Business Context and Reporting Period
Company: Owl Rock Capital Corporation (Note: Filing text identifies registrant as Owl Rock Capital Corporation, though metadata references Blue Owl Capital Corp).
Filing Type: Form 8-K (Current Report)
Reporting Date: March 27, 2020 (Event Date: March 26, 2020)
Primary Event: Completion of a $395.31 million term debt securitization transaction (Collateralized Loan Obligation or "CLO Transaction") via consolidated subsidiaries Owl Rock CLO III, Ltd. and Owl Rock CLO III, LLC.
Key Financial Metrics and Transaction Details
Transaction Size: $395.31 million total issuance.
Debt Structure (Secured Notes):
- Total Secured Notes: $260 million
- Class A-1L Notes: $166 million (3-month LIBOR + 1.80%)
- Class A-1F Notes: $40 million (Fixed 2.75%)
- Class A-2 Notes: $20 million (3-month LIBOR + 2.00%)
- Class B Notes: $34 million (3-month LIBOR + 2.45%)
- Maturity Date: April 20, 2032
Equity Structure (Preferred Shares):
- Total Issuance: Approximately $135.31 million (135,310 shares at $1,000/share)
- Ownership: 100% purchased by the Company (Owl Rock Capital Corporation) to satisfy risk retention regulations.
Collateral Portfolio: Approximately $400 million par amount of middle market loans and participation interests ($312.12 million sold by Company; $87.87 million purchased from subsidiary ORCC Financing IV LLC).
Use of Proceeds: Repayment of revolving loans under existing credit facilities.
Revenue/Profit/Cash Flow: The filing text does not provide specific revenue, profit, cash flow, or margin figures for the reporting period.
Material Changes and Strategic Actions
Financing Strategy: The Company shifted from revolving credit facilities to a long-term securitization structure to fund its middle market loan portfolio.
Asset Transfer: Immediate transfer of approximately $312.12 million in loans from the Company to the CLO Issuer, with provisions for future ongoing sales.
Management Fees: Owl Rock Capital Advisors LLC (ORCA) serves as collateral manager but has currently waived its right to receive fees, though this waiver may be rescinded at any time.
Outlook, Risks, and Contingencies
LIBOR Transition: The Secured Notes include provisions to replace LIBOR with a different benchmark rate upon the occurrence of triggering events related to the end of LIBOR.
Investment Horizon: The Issuer may purchase additional middle market loans through April 20, 2024, under the direction of ORCA.
Regulatory Compliance: The Company acts as a retention holder for the Preferred Shares to satisfy U.S. and European Union securitization regulations.
Legal Status: The Secured Notes are privately placed and not registered under the Securities Act of 1933; they cannot be offered or sold in the U.S. absent registration or an applicable exemption.
Investor Verification Checklist
- Verify the exact impact of the $395.31 million transaction on the Company's consolidated balance sheet and leverage ratios in the upcoming Form 10-Q.
- Confirm the specific terms of the fee waiver by ORCA and the conditions under which it may be rescinded.
- Review the underlying loan sale agreements and Indenture (attached as exhibits to the Form 10-Q) for detailed covenants and events of default.
- Monitor the Company's ability to originate eligible middle market loans to maintain the collateral portfolio through the April 2024 reinvestment period.
- Assess the Company's liquidity position post-transaction, specifically regarding the repayment of existing revolving credit facilities.