or on the proceeds from a sale or other disposition of the Notes. The certification procedures required to claim the exemption from withholding tax on interest described above will satisfy the certification requirements necessary to avoid backup withholding as well. The amount of any backup withholding from a payment to a Non-U.S. Holder will be allowed as a credit against the Non-U.S. Holder’s U.S. federal income tax liability and may entitle the Non-U.S. Holder to a refund, provided that the required information is timely furnished to the IRS.

Withholding and Information Reporting on Foreign Financial Accounts. Sections 1471 through 1474 of the Code and the Treasury regulations and other published guidance promulgated thereunder, which are commonly referred to as FATCA, generally impose withholding taxes on certain types of payments, including interest, made to “foreign financial institutions” and certain other non-U.S. entities unless additional certification, information reporting and other specified requirements are satisfied. Failure to comply with the FATCA reporting requirements could result in withholding tax being imposed on payments of interest and sales proceeds to foreign intermediaries and certain Non-U.S. Holders. If the payee is a foreign financial institution and is subject to the certification and information reporting requirements above, it must enter into an agreement with the U.S. Department of Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States owned foreign entities” (each as defined in the Code), annually report certain information about such accounts and withhold 30% on payments to non-compliant foreign financial institutions and certain other account holders. An intergovernmental agreement between the United States and an applicable foreign country, or future Treasury regulations or other guidance, may modify these requirements. Accordingly, the entity through which the Notes are held will affect the determination of whether such withholding is required.

 

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If payment of this withholding tax is made, Non-U.S. Holders that are otherwise eligible for an exemption from, or reduction of, U.S. federal withholding taxes with respect to such interest or proceeds will be required to seek a credit or refund from the IRS to obtain the benefit of such exemption or reduction, if any. We will not pay additional amounts to Non-U.S. Holders in respect of any amounts withheld. Prospective Non-U.S. Holders should consult their own tax advisors regarding the potential application of withholding under FATCA to their investment in the Notes.

 

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UNDERWRITING

J.P. Morgan Securities LLC, BofA Securities, Inc., RBC Capital Markets, LLC and ING Financial Markets LLC are acting as the representatives of each of the underwriters named below. Subject to the terms and conditions set forth in an underwriting agreement among us, the Adviser, the Administrator and the underwriters, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the aggregate principal amount of Notes set forth opposite its name below.

 

Underwriter

   Principal
Amount
 

J.P. Morgan Securities LLC

   $ 52,500,000  

BofA Securities, Inc.

     35,000,000  

RBC Capital Markets, LLC

     35,000,000  

ING Financial Markets LLC

    
22,500,000
 

Barclays Capital Inc.

     15,000,000  

Deutsche Bank Securities Inc.

     15,000,000  

Goldman Sachs & Co. LLC

     15,000,000  

KeyBanc Capital Markets Inc.

     15,000,000  

MUFG Securities Americas Inc.

     15,000,000  

Citigroup Global Markets Inc.

     12,000,000  

HSBC Securities (USA) Inc.

     12,000,000  

Morgan Stanley & Co. LLC

     12,000,000  

CIT Capital Securities LLC

     7,000,000  

R. Seelaus & Co., LLC

     7,000,000  

Janney Montgomery Scott LLC

     6,000,000  

Jefferies LLC

     6,000,000  

JMP Securities LLC

     6,000,000  

Keefe, Bruyette & Woods, Inc.

     6,000,000  

Wells Fargo Securities, LLC

     6,000,000  
  

 

 

 

Total

   $ 300,000,000  
  

 

 

 

Subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the Notes sold under the underwriting agreement if any of these Notes are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated.

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act or to contribute to payments the underwriters may be required to make in respect of those liabilities.

The underwriters are offering the Notes, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the Notes, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officers’ certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

 

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Commissions and Discounts

The following table shows the total underwriting discounts that we are to pay to the underwriters in connection with this offering.

 

     Per Note     Total  

Public offering price

     99.153   $ 297,459,000  

Underwriting discount (sales load)

     1.000   $ 3,000,000  

Proceeds, before expenses, to us

     98.153   $ 294,459,000  

The underwriters propose to offer some of the Notes to the public at the public offering price set forth on the cover page of this prospectus supplement and may offer the Notes to certain other Financial Industry Regulatory Authority (FINRA) members at the public offering price less a concession not in excess of 0.600% of the aggregate principal amount of the Notes. The underwriters may allow, and the dealers may reallow, a discount not in excess of 0.400% of the aggregate principal amount of the Notes. After the initial offering of the Notes to the public, the public offering price and such concessions may be changed. No such change shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus supplement.

The expenses of the offering, not including the underwriting discount, are estimated at approximately $0.4 million and are payable by us.

No Sales of Similar Securities

Subject to certain exceptions, we have agreed not to sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any debt securities issued or guaranteed by us or any securities convertible into or exercisable or exchangeable for debt securities issued or guaranteed by us or file or cause to be declared effective a registration statement under the Securities Act with respect to any of the foregoing, without the consent of J.P. Morgan Securities LLC, until the settlement date of this offering. This consent may be given at any time without public notice.

Listing

The Notes are a new issue of securities with no established trading market. The Notes will not be listed on any securities exchange or quoted on any automated dealer quotation system. We have been advised by the underwriters that they presently intend to make a market in the Notes after completion of this offering as permitted by applicable laws and regulations. The underwriters are not obligated, however, to make a market in the Notes and any such market-making may be discontinued at any time in the sole discretion of such underwriters without any notice. Accordingly, no assurance can be given that an active and liquid public trading market for the Notes will develop or be maintained. If an active public trading market for the Notes does not develop, the market price and liquidity of the Notes may be adversely affected.

Price Stabilization, Short Positions

In connection with the offering, the underwriters may purchase and sell the Notes in the open market. These transactions may include short sales and purchases on the open market to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater principal amount of Notes than they are required to purchase in the offering. The underwriters must close out any short position by purchasing Notes in the open market. A short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Notes in the open market after pricing that could adversely affect investors who purchase in the offering.

Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of the Notes or preventing or retarding a decline in the market price of the Notes. As a result, the price of the Notes may be higher than the price that might otherwise exist in the open market.

 

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The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representative has repurchased notes sold by or for the account of such underwriter in stabilizing or short covering transactions.

Any of these activities may cause the price of the Notes to be higher than the price that otherwise would exist in the open market in the absence of such transactions. These transactions may be affected in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time without any notice relating thereto.

Neither we nor the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Notes. In addition, neither we nor the underwriters make any representation that the representative will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Alternative Settlement Cycle

We expect that delivery of the Notes offered hereby will be made against payment therefor on or about February 25, 2020, which will be the seventh business day following the date of the pricing of the Notes offered hereby (such settlement being herein referred to as “T+7”). Under Rule 15c6-1 promulgated under the Exchange Act, trades in the secondary market generally are required to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Notes offered hereby prior to the date of delivery hereunder will be required, by virtue of the fact that the Notes offered hereby initially will settle in T+7 business days, to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement.

Electronic Offer, Sale and Distribution of Notes

The underwriters may make prospectuses available in electronic (PDF) format. A prospectus in electronic (PDF) format may be made available on a web site maintained by the underwriters, and the underwriters may distribute such prospectuses electronically.

Other Relationships

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. The underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us and our affiliates, for which they received or will receive customary fees and expenses, including acting as underwriters for our and our affiliates’ securities offerings.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of ours and our affiliates (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with us and our affiliates. If the underwriters or their respective affiliates have a lending relationship with us, the underwriters or their respective affiliates routinely hedge, or may hedge, their credit exposure to us consistent with their customary risk management policies. Typically, the underwriters and their respective affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the Notes offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the Notes offered hereby. The underwriters and their respective affiliates may also communicate independent investment

 

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recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

Affiliates of certain of the underwriters serve as agents and/or lenders under the Credit Facility. JPMorgan Chase Bank, N.A., an affiliate of J.P. Morgan Securities LLC, served as joint lead arranger and bookrunner and as syndication agent with respect to the Credit Facility. BofA Securities, Inc. (assignee of Merrill Lynch, Pierce, Fenner & Smith Incorporated) served as joint lead arranger and bookrunner and Bank of America, N.A., an affiliate of BofA Securities, Inc., served as syndication agent with respect to the Credit Facility. ING Capital LLC, an affiliate of ING Financial Markets LLC, is agent under the Credit Facility and served as joint lead arranger and bookrunner under the Credit Facility. Affiliates of certain underwriters may hold our 2024 Notes and 2028 Notes. Certain of the underwriters and their affiliates were underwriters in connection with our initial public offering and our subsequent common stock offerings and debt offerings, for which they received customary fees.

Certain proceeds of this offering will be used to repay or repurchase outstanding indebtedness under the Credit Facility and to redeem the 2024 Notes and 2028 Notes. Affiliates of certain of the underwriters are lenders under the Credit Facility. Accordingly, affiliates of certain of the underwriters may receive more than 5% of the proceeds of this offering to the extent such proceeds are used to repay or repurchase outstanding indebtedness under the Credit Facility, the 2024 Notes and the 2028 Notes.

The principal business address of J.P. Morgan Securities LLC is 383 Madison Avenue, New York, New York 10179. The principal business address of BofA Securities, Inc. is One Bryant Park, New York, New York 10036. The principal business address of RBC Capital Markets, LLC is 200 Vesey Street, 8th Floor, New York, New York 10281. The principal business address of ING Financial Markets LLC is 1133 Avenue of the Americas, New York, New York 10036.

Notice to Prospective Investors in Canada

The Notes may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the Notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus supplement (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Notice to Prospective Investors in the European Economic Area and the United Kingdom

The Notes may not be offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”) or in the United Kingdom. For these purposes:

 

  (a)

a retail investor means a person who is one (or more) of the following:

 

  (i)

a retail client as defined in point (11) of Article 4(1) of Article 4(1) of Directive 2014/65/EU (as amended or superseded, “MiFID II”); or

 

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  (ii)

a customer within the meaning of Directive (EU) 2016/97 (as amended or superseded, the “Insurance Distribution Directive”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or

 

  (iii)

not a qualified investor as defined in Regulation (EU) 2017/1129 (as amended or superseded, the “Prospectus Regulation”), and

 

  (b)

the expression “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes.

Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA or in the United Kingdom has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA or in the United Kingdom may be unlawful under the PRIIPs Regulation. This prospectus supplement and the accompanying prospectus have been prepared on the basis that any offer of Notes in any member state of the EEA or in the United Kingdom will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of the Notes. This prospectus supplement and the accompanying prospectus are not a prospectus for the purposes of the Prospectus Regulation.

Notice to Prospective Investors in the United Kingdom

Each underwriter has advised us that: (a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by it in connection with the issue or sale of the Notes which are the subject of the offering contemplated in this prospectus supplement and the accompanying prospectus in circumstances in which Section 21(1) of FSMA does not apply to us; and (b) it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom.

Notice to Prospective Investors in Japan

The Notes offered by this prospectus supplement have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the “FIEA”). The Notes offered by this prospectus supplement may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEA and any other applicable laws, regulations and ministerial guidelines of Japan.

Notice to Prospective Investors in Hong Kong

The Notes may not be offered or sold in Hong Kong by means of any document (except for Notes which are “structured product” as defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (the “Securities and Futures Ordinance”)) other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) (the “Companies (Winding Up and Miscellaneous Provisions) Ordinance”), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to the Notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities

 

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laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance and any rules made thereunder.

Notice to Prospective Investors in Singapore

Each of the underwriters has acknowledged that this prospectus supplement has not been and will not be registered as a prospectus with the Monetary Authority of Singapore (the “MAS”). Accordingly, each of the underwriters has represented, warranted and undertaken that it has not offered or sold any Notes or caused the Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell the Notes or cause the Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this prospectus supplement or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

 

  (a)

a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

 

  (b)

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:

 

  (i)

to an institutional investor or to a relevant person (as defined in Section 275(2) of the SFA) or to any person arising from an offer referred to in Section 275(1A), or Section 276(4)(i)(B) of the SFA;

 

  (ii)

where no consideration is or will be given for the transfer;

 

  (iii)

where the transfer is by operation of law;

 

  (iv)

as specified in Section 276(7) of the SFA; or

 

  (v)

as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

Singapore Securities and Futures Act Product Classification

Solely for the purposes of the underwriters’ obligations pursuant to Sections 309B(1)(a) and 309B(1)(c) of the Securities and Futures Act (Chapter 289 of Singapore) (the “SFA”), they have determined, and hereby notify all relevant persons (as defined in Section 309A of the SFA) that the Notes are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products) and MAS Notice FAA-N16: Notice on Recommendations on Investment Products.

Notice to Residents of the People’s Republic of China

The underwriters have been advised that the offer of the Notes is not an offer of securities within the meaning of the People’s Republic of China (“PRC”) securities laws or other pertinent laws and regulations of the

 

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PRC, and the Notes are not being offered or sold and may not be offered or sold, directly or indirectly, in the PRC (for such purposes, not including the Hong Kong and Macau Special Administrative Regions or Taiwan), except as permitted by the securities laws of the PRC.

Notice to Prospective Investors in South Korea

The Notes may not be offered, sold and delivered directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in South Korea or to any resident of South Korea except pursuant to the applicable laws and regulations of South Korea, including the Financial Investment Services and Capital Markets Act (the “FSCMA”) and the Foreign Exchange Transaction Law and the decrees and regulations thereunder (the “FETL”). Furthermore, the purchasers of the Notes comply with all applicable regulatory requirements (including but not limited to requirements under the FETL) in connection with their purchase.

Each underwriter has advised us that it has not offered, sold or delivered the Notes, directly or indirectly, or offered or sold the Notes to any person for re-offering or resale, directly or indirectly, in South Korea or to any resident of South Korea and will not offer, sell or deliver the Notes, directly or indirectly, or offer or sell the Notes to any person for re-offering or resale, directly or indirectly, in South Korea or to any resident of South Korea, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FSCMA, the FETL and other relevant laws and regulations of South Korea.

Notice to Prospective Investors in Taiwan

The Notes have not been and will not be registered with the Financial Supervisory Commission of Taiwan, the Republic of China (“Taiwan”), pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in any manner which would constitute an offer within the meaning of the Securities and Exchange Act of Taiwan or would otherwise require registration with or the approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer or sell the Notes in Taiwan.

Notice to Prospective Investors in Switzerland

Neither this prospectus supplement nor any other offering or marketing material relating to the Notes constitutes a prospectus as such term is understood pursuant to Article 652a or Article 1156 of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange or any other regulated trading facility in Switzerland, and neither this prospectus supplement nor any other offering or marketing material relating to the Notes may be publicly distributed or otherwise made publicly available in Switzerland.

 

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LEGAL MATTERS

The validity of the Notes offered hereby and certain legal matters for us in connection with the offering will be passed upon for us by Proskauer Rose LLP, Washington, D.C. Certain legal matters in connection with the offering will be passed upon for the underwriters by Dechert LLP, Washington, D.C.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

This prospectus supplement is part of a registration statement that we have filed with the SEC. Pursuant to the Small Business Credit Availability Act, we are allowed to “incorporate by reference” the information that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus supplement, and later information that we file with the SEC will automatically update and supersede this information.

We previously filed the following documents with the SEC, and such filings are incorporated by reference into this prospectus supplement:

 

   

Annual Report on Form 10-K for the fiscal year ended September 30, 2019, filed November 19, 2019;

 

   

Amendment No. 1 to Annual Report on Form 10-K/A for the fiscal year ended September 30, 2019, filed December 18, 2019;

 

   

Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2019 filed on February 6, 2020;

 

   

Definitive Proxy Statement on Schedule 14A, filed on January 13, 2020 (to the extent incorporated by reference into Part III of Annual Report on Form 10-K for the fiscal year ended September 30, 2019);

 

   

Current Reports on Form 8-K (other than information furnished rather than filed) filed on December 17, 2019, January 31, 2020 and February 13, 2020; and

 

   

The description of our common stock contained in our Registration Statement on Form 8-A (File No. 001-33901), filed on November 25, 2011, including any amendment or report filed for the purpose of updating such description.

We also incorporate by reference into this prospectus additional documents that we may file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act from the filing of this prospectus supplement until all of the securities offered by this prospectus supplement have been sold or we otherwise terminate the offering of these securities, including all filings made after the date of the initial filing of the registration statement of which this prospectus is a part and prior to the effectiveness of the registration statement; provided, however, that information “furnished” under Item 2.02 or Item 7.01 of Form 8-K or other information “furnished” to the SEC which is not deemed filed is not incorporated by reference in this prospectus supplement and the accompanying prospectus. Information that we subsequently file with the SEC will automatically update and may supersede information in this prospectus supplement, the accompanying prospectus and information previously filed with the SEC.

These filings may also be accessed on our website at www.oaktreespecialtylending.com. Except for documents incorporated by reference into this prospectus supplement and the accompanying prospectus, information contained on our website is not incorporated by reference into this prospectus supplement. You may also request a copy of these filings (other than exhibits, unless the exhibits are specifically incorporated by reference into these documents) at no cost by writing, emailing or calling Investor Relations at the following address and telephone number:

Investor Relations

Oaktree Specialty Lending Corporation

1301 Avenue of the Americas, 34th Floor

New York, NY 10019

(212) 284-1900

ocsl-ir@oaktreecapital.com

 

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$1,000,000,000

Oaktree Specialty Lending Corporation

Common Stock

Debt Securities

Warrants

Subscription Rights

 

 

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 were formed in late 2007 and operate 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, of 1940, as amended. We seek 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. 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.

We may offer, from time to time in one or more offerings, up to $1,000,000,000 of shares of our common stock, debt securities, warrants representing rights to purchase common stock or debt securities or subscription rights to purchase common stock, which we refer to, collectively, as the “securities.” Our securities may be offered at prices and on terms to be disclosed in one or more supplements to this prospectus. You should read this prospectus, the applicable prospectus supplement and any free writing prospectuses carefully before you invest in our securities.

Our securities may be offered directly to one or more purchasers, including existing stockholders in a rights offering, through agents designated from time to time by us, or to or through underwriters or dealers. The prospectus supplement relating to an offering will identify any agents or underwriters involved in the sale of our securities, and will disclose any applicable purchase price, fee, commission or discount arrangement between us and our agents or underwriters or among our underwriters or the basis upon which such amount may be calculated. See “Plan of Distribution.” We may not sell any of our securities through agents, underwriters or dealers without delivery of a prospectus supplement describing the method and terms of the offering of such securities.

Our common stock is traded on the Nasdaq Global Select Market under the symbol “OCSL.” On November 19, 2019 and September 30, 2019, the last reported sale price of our common stock was $5.28 and $5.18 per share, respectively. Our Board of Directors is required to determine the net asset value per share of our common stock on a quarterly basis. Our net asset value per share of our common stock as of September 30, 2019 was $6.60.

 

 

An investment in our securities involves certain risks, including, among other things, the risk of leverage and risks relating to investments in securities of small, private and developing businesses. Shares of closed-end investment companies frequently trade at a discount to their net asset value per share. If our shares trade at a discount to their net asset value, this will likely increase the risk of loss to purchasers of our common stock. You should review carefully the risks and uncertainties, including the risk of leverage and dilution, described in the section titled “Risk Factors” beginning on page 5 of this prospectus or otherwise incorporated by reference herein and included in, or incorporated by reference into, the applicable prospectus supplement and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar headings in the other documents that are incorporated by reference into this prospectus before investing in our securities.

This prospectus and any accompanying prospectus supplement contain important information about us that a prospective investor should know before investing in our securities. Please read this prospectus and any accompanying prospectus supplement before investing and keep them for future reference. We file periodic reports, current reports, proxy statements and other information with the Securities and Exchange Commission. This information is available free of charge by contacting us at 333 South Grand Ave., 28th Floor, Los Angeles, CA 90071 or by calling us collect at (213) 830-6300 or on our website at oaktreespecialtylending.com. Except for the documents incorporated by reference into this prospectus, information on our website is not incorporated into or a part of this prospectus or any related prospectus supplement. The Securities and Exchange Commission also maintains a website at www.sec.gov that contains such information.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Prospectus dated January 13, 2020


Table of Contents

TABLE OF CONTENTS

 

ABOUT THIS PROSPECTUS

     i  

PROSPECTUS SUMMARY

     1  

RISK FACTORS

     5  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     6  

USE OF PROCEEDS

     7  

PORTFOLIO COMPANIES

     8  

PORTFOLIO MANAGEMENT

     24  

DIVIDEND REINVESTMENT PLAN

     25  

DESCRIPTION OF OUR CAPITAL STOCK

     27  

DESCRIPTION OF OUR DEBT SECURITIES

     30  

DESCRIPTION OF OUR WARRANTS

     44  

DESCRIPTION OF OUR SUBSCRIPTION RIGHTS

     46  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     48  

PLAN OF DISTRIBUTION

     58  

CUSTODIAN, TRANSFER AND DISTRIBUTION PAYING AGENT AND REGISTRAR

     60  

BROKERAGE ALLOCATION AND OTHER PRACTICES

     60  

LEGAL MATTERS

     61  

EXPERTS

     61  

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     62  

AVAILABLE INFORMATION

     63  


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ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we have filed with the Securities and Exchange Commission, or SEC, using the “shelf” registration process. Under the shelf registration process, we may offer, from time to time, up to $1,000,000,000 of our securities on terms to be determined at the time of the offering. This prospectus provides you with a general description of the securities that we may offer. Each time we use this prospectus to offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained or incorporated by reference in this prospectus. Please carefully read this prospectus, any accompanying prospectus supplement, any free writing prospectus and the documents incorporated by reference in this prospectus and any accompanying prospectus supplement.

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained or incorporated by reference in this prospectus or any accompanying supplement to this prospectus. You must not rely on any unauthorized information or representations not contained or incorporated by reference in this prospectus or any accompanying prospectus supplement as if we had authorized it. This prospectus and any accompanying prospectus supplement do not constitute an offer to sell or a solicitation of any offer to buy any security other than the registered securities to which they relate, nor do they constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction. The information contained or incorporated by reference in this prospectus and any accompanying prospectus supplement is accurate as of their respective dates. Our financial condition, results of operations and prospects may have changed since that date. To the extent required by law, we will amend or supplement the information contained or incorporated by reference in this prospectus and any accompanying prospectus supplement to reflect any material changes to such information subsequent to the date of the prospectus and any accompanying prospectus supplement and prior to the completion of any offering pursuant to the prospectus and any accompanying prospectus supplement.

 

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PROSPECTUS SUMMARY

This summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read the entire prospectus carefully, including the section entitled “Risk Factors” before making a decision to invest in our securities.

Unless otherwise noted, the terms:

 

   

“we,” “us” and “our” refer to Oaktree Specialty Lending Corporation;

 

   

“Oaktree” and “our Adviser” refer to Oaktree Capital Management, L.P., our external investment adviser;

 

   

“Oaktree Administrator” refers to Oaktree Fund Administration, LLC, our administrator;

 

   

“Credit Facility” refers to our secured syndicated revolving credit facility, as most recently amended on February 25, 2019, with certain lenders party thereto from time to time and ING Capital LLC, as administrative agent, which, as of September 30, 2019, permitted up to $700 million of borrowings;

 

   

“2024 Notes” refers to our 5.875% unsecured notes issued in October 2012 in an aggregate principal amount of $75.0 million that mature on October 30, 2024; and

 

   

“2028 Notes” refers to our 6.125% unsecured notes issued in April and May 2013 in an aggregate principal amount of $86.3 million that mature on April 30, 2028.

Oaktree Specialty Lending Corporation

We are a specialty finance company dedicated to providing customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. We were formed in late 2007 and currently operate 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 of 1940, as amended, or the Investment Company Act. In addition, we have qualified and elected to be treated as a regulated investment company, or RIC, under the Internal Revenue Code of 1986, as amended, or the Code, for tax purposes. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any net ordinary income or net realized capital gains that we distribute to our stockholders if we meet certain source-of-income, income distribution and asset diversification requirements.

As of October 17, 2017, we are externally managed by Oaktree pursuant to an investment advisory agreement, as amended from time to time, or the Investment Advisory Agreement, between us and Oaktree. Oaktree is a subsidiary of Oaktree Capital Group, LLC, or OCG. In 2019, Brookfield Asset Management Inc., or 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. Oaktree Administrator, a subsidiary of our Adviser, provides certain administrative and other services necessary for us to operate.

We seek 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. We invest in companies that typically possess business models we expect to be resilient in the future with underlying fundamentals that will provide strength in future downturns. 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 our Adviser’s credit and structuring expertise. 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.



 

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Our Adviser intends to continue to reposition our portfolio into investments that are better aligned with our Adviser’s overall approach to credit investing and that it believes have the potential to generate attractive returns across market cycles. Our Adviser is generally focused on middle-market companies, which we define as companies with enterprise values of between $100 million and $750 million. We expect our portfolio to include a mix of first and second lien loans, including asset backed loans, unitranche loans, mezzanine loans, unsecured loans, bonds, preferred equity and certain equity co-investments. Our portfolio may also include certain structured finance and other non-traditional structures. 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.

Our portfolio totaled $1.4 billion at fair value as of September 30, 2019 and was comprised of 104 portfolio companies. These included debt investments in 79 companies, equity investments in 33 companies, including our limited partnership interests in two private equity funds, and our investment in Senior Loan Fund JV I, LLC, or the SLF JV I. Nine of these equity investments were in companies in which we also had a debt investment. At fair value, 91.0% of our portfolio consisted of debt investments and 78.6% of our portfolio consisted of senior secured loans as of September 30, 2019. The weighted average annual yield of our debt investments at fair value as of September 30, 2019, including our share of the return on our debt investment in SLF JV I, was approximately 8.9%, including 8.1% representing cash payments. The weighted average annual yield of our debt investments is determined before the payment of, and therefore does not take into account, our expenses and the payment by an investor of any stockholder transaction expenses, and does not represent the return on investment for our stockholders.

We are permitted to, and expect to continue to, finance our investments through borrowings. However, as a Business Development Company, subject to certain limited exceptions, we are currently only allowed to borrow amounts in accordance with the asset coverage requirements in the Investment Company Act. We generally expect to target a long-term debt to equity ratio of 0.70x to 0.85x (i.e., one dollar of equity for each $0.70 to $0.85 of debt outstanding). As of September 30, 2019, we had a debt to equity ratio of 0.51x (i.e., one dollar of equity for each $0.51 of debt outstanding). 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. The reduced asset coverage requirements permit us to double the maximum amount of leverage that we are permitted to incur by reducing the asset coverage requirements applicable to us from 200% to 150%. 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.

Our Adviser

We are externally managed and advised by Oaktree, a registered investment adviser under the Investment Advisers Act of 1940, as amended. The principal executive offices of Oaktree are located at 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071. Oaktree, subject to the overall supervision of our Board of Directors, manages our day-to-day operations, and provides investment advisory services to us pursuant to the Investment Advisory Agreement.



 

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Our Adviser is a leading global investment management firm headquartered in Los Angeles, California, focused on less efficient markets and alternative investments. A number of our Adviser’s senior executives and investment professionals have been investing together for over 33 years and have generated impressive investment performance through multiple market cycles. As of September 30, 2019, our Adviser (together with its affiliates) had approximately $122 billion in assets under management1. Our Adviser emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, corporate debt (including high-yield debt and senior loans), control investing, real estate, convertible securities and listed equities.

In 2019, 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. Brookfield is a leading global alternative asset manager with a 120-year history and over $500 billion of assets under management (inclusive of Oaktree) across a broad portfolio of real estate, infrastructure, renewable power, credit and private equity assets. Commencing in 2022, OCG’s founders, senior management and current and former employee-unitholders of OCG will be able to sell their remaining OCG units to Brookfield over time pursuant to an agreed upon liquidity schedule and approach to valuing such units at the time of liquidation. Pursuant to this liquidity schedule, the earliest year in which Brookfield could own 100% of the OCG business is 2029.

Our Adviser’s primary firm-wide goal is to achieve attractive returns while bearing less than commensurate risk. Our Adviser believes that it can achieve this goal by taking advantage of market inefficiencies in which financial markets and their participants fail to accurately value assets or fail to make available to companies the capital that they reasonably require.

Our Adviser believes that its defining characteristic is its adherence to the highest professional standards, which has yielded several important benefits. First and foremost, this characteristic has allowed our Adviser to attract and retain an extremely talented group of investment professionals, or the Investment Professionals. As of September 30, 2019, our Adviser had over 950 professionals in 18 cities and 13 countries, 39 portfolio managers with an average experience of 24 years and approximately 950 years of combined industry experience. Specifically, the Strategic Credit group that is primarily responsible for implementing our investment strategy consists of over 20 Investment Professionals led by Armen Panossian, our Chief Executive Officer and Chief Investment Officer, who focus on the investment strategy employed by our Adviser and certain of its affiliates. Second, it has permitted the investment team to build strong relationships with brokers, banks and other market participants. These institutional relationships have been instrumental in strengthening access to trading opportunities, to understanding the current market, and to executing the investment team’s investment strategies.

 

1 

References to “assets under management” or “AUM” represent assets managed by our Adviser and a proportionate amount of the AUM reported by DoubleLine Capital LP, or Doubleline, in which our Adviser owns a 20% minority interest. Our Adviser’s methodology for calculating AUM includes (i) the net asset value of assets managed directly by our Adviser, (ii) the leverage on which management fees are charged, (iii) undrawn capital that our Adviser is entitled to call from investors in Oaktree funds pursuant to their capital commitments, (iv) for collateralized loan obligation vehicles, or CLOs, the aggregate par value of collateral assets and principal cash, (v) for publicly-traded Business Development Companies, gross assets (including assets acquired with leverage), net of cash, and (vi) our Adviser’s pro rata portion of the AUM reported by DoubleLine. Our Adviser’s calculation of AUM may differ from the calculations of other asset managers and, as a result, our Adviser’s measurements of AUM may not be comparable to similar measures presented by other asset managers. Our Adviser’s definition of AUM is not based on the definitions of AUM that may be set forth in agreements governing the investment funds, vehicles or accounts that it manages and is not calculated pursuant to regulatory definitions.



 

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Our Adviser and its affiliates provide discretionary investment management services to other managed accounts and investment funds, which may have overlapping investment objectives and strategies with our own and, accordingly, may invest in asset classes similar to those targeted by us. The activities of such managed accounts and investment funds may raise actual or potential conflicts of interest.

Strategic Credit

Our Adviser officially launched its Strategic Credit strategy in early 2013 as a step-out from its Distressed Debt strategy, to capture attractive investment opportunities that appear to offer too little return for distressed debt investors, but may pose too much uncertainty for high-yield bond creditors. The strategy seeks to achieve an attractive total return by investing in public and private performing debt.

Strategic Credit focuses on U.S. and non-U.S. investment opportunities that arise from pricing inefficiencies that occur in the primary and secondary markets or from the financing needs of healthy companies with limited access to traditional lenders or public markets. Typical investments will be in high yield bonds and senior secured loans for borrowers that are in need of direct loans, rescue financings, or other capital solutions or that have had challenged or unsuccessful primary offerings.

The Investment Professionals employ a fundamental, value-driven opportunistic approach to credit investing, which seeks to benefit from the resources, relationships and proprietary information of our Adviser’s global investment platform.

Our Administrator

We entered into an administration agreement, as amended from time to time, or the Administration Agreement, with Oaktree Administrator, a Delaware limited liability company and a wholly owned subsidiary of Oaktree. The principal executive offices of Oaktree Administrator are located at 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071. Pursuant to the Administration Agreement, Oaktree Administrator provides services to us, and we reimburse Oaktree Administrator for costs and expenses incurred by Oaktree Administrator in performing its obligations under the Administration Agreement and providing personnel and facilities thereunder.

Corporate Information

Our principal executive offices are located at 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071, and our telephone number is (213) 830-6300. Our corporate website is located at www.oaktreespecialtylending.com. Except for the documents incorporated by reference into this prospectus, information on our website is not incorporated into or a part of this prospectus or any related prospectus supplement.



 

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RISK FACTORS

An investment in any securities offered pursuant to this prospectus and any accompanying prospectus supplement involves substantial risks. You should carefully consider the risk factors incorporated by reference herein from our most recent Annual Report on Form 10-K and our subsequent Quarterly Reports on Form 10-Q and the other information contained in this prospectus, as updated, amended or superseded by our subsequent filings under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the risk factors and other information contained in any accompanying prospectus supplement or free writing prospectus before acquiring any of such securities. The occurrence of any of these risks could materially and adversely affect our business, prospects, financial condition, results of operations and cash flow and might cause you to lose all or part of your investment in the offered securities. The risks described in these documents are not the only risks we face, and there may be additional risks that we do not presently know of or that we currently consider not likely to have a significant impact. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our business or our financial performance.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements in this prospectus and any accompanying prospectus supplement constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this prospectus and any accompanying prospectus supplement may include statements as to:

 

   

our future operating results and distribution projections;

 

   

the ability of Oaktree to reposition our portfolio and to implement Oaktree’s future plans with respect to our business;

 

   

the ability of Oaktree 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 party.

In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this prospectus, and any accompanying prospectus supplement, 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 this prospectus and any accompanying prospectus supplement. 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;

 

   

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 and RICs; 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 prospectus and will base the forward-looking statements included in any accompanying prospectus supplement on information available to us on the date of this prospectus and any accompanying prospectus supplement, as appropriate, and we assume no obligation to update any such forward-looking statements, except as required by law. 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. The forward-looking statements contained in this prospectus and any accompanying prospectus supplement are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and the forward looking statements contained in our periodic reports are excluded from the safe-harbor protection provided by Section 21E of the Exchange Act.

 

6


Table of Contents

USE OF PROCEEDS

We intend to use substantially all of the net proceeds from selling our securities to make investments in accordance with our investment objective and strategies described in this prospectus or any prospectus supplement and for general corporate purposes. We may also use a portion of the net proceeds to reduce any of our outstanding borrowings, including borrowings under the Credit Facility and to redeem or repurchase the 2024 Notes and 2028 Notes.

We anticipate that substantially all of the net proceeds from any offering of our securities will be used as described above within three to six months. Pending such use, we will invest the net proceeds primarily in high quality, short-term debt securities consistent with our business development company election and our election to be taxed as a RIC. Our ability to achieve our investment objective may be limited to the extent that the net proceeds from an offering, pending full investment, are held in interest-bearing deposits or other short-term instruments. The prospectus supplement relating to an offering will more fully identify the use of proceeds from any offering.

 

7


Table of Contents

PORTFOLIO COMPANIES

The following table sets forth certain information as of September 30, 2019, for each portfolio company in which we had a debt or equity investment. Our only formal relationships with our portfolio companies are the managerial assistance ancillary to our investments and the board observation or participation rights we may receive. For example, certain of our officers may serve as members of the boards of certain of our portfolio companies.

 

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
Control Investments                 (8)(9)

C5 Technology

Holdings, LLC

 

Data Processing & Outsourced Services

             

850 W. Jackson Blvd.

Chicago, IL 60607

   

829 Common Units

    82.9         —         —       (20)
   

 

34,984,460.37

Preferred Units

        $ 34,984     $ 34,984     (20)
              34,984       34,984    
           

 

 

   

 

 

   

First Star Speir

Aviation Limited

  Airlines  

First Lien Term Loan,

            (10)

2 Grand Canal Square

Grand Canal Quay

Dublin 2

662881, Ireland

   

9.00% cash due 12/15/2020

           
        $

 

11,510

 

 

 

   

 

2,140

 

 

 

   

 

11,510

 

 

 

  (11)(20)

 

   

100% equity interest

    100.0         8,500       4,630     (11)(12)(20)
              10,640       16,140    
           

 

 

   

 

 

   
New IPT, Inc.   Oil & Gas Equipment & Services   First Lien Term Loan, LIBOR+5.00% cash due 3/17/2021            

1707 Cole Blvd., Suite 200

Golden, CO 80401

      7.10     3,256       3,256       3,256     (6)(20)
   

 

First Lien Revolver, LIBOR+5.00% cash due 3/17/2021

      7.10     1,009       1,009       1,009     (6)(19)(20)
   

 

50.087 Class A Common Units in New IPT Holdings, LLC

    50.1         —         2,903     (20)
              4,265       7,168    
           

 

 

   

 

 

   
Senior Loan Fund JV I, LLC   Multi-Sector Holdings               (14)(15)

333 South Grand Avenue

28th Floor

Los Angeles, CA 90071

    Subordinated Debt, LIBOR+7.00% cash due 12/29/2028       9.39     96,250       96,250       96,250     (6)(11)(20)
   

 

87.5% LLC equity interest

    87.5         49,322       30,052     (11)(16)(19)
              145,572       126,302    
           

 

 

   

 

 

   
Thruline Marketing, Inc.   Advertising               (25)

15500 West 113th

Street, Suite 200

Lenexa, KS 66219

    First Lien Term Loan, LIBOR+7.00% cash due 4/3/2022       9.10     18,146       18,146       18,146     (6)(20)
   

 

First Lien Revolver, LIBOR+7.75% cash due 4/3/2022

        —            —            —          (6)(19)(20)
   

 

9,073 Class A Units in FS AVI Holdco, LLC

    90.7         10,648       6,438     (20)
              28,794       24,584    
           

 

 

   

 

 

   

 

8


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes  
Affiliate Investments  

Specialized

Finance

                (17)  
Assembled Brands Capital LLC              

76 Greene Street

New York, NY 10012

    First Lien Delayed Draw Term Loan, LIBOR+6.00% cash due 10/17/2023       8.10     5,585       5,585       5,585       (6)(19)(20)  
   

 

1,609,201 Class A Units

    7.8         765       782       (20)  
   

 

1,019,168.80 Preferred Units, 6%

          1,019       1,019       (20)  
   

 

70,424.5641 Class A Warrants (exercise price $3.3778) expiration date 9/9/2029

          —         —         (20)  
              7,369       7,386    
           

 

 

   

 

 

   
Caregiver Services, Inc.   Health Care Services              

10451 N.W. 117th Avenue Suite 110

Miami, FL 33178

  1,080,399 shares of Series A Preferred Stock, 10%           1,080       1,784       (20)  
              1,080       1,784    
           

 

 

   

 

 

   
Non-Control/Non-Affiliate Investments                   (18)  
4 Over International, LLC   Commercial Printing              

5900 San Fernando Road

Glendale, CA 91202

  First Lien Term Loan, LIBOR+6.00% cash due 6/7/2022       8.04     5,799       5,764       5,688       (6)(20)  
   

 

First Lien Revolver, PRIME+5.00% cash due 6/7/2021

      10.00     255       238       212       (6)(19)(20)  
              6,002       5,900    
           

 

 

   

 

 

   
99 Cents Only Stores LLC   General Merchandise Stores              

4000 Union Pacific Avenue

City of Commerce, CA 90023

  First Lien Term Loan, LIBOR+5.00% cash 1.50% PIK due 1/13/2022       7.10     19,326       18,946       16,934       (6)  
              18,946       16,934    
           

 

 

   

 

 

   
Access CIG, LLC  

Diversified Support Services

             

6818 A Patterson Pass Road

Livermore, CA 94550

  Second Lien Term Loan, LIBOR+7.75% cash due 2/27/2026       10.07     15,000       14,892       15,000       (6)(20)  
              14,892       15,000    
           

 

 

   

 

 

   
Aden & Anais Merger Sub, Inc.  

Apparel, Accessories & Luxury Goods

             

20 Jay Street, Suite 600

Brooklyn, NY 11201

  51,645 Common Units in Aden & Anais Holdings, Inc.     5.2         5,165       —         (20)  
              5,165       —      
           

 

 

   

 

 

   
AdVenture Interactive, Corp.   Advertising              

1933 N. Meacham Rd.

Suite 400

Schaumburg, IL 60173

   

9,073 shares of common stock

           
      90.7         13,611       12,677       (20)  
              13,611       12,677    
           

 

 

   

 

 

   

 

9


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
AI Ladder (Luxembourg) Subco S.a.r.l.  

Electrical Components & Equipment

             

2-4, Rue Beck

L-1222, Luxembourg

  First Lien Term Loan, LIBOR+4.50% cash due 7/9/2025       6.60     21,752       21,210       20,032     (6)(11)
              21,210       20,032    
           

 

 

   

 

 

   
AI Sirona (Luxembourg) Acquisition S.a.r.l.   Pharmaceuticals              

5 Rue des Capucins

L-1313, Luxembourg

   

Second Lien Term

Loan,

           
    EURIBOR+7.25% cash due 7/10/2026       7.25   17,500       20,035       18,673     (6)(11)
              20,035       18,673    
           

 

 

   

 

 

   
Air Medical Group Holdings, Inc.   Health Care Services              

209 Highway 121 Bypass Suite 21

Lewisville, TX 75067

    First Lien Term Loan, LIBOR+4.25% cash due 3/14/2025       6.29     6,321       6,192       5,936     (6)
              6,192       5,936    
           

 

 

   

 

 

   
AirStrip Technologies, Inc.  

Application Software

             

335 East Sonterra Blvd.

Suite 200

San Antonio, TX 78258

  22,858.71 Series C-1 Preferred Stock Warrants (exercise price $34.99757) expiration date 5/11/2025           90       —       (20)
              90       —      
           

 

 

   

 

 

   
Airxcel, Inc.  

Household Appliances

             

4000 Union Pacific Avenue

City of Commerce, CA 90023

  First Lien Term Loan, LIBOR+4.50% cash due 4/28/2025       6.54     7,900       7,837       7,614     (6)
              7,837       7,614    
           

 

 

   

 

 

   
Aldevron, L.L.C.   Biotechnology              

4055 41st Avenue South

Fargo, ND 58104

    First Lien Term Loan, LIBOR+4.25% cash due 9/20/2026       6.36     8,000       7,920       8,040     (6)
              7,920       8,040    
           

 

 

   

 

 

   

Algeco Scotsman Global

Finance Plc

  Construction & Engineering              

12 Berkeley Street, 2nd Floor

Mayfair, London W1J8DT

United Kingdom

    Fixed Rate Bond, 8.00% cash due 2/15/2023         23,915       23,443       23,982     (11)
              23,443       23,982    
           

 

 

   

 

 

   
Allen Media, LLC  

Movies & Entertainment

             

1925 Century Park East

10th Floor

Los Angeles, CA 90067

  First Lien Term Loan, LIBOR+6.50% cash due 8/30/2023       8.60     19,238       18,858       18,613     (6)(20)
              18,858       18,613    
           

 

 

   

 

 

   
Altice France S.A.  

Integrated Telecommunication Services

             

16 Rue du General Alain de

Boissieu

Paris, 75015 France

  Fixed Rate Bond, 8.13% cash due 1/15/2024         3,000       3,045       3,113     (11)
   

 

Fixed Rate Bond, 7.63% cash due 2/15/2025

        2,000       2,012       2,083     (11)
              5,057       5,196    
           

 

 

   

 

 

   

 

10


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
Alvotech Holdings S.A.   Biotechnology               (24)

Saemundargata 15-19

101 Reykjavik, Iceland

    Fixed Rate Bond 15% PIK Note A due 12/13/2023         14,800       16,304       18,089     (11)(20)
   

 

Fixed Rate Bond 15% PIK Note B due 12/13/2023

        14,800       16,304       16,609     (11)(20)
              32,608       34,698    
           

 

 

   

 

 

   
Ancile Solutions, Inc.  

Application Software

             

6085 Marshalee Drive

Elkridge, MD 21075

  First Lien Term Loan, LIBOR+7.00% cash due 6/30/2021       9.10     8,677       8,591       8,504     (6)(20)
              8,591       8,504    
           

 

 

   

 

 

   
Apptio, Inc.  

Application Software

             

11100 NE 8th Street

Suite 600

Bellevue, WA 98004

  First Lien Term Loan, LIBOR+7.25% cash due 1/10/2025       9.56     23,764       23,340       23,325     (6)(20)
   

 

First Lien Revolver, LIBOR+7.25% cash due 1/10/2025

        —         (27     (28   (6)(19)(20)
              23,313       23,297    
           

 

 

   

 

 

   
Asurion, LLC  

Property & Casualty Insurance

             

648 Grassmere Park

Nashville, TN 37211

  Second Lien Term Loan, LIBOR+6.50% cash due 8/4/2025       8.54     22,000       21,954       22,382     (6)
              21,954       22,382    
           

 

 

   

 

 

   
Avantor Inc.  

Health Care

             

3477 Corporate Parkway

Suite 200

Center Valley, PA 18034

  Distributors   Fixed Rate Bond, 9.00% cash due 10/1/2025         3,000       2,975       3,379    
              2,975       3,379    
           

 

 

   

 

 

   
Belk Inc.   Department Stores              

2801 West Tyvola Road

Charlotte, NC 28217

    First Lien Term Loan, LIBOR+4.75% cash due 12/12/2022       6.80     653       585       480     (6)
              585       480    
           

 

 

   

 

 

   
Blackhawk Network Holdings, Inc.  

Data Processing & Outsourced

             

6220 Stoneridge Mall Road

Pleasanton, CA 94588

  Services   Second Lien Term Loan, LIBOR+7.00% cash due 6/15/2026       9.06     26,250       26,013       26,283     (6)
              26,013       26,283    
           

 

 

   

 

 

   
Boxer Parent Company Inc.   Systems Software              
2101 Citywest Blvd. Houston, TX 77042     First Lien Term Loan, LIBOR+4.25% cash due 10/2/2025       6.29     13,915       13,798       13,416     (6)
              13,798       13,416    
           

 

 

   

 

 

   
California Pizza Kitchen, Inc.   Restaurants              

12181 Bluff Creek Drive

5th Floor

Playa Vista, CA 90094

    First Lien Term Loan, LIBOR+6.00% cash due 8/23/2022       8.53     3,122       3,097       2,800     (6)
              3,097       2,800    
           

 

 

   

 

 

   

 

11


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
Cenegenics, LLC  

Health Care

              (23)

851 South Rampart Blvd. Suite 220

Las Vegas, NV 89145

  Services   First Lien Term Loan, 9.75% cash 2.00% PIK due 9/30/2019         29,781       27,738       —       (20)(21)
   

 

First Lien Revolver, 15.00% cash due 9/30/2019

        2,203       2,203       —       (20)(21)
   

 

452,914.87 Common Units in Cenegenics, LLC

    7.6         598       —       (20)
   

 

345,380.141 Preferred Units in Cenegenics, LLC

          300       —       (20)
              30,839       —      
           

 

 

   

 

 

   
CITGO Holding, Inc.  

Oil & Gas

             

1293 Eldridge Parkway

Houston, TX 77077

  Refining & Marketing   Fixed Rate Bond, 9.25% cash due 8/1/2024         10,672       10,672       11,366    
   

 

First Lien Term Loan, LIBOR+7.00% cash due 8/1/2023

      9.04     10,000       9,855       10,219     (6)
              20,527       21,585    
           

 

 

   

 

 

   
CITGO Petroleum Corp.  

Oil & Gas Refining & Marketing

             

1293 Eldridge Parkway

Houston, TX 77077

  First Lien Term Loan, LIBOR+5.00% cash due 3/28/2024       7.10     9,950       9,851       10,012     (6)
              9,851       10,012    
           

 

 

   

 

 

   
Connect U.S. Finco LLC   Alternative Carriers              

99 City Road

London, UK NA EC1Y 1AX

  First Lien Term Loan, LIBOR+4.50% cash due 9/23/2026       7.10     30,000       29,400       29,580     (6)(11)
              29,400       29,580    
           

 

 

   

 

 

   
Convergeone Holdings, Inc.  

IT Consulting & Other Services

             

10900 Nesbitt Avenue

South Bloomington, MN 55437

  First Lien Term Loan, LIBOR+5.00% cash due 1/4/2026       7.04     14,770       14,225       13,352     (6)
              14,225       13,352    
           

 

 

   

 

 

   
Conviva Inc.  

Application Software

             

989 East Hillsdale Blvd. Suite 400

Foster City, CA 94404

  417,851 Series D Preferred Stock Warrants (exercise price $1.1966) expiration date 2/28/2021           105       411     (20)
              105       411    
           

 

 

   

 

 

   
Covia Holdings Corporation  

Oil & Gas Equipment & Services

             

3 Summit Park Drive

Suite 700

Independence, OH 44131

  First Lien Term Loan, LIBOR+4.00% cash due 6/1/2025       6.31     7,900       7,900       6,484     (6)(11)
              7,900       6,484    
           

 

 

   

 

 

   

 

12


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
DigiCert, Inc.  

Internet Services & Infrastructure

             

2801 N. Thanksgiving Way

Suite 500

Lehi, UT 84043

  First Lien Term Loan, LIBOR+4.00% cash due 10/31/2024       6.04     4,222       4,184       4,221     (6)
              4,184       4,221    
           

 

 

   

 

 

   
Dominion Diagnostics, LLC   Health Care Services               (23)

211 Circuit Dr.

North Kingstown, RI 02852

    Subordinated Term Loan, 11.00% cash 1.00% PIK due 10/18/2019         20,273       14,281       2,890     (20)(21)
   

 

First Lien Term Loan, PRIME+4.00% cash due 4/8/2019

      9.00     45,691       45,691       45,691     (6)(20)
   

 

First Lien Revolver, PRIME+4.00% cash due 4/8/2019

      9.00     2,090       2,090       2,090     (6)(20)
              62,062       50,671    
           

 

 

   

 

 

   
The Dun & Bradstreet Corporation  

Research & Consulting Services

             

103 JFK Parkway

Short Hills, NJ 07078

  First Lien Term Loan, LIBOR+5.00% cash due 2/6/2026       7.05     10,000       9,817       10,074     (6)
   

 

Fixed Rate Bond 6.875% cash due 8/15/2026

        5,000       5,000       5,459    
              14,817       15,533    
           

 

 

   

 

 

   
Eagleview Technology Corporation   Application Software              

3700 Monte Villa Parkway Suite 200

Bothell, WA 98021

    Second Lien Term Loan, LIBOR+7.50% cash due 8/14/2026       9.55     12,000       11,880       11,520     (6)(20)
              11,880       11,520    
           

 

 

   

 

 

   
EHR Canada, LLC   Food Retail              

3309 Collins Lane

Louisville, KY 40245

    First Lien Term Loan, LIBOR+8.00% cash due 9/28/2020       10.10     14,611       14,473       14,903     (6)(20)
              14,473       14,903    
           

 

 

   

 

 

   
EOS Fitness Opco Holdings, LLC   Leisure Facilities              

1 East Washington Street

Phoenix, AZ 85004

    487.5 Class A Preferred Units, 12%           488       855     (20)
    12,500 Class B Common Units     1.3         —         934     (20)
              488       1,789    
           

 

 

   

 

 

   
Equitrans Midstream Corp.  

Oil & Gas Storage & Transportation

             

625 Liberty Avenue

Suite 2000

Pittsburgh, PA 15222

  First Lien Term Loan, LIBOR+4.50% cash due 1/31/2024       6.55     11,910       11,603       11,926     (6)(11)
              11,603       11,926    
           

 

 

   

 

 

   

 

13


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
ExamSoft Worldwide, Inc.  

Application Software

             

5001 LBJ Freeway Suite 700

Dallas, TX 75244

  180,707 Class C Units in ExamSoft Investor LLC     0.5         181       —       (20)
              181       —      
           

 

 

   

 

 

   
GI Chill Acquisition LLC  

Managed Health Care

             

11915 La Grange Avenue

Los Angeles, CA 90025

  First Lien Term Loan, LIBOR+4.00% cash due 8/6/2025       6.10     17,820       17,731       17,775     (6)(20)
   

 

Second Lien Term Loan, LIBOR+7.50% cash due 8/6/2026

      9.60     10,000       9,914       10,000     (6)(20)
              27,645       27,775    
           

 

 

   

 

 

   
GKD Index Partners, LLC  

Specialized Finance

             

4925 Greenville Avenue - Suite 840

Dallas, TX 75206

  First Lien Term Loan, LIBOR+7.25% cash due 6/29/2023       9.35     22,402       22,235       22,108     (6)(20)
   

 

First Lien Revolver, LIBOR+7.25% cash due 6/29/2023

        —         (9     (15   (6)(19)(20)
              22,226       22,093    
           

 

 

   

 

 

   
GoodRx, Inc.  

Interactive Media & Services

             

233 Wilshire Blvd.

Suite 990

Santa Monica, CA 90401

  Second Lien Term Loan, LIBOR+7.50% cash due 10/12/2026       9.54     22,222       21,805       22,500     (6)(20)
              21,805       22,500    
           

 

 

   

 

 

   
Guidehouse LLP  

Research & Consulting Services

              (13)

1800 Tysons Boulevard

7th Floor

McLean, VA 22102

  Second Lien Term Loan, LIBOR+7.50% cash due 5/1/2026       9.54     20,000       19,917       19,750     (6)
              19,917       19,750    
           

 

 

   

 

 

   
HealthEdge Software, Inc.  

Application Software

             

30 Corporate Drive

Burlington, MA 01803

  482,453 Series A-3 Preferred Stock Warrants (exercise price $1.450918) expiration date 9/30/2023           213       757     (20)
              213       757    
           

 

 

   

 

 

   
I Drive Safely, LLC   Education Services              

5760 Fleet Street, Suite 210

Carlsbad, CA 92008

    125,079 Class A Common Units of IDS Investments, LLC     1.1         1,000       200     (20)
              1,000       200    
           

 

 

   

 

 

   
IBG Borrower LLC  

Apparel, Accessories & Luxury Goods

             

1450 Broadway

New York, NY 10018

  First Lien Term Loan, LIBOR+7.00% cash due 8/2/2022       9.13     14,209       13,027       13,286     (6)(20)
              13,027       13,286    
           

 

 

   

 

 

   

 

14


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
iCIMs, Inc.  

Application Software

             

101 Crawfords Corner Road, Suite 3-100, Fifth Floor

Holmdel, NJ 07733

  First Lien Term Loan, LIBOR+6.50% cash due 9/12/2024       8.56     16,718       16,436       16,438     (6)(20)
   

 

First Lien Revolver, LIBOR+6.50% cash due 9/12/2024

        —         (15     (15   (6)(19)(20)
              16,421       16,423    
           

 

 

   

 

 

   
Integral Development Corporation   Other Diversified Financial Services              

850 Hansen Way

Palo Alto, CA 94304

  1,078,284 Common Stock Warrants (exercise price $0.9274) expiration date 7/10/2024           113       —       (20)
              113       —      
           

 

 

   

 

 

   
Kellermeyer Bergensons Services, LLC   Environmental & Facilities Services              

1575 Henthorne Drive

Maumee, OH 43537

    Second Lien Term Loan, LIBOR+8.50% cash due 4/29/2022       10.77     6,105       5,940       5,937     (6)(20)
              5,940       5,937    
           

 

 

   

 

 

   
L Squared Capital Partners LLC   Multi-Sector Holdings              

3434 Via Lido, Suite 300

Newport Beach, CA 92663

    2.00% limited partnership interest     2.0         864       2,237     (11)(16)
              864       2,237    
           

 

 

   

 

 

   
Lanai Holdings III, Inc.  

Health Care Distributors

             

70 West Madison Street

# 4600

Chicago, IL 60602

  First Lien Term Loan, LIBOR+4.75% cash due 8/29/2022       7.01     19,892       19,586       18,583     (6)
              19,586       18,583    
           

 

 

   

 

 

   
Lannett Company, Inc.   Pharmaceuticals              

13200 Townsend Road

Philadelphia, PA 19154

    First Lien Term Loan, LIBOR+5.00% cash due 11/25/2020       7.04     762       762       759     (6)(11)
              762       759    
           

 

 

   

 

 

   
Lift Brands Holdings, Inc.   Leisure Facilities              

7 Times Square, Suite 4307

New York, NY 10036

    2,000,000 Class A Common Units in Snap Investments, LLC     2.0         1,399       3,020     (20)
              1,399       3,020    
           

 

 

   

 

 

   
Lightbox Intermediate, L.P.   Real Estate Services              

780 Third Avenue

New York, NY 10017

    First Lien Term Loan, LIBOR+5.00% cash due 5/9/2026       7.05     39,900       39,332       39,501     (6)(20)
              39,332       39,501    
           

 

 

   

 

 

   

 

15


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
Long’s Drugs Incorporated   Pharmaceuticals              

630 Kilbourne Road

Columbia, SC 29205

    50 Series A Preferred Shares in Long’s Drugs Incorporated           385       924     (20)
   

 

25 Series B Preferred Shares in Long’s Drugs Incorporated

          210       572     (20)
              595       1,496    
           

 

 

   

 

 

   
LTI Holdings, Inc.  

Auto Parts & Equipment

             

600 S Mcclure Road

Modesto, CA 95357

  Second Lien Term Loan, LIBOR+6.75% cash due 9/6/2026       8.79     9,000       9,000       8,246     (6)
              9,000       8,246    
           

 

 

   

 

 

   
Lytx Holdings, LLC  

Research & Consulting Services

             

9785 Towne Centre Drive

San Diego, CA 92121

  3,500 Class B Units     0.9         —         2,053     (20)
              —         2,053    
           

 

 

   

 

 

   
Maravai Intermediate Holdings, LLC   Biotechnology              

9955 Mesa Rim Road

San Diego, CA 92121

    First Lien Term Loan, LIBOR+4.25% cash due 8/2/2025       6.31     11,880       11,761       11,813     (6)(20)
              11,761       11,813    
           

 

 

   

 

 

   
Mayfield Agency Borrower
Inc.
  Property & Casualty Insurance              

59 Maiden Lane

New York, NY 10038

    First Lien Term Loan, LIBOR+4.50% cash due 2/28/2025       6.54     15,892       15,630       15,481     (6)
   

 

Second Lien Term Loan, LIBOR+8.50% cash due 3/2/2026

      10.54     35,925       35,492       36,285     (6)(20)
              51,122       51,766    
           

 

 

   

 

 

   
McAfee, LLC   Systems Software              

2821 Mission College Blvd.

Santa Clara, CA 95054

    First Lien Term Loan, LIBOR+3.75% cash due 9/30/2024       5.79     10,957       10,884       10,995     (6)
   

 

Second Lien Term Loan, LIBOR+8.50% cash due 9/29/2025

      10.54     7,000       7,034       7,093     (6)
              17,918       18,088    
           

 

 

   

 

 

   
MHE Intermediate Holdings, LLC   Diversified Support Services              

2 Penn Plaza

New York, NY 10121

  First Lien Term Loan, LIBOR+5.00% cash due 3/8/2024       7.10     2,932       2,913       2,874     (6)(20)
              2,913       2,874    
           

 

 

   

 

 

   
Mindbody, Inc.  

Internet Services & Infrastructure

             

4051 Broad Street

Suite 220

San Luis Obispo,
CA 93401

  First Lien Term Loan, LIBOR+7.00% cash due 2/14/2025       9.06     28,952       28,434       28,402     (6)(20)
   

 

First Lien Revolver, LIBOR+7.00% cash due 2/15/2025

        —         (55     (58   (6)(19)(20)
              28,379       28,344    
           

 

 

   

 

 

   

 

16


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
Ministry Brands, LLC  

Application Software

             

14488 Old Stage Road

Lenoir City, TN 37772

  Second Lien Term Loan, LIBOR+9.25% cash due 6/2/2023       11.34     7,056       6,997       7,056     (6)(20)
   

 

Second Lien Delayed Draw Term Loan, LIBOR+9.25% cash due 6/2/2023

      11.34     1,944       1,927       1,944     (6)(20)
   

 

First Lien Revolver, LIBOR+5.00% cash due 12/2/2022

      7.04     200       191       200     (6)(19)(20)
              9,115       9,200    
           

 

 

   

 

 

   
Navicure, Inc.  

Health Care Technology

             

2055 Sugarloaf Circle

Suite 600

Duluth, GA 30097

  Second Lien Term Loan, LIBOR+7.50% cash due 10/31/2025       9.54     14,500       14,389       14,573     (6)(20)
              14,389       14,573    
           

 

 

   

 

 

   
Numericable SFR SA  

Integrated Telecommunication Services

             

16 Rue du General
Alain de Boissieu

Paris, 75015 France

 

Fixed Rate Bond,

7.38% cash due

5/1/2026

        5,000       5,104       5,380     (11)
            5,104       5,380    
           

 

 

   

 

 

   
OmniSYS Acquisition Corporation   Diversified Support Services              

15950 Dallas
Parkway, Suite 350

Dallas, TX 75248

  100,000 Common Units in OSYS Holdings, LLC     1.6         1,000       750     (20)
              1,000       750    
           

 

 

   

 

 

   
Onvoy, LLC  

Integrated Telecommunication Services

             

10300 6th Avenue North

Plymouth, MN 55441

  Second Lien Term Loan, LIBOR+10.50% cash due 2/10/2025       12.54     16,750       16,750       13,187     (6)(20)
   

 

19,666.67 Class A Units in GTCR Onvoy Holdings, LLC

    0.6         1,967       —       (20)
   

 

13,664.73 Series 3 Class B Units in GTCR Onvoy Holdings, LLC

    0.5         —         —       (20)
              18,717       13,187    
           

 

 

   

 

 

   
P2 Upstream Acquisition Co.   Application Software              

1670 Broadway,
Suite 2800

Denver, CO 80202

    First Lien Term Loan, LIBOR+4.00% cash due 10/30/2020       6.19     2,976       2,936       2,950     (6)
    First Lien Revolver, LIBOR+4.00% cash due 2/1/2020         —         —         (79   (6)(19)
              2,936       2,871    
           

 

 

   

 

 

   

 

17


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
PaySimple, Inc.  

Data Processing & Outsourced Services

             

1515 Wynkoop Street

Suite 250

Denver, CO 80202

  First Lien Term Loan, LIBOR+5.50% cash due 8/23/2025       7.55     37,750       37,004       37,184     (6)(20)
   

 

First Lien Delayed Draw Term Loan, LIBOR+5.50% cash due 8/23/2025

        —         (242     (184   (6)(19)(20)
              36,762       37,000    
           

 

 

   

 

 

   
Pingora MSR Opportunity Fund I-A, LP   Thrifts & Mortgage Finance              

1755 Blake Street

Boulder, CO 80202

    1.86% limited partnership interest     1.9         1,217       691     (11)(16)(19)
              1,217       691    
           

 

 

   

 

 

   
PLATO Learning Inc.   Education Services              

5600 West 83rd Street

Suite 300, 8200 Tower

Bloomington, MN 55437

    Unsecured Senior PIK Note, 8.5% PIK due 12/9/2021         2,845       2,434       —       (20)(22)
   

 

Unsecured Junior PIK Note, 10% PIK due 12/9/2021

        13,577       10,227       —       (20)(22)
   

 

Unsecured Revolver, 5.00% cash due 12/9/2021

        2,064       1,885       (184   (19)(20)(21)
   

 

126,127.80 Class A Common Units of Edmentum

    3.4         126       —       (20)
              14,672       (184  
           

 

 

   

 

 

   
Project Boost Purchaser, LLC   Application Software              

Unit 5, Priors Way

Maidenhead
Berkshire SL6 2HP
UK

    First Lien Term Loan, LIBOR+3.50% cash due 6/1/2026       5.54     7,000       6,930       6,964     (6)
    Second Lien Term Loan, LIBOR+8.00% cash due 5/9/2027       10.14     3,750       3,750       3,750     (6)(20)
              10,680       10,714    
           

 

 

   

 

 

   
ProFrac Services, LLC  

Industrial Machinery

             

777 Main Street,
Suite 3900

Fort Worth, TX 76102

  First Lien Term Loan, LIBOR+6.25% cash due 9/15/2023       8.66     17,192       17,055       16,848     (6)(20)
              17,055       16,848    
           

 

 

   

 

 

   
QuorumLabs, Inc.  

Application Software

             

2890 Zanker Road,
Suite 102

San Jose, CA 95134

  64,887,669 Junior-2 Preferred Stock           375       —       (20)
              375       —      
           

 

 

   

 

 

   

 

18


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
Refac Optical Group   Specialty Stores              

1 Harmon Drive

Glen Oaks Industrial Park

Glendora, NJ 08029

    1,550.9435 Shares of Common Stock in Refac Holdings, Inc.     1.9         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

             

4000 Legato Road,
Suite 600

Fairfax, VA 22033

  First Lien Term Loan, LIBOR+6.00% cash due 2/28/2022       8.05     3,086       3,056       2,932     (6)(20)
              3,056       2,932    
           

 

 

   

 

 

   
Scilex Pharmaceuticals Inc.   Pharmaceuticals              

301 Lindenwood Drive
Suite 300

Malvern, PA 19355

    Fixed Rate Zero Coupon Bond due 8/15/2026         15,879       11,146       11,353     (20)
              11,146       11,353    
           

 

 

   

 

 

   
ShareThis, Inc.  

Application Software

             

4005 Miranda Avenue Suite 100

Palo Alto, CA 94304

  345,452 Series C Preferred Stock Warrants (exercise price $3.0395) expiration date 3/4/2024           367       2     (20)
              367       2    
           

 

 

   

 

 

   
Sorrento Therapeutics, Inc.   Biotechnology              

4955 Directors Place

San Diego CA 92121

    First Lien Term Loan, LIBOR+7.00% cash due 11/7/2023       9.13     30,000       28,132       29,250     (6)(11)(20)
   

 

First Lien Delayed Draw Term Loan, LIBOR+7.00% cash due 11/7/2023

        —         (62     (69   (6)(11)(19)(20)
   

 

Stock Warrants Strike (exercise price $3.28) expiration date 5/7/2029

          1,750       1,667     (11)(20)
   

 

Stock Warrants Strike (exercise price $3.94) expiration date 11/3/2029

          —         320     (11)(20)
              29,820       31,168    
           

 

 

   

 

 

   
Swordfish Merger Sub LLC   Auto Parts & Equipment              

6800 East 163rd Street

Belton, MO 64012

    Second Lien Term Loan, LIBOR+6.75% cash due 2/2/2026       8.79     12,500       12,450       12,135     (6)(20)
              12,450       12,135    
           

 

 

   

 

 

   

 

19


Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
TerSera Therapeutics, LLC   Pharmaceuticals              

150 North Field Drive

Two Conway Park
Suite 195

Lake Forest, IL 60045

    Second Lien Term Loan, LIBOR+9.25% cash due 3/30/2024    

 

 

 

11.35

 

 

 

 

 

25,463

 

 

 

 

 

 

25,025

 

 

 

 

 

 

25,192

 

 

 

 

(6)(20)

   

 

Second Lien Incremental Delayed Draw Term Loan, LIBOR+9.25% cash due 3/19/2020

        —         —         (45   (6)(19)(20)
   

 

668,879 Common Units of TerSera Holdings LLC

    0.9         1,731       2,629     (20)
              26,756       27,776    
           

 

 

   

 

 

   
TigerText, Inc.  

Application Software

             

2110 Broadway

Santa Monica, CA 90404

  299,110 Series B Preferred Stock Warrants (exercise price $1.3373) expiration date 12/8/2024           60       560     (20)
              60       560    
           

 

 

   

 

 

   
Transact Holdings Inc.  

Application Software

             

22601 North 19th Avenue Suite 130

Phoenix, AZ 85027

  First Lien Term Loan, LIBOR+4.75% cash due 4/30/2026       7.01     7,000       6,895       6,965     (6)
              6,895       6,965    
           

 

 

   

 

 

   
Tribe Buyer LLC  

Human Resource & Employment Services

             

9760 Shepard Road

Macedonia, OH 44056

  First Lien Term Loan, LIBOR+4.50% cash due 2/16/2024       6.54     830       830       775     (6)(20)
              830       775    
           

 

 

   

 

 

   
Truck Hero, Inc.  

Auto Parts & Equipment

             

5400 South State Road

Ann Arbor, MI 48108

  Second Lien Term Loan, LIBOR+8.25% cash due 4/21/2025       10.29     21,500       21,191       20,103     (6)(20)
              21,191       20,103    
           

 

 

   

 

 

   
Uber Technologies, Inc.  

Application Software

             

405 Howard Street

San Francisco, CA 94105

  First Lien Term Loan, LIBOR+4.00% cash due 4/4/2025       6.03     5,689       5,652       5,667     (6)
              5,652       5,667    
           

 

 

   

 

 

   
Uniti Group LP   Specialized REITs              

10802 Executive Center Drive

Benton Building, Suite 300

Little Rock, AR 72211

    First Lien Term Loan, LIBOR+5.00% cash due 10/24/2022    

 

 

 

7.04

 

 

 

 

 

8,403

 

 

 

 

 

 

8,264

 

 

 

 

 

 

8,213

 

 

 

 

(6)(11)

              8,264       8,213    
           

 

 

   

 

 

   
UOS, LLC  

Trading Companies & Distributors

             

12660 East Lynchburg Salem Turnpike

Forest, VA 24551

  First Lien Term Loan, LIBOR+5.50% cash due 4/18/2023       7.54     10,242       10,357       10,370     (6)
              10,357       10,370    
           

 

 

   

 

 

   

 

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Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes
Veritas US Inc.  

Application Software

             

2625 Augustine Drive

Santa Clara, CA 95054

  First Lien Term Loan, LIBOR+4.50% cash due 1/27/2023       6.60     34,200       34,468       32,413     (6)
              34,468       32,413    
           

 

 

   

 

 

   
Verscend Holding Corp.  

Health Care Technology

             

201 Jones Road, 4th Floor

Waltham, MA 02451

  First Lien Term Loan, LIBOR+4.50% cash due 8/27/2025       6.54     24,750       24,633       24,879     (6)
   

 

Fixed Rate Bond, 9.75% cash due 8/15/2026

        12,000       12,022       12,823    
              36,655       37,702    
           

 

 

   

 

 

   
Vertex Aerospace Services Corp.   Aerospace & Defense              

1041 Old Cassatt Road

Berwyn, PA 19312

    First Lien Term Loan, LIBOR+4.50% cash due 6/29/2025       6.54     15,800       15,735       15,869     (6)
              15,735       15,869    
           

 

 

   

 

 

   
Vitalyst Holdings, Inc.  

IT Consulting & Other Services

             

One Bala Plaza, Suite 434

Bala Cynwyd, PA 19004

  675 Series A Preferred Stock Units           675       440     (20)
   

 

7,500 Class A Common Stock Units

    1.5         75       —       (20)
              750       440    
           

 

 

   

 

 

   
Windstream Services, LLC  

Integrated

Telecommunication Services

             

4001 Rodney Parham Road

Little Rock, AR 72212

  Fixed Rate Bond, 8.63% cash due 10/31/2025         5,000       4,863       5,113     (11)
              4,863       5,113    
           

 

 

   

 

 

   
WP CPP Holdings, LLC  

Aerospace & Defense

             

1621 Euclid Avenue

Suite 1850

Cleveland, OH 44115

  Second Lien Term Loan, LIBOR+7.75% cash due 4/30/2026       10.01     15,000       14,874       14,937     (6)
              14,874       14,937    
           

 

 

   

 

 

   
xMatters, Inc.  

Application Software

             

12647 Alcosta Blvd.

Suite 425

San Ramon, CA 94583

  600,000 Common Stock Warrants (exercise price $0.593333) expiration date 2/26/2025           709       273     (20)
              709       273    
           

 

 

   

 

 

   
Yeti Holdings, Inc.   Leisure Products              

7601 Southwest Parkway

Austin, TX 78735

    537,629 Shares Yeti Holdings, Inc. Common Stock     0.6         —         15,054    
              —         15,054    
           

 

 

   

 

 

   
Zep Inc.  

Specialty Chemicals

             

3330 Cumberland Blvd. Suite 700

Atlanta, GA 30339

  Second Lien Term Loan, LIBOR+8.25% cash due 8/11/2025       10.35     30,000       29,889       21,950     (6)(20)
   

 

First Lien Term Loan, LIBOR+4.00% cash due 8/12/2024

      6.04     1,975       1,899       1,564     (6)
              31,788       23,514    
           

 

 

   

 

 

   

 

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Table of Contents

Name and Address of
Portfolio Company
(1)(2)(3)(4)(5)

 

Principal Business

 

Title of Securities
Held by Us

  Percentage
of
Ownership
Interest*
    Cash
Interest
Rate (6)
    Principal
($ in
thousands)
(7)
    Cost ($ in
thousands)
    Fair Value
($ in
thousands)
    Notes

Zephyr Bidco Limited

65 Grosvenor Street

London, W1K3JH

United Kingdom

 

Specialized Finance

 

 

Second Lien Term Loan, UK LIBOR+7.50% cash due 7/23/2026

   

 

 

 

8.21

 

 

 

£

 

18,000

 

 

 

 

 

 

23,632

 

 

 

 

 

 

22,006

 

 

 

 

(6)(11)

              23,632       22,006    
           

 

 

   

 

 

   

 

*

Percentage of class held refers only to equity held, if any. Calculated on a fully diluted basis.

(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 notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2019 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)

With the exception of investments held by our wholly-owned subsidiaries that each formerly held a license from the U.S. Small Business Administration to operate as a small business investment company, each of our investments is pledged as collateral under the Credit Facility.

(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, 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 unless otherwise noted. As of September 30, 2019, the reference rates for our variable rate loans were the 30-day LIBOR at 2.04%, the 60-day LIBOR at 2.09%, the 90-day LIBOR at 2.10%, the 180-day LIBOR at 2.06%, the PRIME at 5.00%, the 30-day UK LIBOR at 0.71% and the 30-day EURIBOR at (0.51)%. Most loans include an interest floor, which generally ranges from 0% to 1%.

(7)

Principal includes accumulated payment in kind, or 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 we own more than 25% of the voting securities or maintain greater than 50% of the board representation.

(9)

As defined in the Investment Company Act, we are deemed to be both an “Affiliated Person” of and to “Control” this portfolio company as we own more than 25% of the portfolio company’s outstanding voting securities or have the power to exercise control over management or policies of such portfolio company (including through a management agreement).

(10)

First Star Speir Aviation 1 Limited is a wholly-owned holding company formed by us in order to facilitate our investment strategy. In accordance with Accounting Standards Update 2013-08, we have deemed the holding company to be an investment company under accounting principles generally accepted in the United States 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, we may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. As of September 30, 2019, qualifying assets represented 75.0% of our total assets and non-qualifying assets represented 25.0% of our total assets.

(12)

Income producing through payment of dividends or distributions.

(13)

During the year ended September 30, 2019, the portfolio company was renamed from Eton to Guidehouse LLP.

(14)

See Note 3 in the notes to the Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2019 for portfolio composition.

(15)

On December 28, 2018, the mezzanine notes issued by SLF Repack Issuer 2016, LLC, a wholly-owned, special purpose issuer subsidiary of SLF JV I were redeemed and we purchased subordinated notes and LLC equity interests issued by SLF JV I. Prior to December 28, 2018, the mezzanine notes issued by SLF Repack Issuer 2016, LLC consisted of Class A mezzanine secured deferrable floating rate notes and Class B mezzanine secured deferrable fixed rate notes.

(16)

This investment was valued using NAV as a practical expedient for fair value. Consistent with Financial Accounting Standards Board guidance under Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, or 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 we own 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 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.

 

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Table of Contents
(20)

As of September 30, 2019, these investments are 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, 2019. Cash non-accrual status is inclusive of PIK and other non-cash income, where applicable.

(22)

This investment was on PIK non-accrual status as of September 30, 2019. PIK non-accrual status is inclusive of other non-cash income, where applicable.

(23)

Payments on this investment are currently past due.

(24)

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. The accumulated PIK interest balance as of September 30, 2019 is $3.6 million. The fair value of this investment is inclusive of PIK.

(25)

During the year ended September 30, 2019, the portfolio company was renamed from Keypath Education, Inc. to Thruline Marketing, Inc.

 

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Table of Contents

PORTFOLIO MANAGEMENT

Armen Panossian is our portfolio manager and primarily responsible for the day-to-day management of our portfolio. As of September 30, 2019, our portfolio manager manages two other business development companies with a total of approximately $0.9 billion in assets under management, 3 pooled investment vehicles with a total of approximately $0.5 billion in assets under management and 11 other accounts with a total of approximately $2.4 billion in assets under management. In addition to those funds and accounts for which Mr. Panossian has primary responsibility for day-to-day management, he is also Head of Oaktree’s Performing Credit organization and, in such capacity, oversees the management of approximately $40 billion in assets under management as of September 30, 2019.

Our portfolio manager is not employed by us and does not receive any direct compensation from us or from the previously listed accounts for serving in such capacity. Our portfolio manager is paid by our Adviser and compensation includes a base salary, deferred equity or other deferred compensation and discretionary bonuses and variable incentive compensation based primarily on past performance, services provided and expected future contributions.

The table below shows the dollar range of shares of our common stock beneficially owned by our portfolio manager as of September 30, 2019:

 

Name of Portfolio Manager

   Dollar Range of Equity
Securities(1)(2)
 

Armen Panossian

     None  

 

(1)

Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act.

(2)

The dollar range of equity securities beneficially owned are: none, $1 — $10,000, $10,001 — $50,000, $50,001 — $100,000, $100,001 — $500,000, $500,001 — $1,000,000, or over $1,000,000.

 

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Table of Contents

DIVIDEND REINVESTMENT PLAN

We have adopted a dividend reinvestment plan that provides for reinvestment of our distributions on behalf of our stockholders, unless a stockholder elects to receive cash as provided below. As a result, if our Board of Directors authorizes, and we declare, a cash distribution, then our stockholders who have not “opted out” of our dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of our common stock, rather than receiving the cash distributions.

No action will be required on the part of a registered stockholder to have their cash distributions reinvested in shares of our common stock. A registered stockholder may elect to receive an entire distribution in cash by notifying American Stock Transfer & Trust Company, LLC, the plan administrator and our transfer agent and registrar, in writing so that such notice is received by the plan administrator no later than three days prior to the dividend payment date for distributions to stockholders. The plan administrator will set up an account for shares acquired through the plan for each stockholder who has not elected to receive distributions in cash and hold such shares in non-certificated form. Upon request by a stockholder participating in the plan, received in writing not less than three days prior to the dividend payment date, the plan administrator will, instead of crediting shares to the participant’s account, issue a certificate registered in the participant’s name for the number of whole shares of our common stock and a check for any fractional share. Those stockholders whose shares are held by a broker or other financial intermediary may receive distributions in cash by notifying their broker or other financial intermediary of their election. If the stockholder request is received less than three days prior to the dividend payment date then that dividend will be reinvested. However, all subsequent dividends will be paid out in cash on all balances.

We intend to use newly issued shares to implement the plan when our shares are trading at or above net asset value. Under such circumstances, the number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the distribution payable to such stockholder by the greater of (a) the net asset value per share of our common stock, and (b) 95% of the market price per share of our common stock at the close of trading on the payment date fixed by our Board of Directors for such distribution. Market price per share on that date will be the closing price for such shares on the Nasdaq Global Select Market or, if no sale is reported for such day, at the average of their reported bid and asked prices. We reserve the right to purchase shares in the open market in connection with our implementation of the plan if either (1) the price at which newly-issued shares are to be credited does not exceed 110% of the last determined net asset value of the shares; or (2) we have advised the plan administrator that since such net asset value was last determined, we have become aware of events that indicate the possibility of a material change in the per share net asset value as a result of which the net asset value of the shares on the payment date might be higher than the price at which the plan administrator would credit newly-issued shares to stockholders. Shares purchased in open market transactions by the plan administrator will be allocated to a stockholder based on the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased in the open market.

There will be no brokerage charges or other charges for dividend reinvestment to stockholders who participate in the plan. We will pay the plan administrator’s fees under the plan. If a participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a $15.00 transaction fee plus a $0.10 per share brokerage commission from the proceeds.

Stockholders who receive distributions in the form of stock generally are subject to the same federal, state and local tax consequences as are stockholders who elect to receive their distributions in cash; however, since their cash dividends will be reinvested, such stockholders will not receive cash with which to pay any applicable taxes on reinvested dividends. A stockholder’s basis for determining gain or loss upon the sale of stock received in a distribution from us will be equal to the total dollar amount of the distribution payable to the stockholder. Any stock received in a distribution will have a holding period for tax purposes commencing on the day following the day on which the shares are credited to the stockholder’s account.

 

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Table of Contents

Participants may terminate their accounts under the plan by notifying the plan administrator via its website at www.amstock.com, by filling out the transaction request form located at the bottom of their statement and sending it to the plan administrator at P.O. Box 922, Wall Street Station, New York, New York, 10269-0560, or by calling the plan administrators at 1-866-665-2281.

We may terminate the plan upon notice in writing mailed to each participant at least 30 days prior to any record date for the payment of any distribution by us. All correspondence concerning the plan should be directed to the plan administrator by mail at P.O. Box 922, Wall Street Station, New York, New York, 10269-0560, or by telephone at 1-866-665-2281.

 

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Table of Contents

DESCRIPTION OF OUR CAPITAL STOCK

The following description summarizes material provisions of the Delaware General Corporation Law and our restated certificate of incorporation, as amended, or our certificate of incorporation, and fourth amended and restated bylaws, or our bylaws. This summary is not necessarily complete, and we refer you to the Delaware General Corporation Law and our certificate of incorporation and bylaws for a more detailed description of the provisions summarized below.

Capital Stock

Our authorized capital stock consists of 250,000,000 shares of common stock, par value $0.01 per share, of which 140,960,651 shares were outstanding as of November 20, 2019.

Our common stock is listed on the Nasdaq Global Select Market under the ticker symbol “OCSL.” No stock has been authorized for issuance under any equity compensation plans. Under Delaware law, our stockholders generally will not be personally liable for our debts or obligations.

Set forth below is a chart describing the classes of our securities outstanding as of November 20, 2019:

 

(1)
Title of Class

   (2)
Amount Authorized
     (3)
Amount Held by Us or
for Our Account
     (4)
Amount Outstanding
Exclusive of Amount
Under Column 3
 

Equity Securities

        

Common Stock

     250,000,000        —          140,960,651  

Debt Securities

        

2024 Notes

   $ 75,000,000        —        $ 75,000,000  

2028 Notes

   $ 86,250,000        —        $ 86,250,000  

Under the terms of our certificate of incorporation, all shares of our common stock have equal rights as to earnings, assets, dividends and voting and, when they are issued, are duly authorized, validly issued, fully paid and nonassessable. Distributions may be paid to the holders of our common stock if, as and when authorized by our Board of Directors and declared by us out of funds legally available therefore. Shares of our common stock have no preemptive, exchange, conversion or redemption rights and are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract. In the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities. Each share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. The holders of our common stock possess exclusive voting power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock are able to elect all of our directors, and holders of less than a majority of such shares are unable to elect any director.

Limitation on Liability of Directors and Officers; Indemnification and Advance of Expenses

Under our certificate of incorporation, we will fully indemnify any person who was or is involved in any actual or threatened action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, limited liability company, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, against expenses (including attorney’s fees), judgments, fines and amounts paid or to be paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding. Our certificate of incorporation also provides that our directors will not be personally liable for monetary damages to us for breaches of their fiduciary duty as directors, except for a breach of their duty of loyalty to us or our stockholders, for acts or omissions not in good

 

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Table of Contents

faith or which involve intentional misconduct or a knowing violation of law, or for any transaction from which the director derived an improper personal benefit. So long as we are regulated under the Investment Company Act, the above indemnification and limitation of liability will be limited by the Investment Company Act or by any valid rule, regulation or order of the SEC thereunder. The Investment Company Act provides, among other things, that a company may not indemnify any director or officer against liability to it or its stockholders to which he or she might otherwise be subject by reason of his or her willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office unless a determination is made by final decision of a court, by vote of a majority of a quorum of directors who are disinterested, non-party directors or by independent legal counsel that the liability for which indemnification is sought did not arise out of the foregoing conduct.

Delaware law also provides that indemnification permitted under the law shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation’s bylaws, any agreement, a vote of stockholders or otherwise.

Our certificate of incorporation permits us to secure insurance on behalf of any person who is or was or has agreed to become a director or officer or is or was serving at our request as a director or officer of another enterprise for any liability arising out of his or her actions, regardless of whether the Delaware General Corporation Law would permit indemnification. We have obtained liability insurance for our officers and directors.

Delaware Law and Certain Certificate of Incorporation and Bylaw Provisions; Anti-Takeover Measures

We are subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, the statute prohibits a publicly held Delaware corporation from engaging in a “business combination” with “interested stockholders” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes certain mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to exceptions, an “interested stockholder” is a person who, together with his, her or its affiliates and associates, owns, or within three years did own, 15% or more of the corporation’s voting stock.

Our certificate of incorporation and bylaws provide that:

 

   

the Board of Directors be divided into three classes, as nearly equal in size as possible, with staggered three-year terms;

 

   

directors may be removed only for cause by the affirmative vote of the holders of two-thirds of the shares of our capital stock entitled to vote; and

 

   

any vacancy on the Board of Directors, however the vacancy occurs, including a vacancy due to an enlargement of the Board of Directors, may only be filled by vote of the directors then in office.

The classification of our Board of Directors and the limitations on removal of directors and filling of vacancies could have the effect of making it more difficult for a third party to acquire us, or of discouraging a third party from acquiring us.

Our certificate of incorporation and bylaws also provide that:

 

   

any action required or permitted to be taken by the stockholders at an annual meeting or special meeting of stockholders may only be taken if it is properly brought before such meeting and may not be taken by written action in lieu of a meeting; and

 

   

special meetings of the stockholders may only be called by our Board of Directors, chairman or chief executive officer.

 

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Our bylaws provide that, in order for any matter to be considered “properly brought” before a meeting, a stockholder must comply with requirements regarding advance notice to us. These provisions could delay until the next stockholders’ meeting stockholder actions which are favored by the holders of a majority of our outstanding voting securities. These provisions may also discourage another person or entity from making a tender offer for our common stock, because such person or entity, even if it acquired a majority of our outstanding voting securities, would be able to take action as a stockholder (such as electing new directors or approving a merger) only at a duly called stockholders meeting, and not by written consent.

The Delaware General Corporation Law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or bylaws, unless a corporation’s certificate of incorporation or bylaws requires a greater percentage. Under our certificate of incorporation and bylaws, any amendment or repeal of the bylaws by the stockholders shall require the affirmative vote of the holders of at least 66 2/3% of the shares of our capital stock then outstanding and entitled to vote in the election of directors. The vote of at least 66 2/3% of the shares of our capital stock then outstanding and entitled to vote in the election of directors, voting together as a single class, will not be required to amend or repeal any provision of our certificate of incorporation pertaining to the Board of Directors, limitation of liability, indemnification, stockholder action or amendments to our certificate of incorporation. In addition, our certificate of incorporation permits our Board of Directors to amend or repeal our bylaws by a majority vote.

 

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DESCRIPTION OF OUR DEBT SECURITIES

We may issue debt securities in one or more series. The specific terms of each series of debt securities will be described in the particular prospectus supplement relating to that series. The prospectus supplement may or may not modify the general terms found in this prospectus and will be filed with the SEC. For a complete description of the terms of a particular series of debt securities, you should read both this prospectus and the prospectus supplement relating to that particular series.

As required by federal law for all bonds and notes of companies that are publicly offered, the debt securities are governed by a document called an “indenture.” An indenture is a contract between us and a financial institution acting as trustee on your behalf, and is subject to and governed by the Trust Indenture Act of 1939, as amended. The trustee has two main roles. First, the trustee can enforce your rights against us if we default. There are some limitations on the extent to which the trustee acts on your behalf, described in the second paragraph under “Events of Default — Remedies if an Event of Default Occurs.” Second, the trustee performs certain administrative duties for us with respect to the debt securities.

This section is a summary of the material provisions of the indenture, including the general terms of our debt securities and your rights as a holder of such securities. Any accompanying prospectus supplement will describe any other material terms of the debt securities being offered thereunder. This section does not describe every aspect of the debt securities and the indenture. We urge you to read the indenture because it, and not this description, defines your rights as a holder of debt securities. A copy of the indenture has been filed as an exhibit to the registration statement of which this prospectus is a part. We will file a supplemental indenture with the SEC in connection with any debt offering, at which time the supplemental indenture would be publicly available. See “Available Information” for information on how to obtain a copy of the indenture.

The prospectus supplement, which will accompany this prospectus, will describe the particular series of debt securities being offered by including:

 

   

the designation or title of the series of debt securities;

 

   

the total principal amount of the series of debt securities;

 

   

the percentage of the principal amount at which the series of debt securities will be offered;

 

   

the date or dates on which principal will be payable;

 

   

the rate or rates (which may be either fixed or variable) and/or the method of determining such rate or rates of interest, if any;

 

   

the date or dates from which any interest will accrue, or the method of determining such date or dates, and the date or dates on which any interest will be payable;

 

   

whether any interest may be paid by issuing additional securities of the same series in lieu of cash (and the terms upon which any such interest may be paid by issuing additional securities);

 

   

the terms for redemption, extension or early repayment, if any;

 

   

the currencies in which the series of debt securities are issued and payable;

 

   

whether the amount of payments of principal, premium or interest, if any, on a series of debt securities will be determined with reference to an index, formula or other method (which could be based on one or more currencies, commodities, equity indices or other indices) and how these amounts will be determined;

 

   

the place or places of payment, transfer, conversion and/or exchange of the debt securities;