Blue Owl Capital Corp. 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Blue Owl Capital Corporation (the "Company") on April 11, 2024. The filing details the completion of a $260 million term debt securitization refinancing (the "CLO Refinancing") by the Company's consolidated subsidiary, Owl Rock CLO III, LLC (the "Issuer").
Key Financial Metrics and Transaction Details
- Total Refinancing Amount: $260,000,000.
- Secured Notes Issued:
- $228,000,000 of AAA(sf) Class A-R Notes (Benchmark + 1.85%).
- $32,000,000 of AA(sf) Class B-R Notes (Benchmark + 2.35%).
- Maturity Date: April 2036.
- Collateral: Middle market loans and other assets of the Issuer.
- Subordinated Securities: $135,310,000 in Preferred Shares remain outstanding and are held by the Company as a retention holder.
- Use of Proceeds: Redemption of prior notes issued on the Original Closing Date (March 26, 2020), payment of refinancing expenses, and general corporate purposes.
Material Changes
The primary material change is the refinancing of the Company's existing CLO structure. The Original Issuer (Owl Rock CLO III, Ltd.) was merged into the Issuer (Owl Rock CLO III, LLC), which assumed all rights and obligations. The Company entered into an amended and restated Loan Sale Agreement to facilitate ongoing sales of middle market loans to the Issuer. Additionally, the Company entered into an amended Collateral Management Agreement with Blue Owl Credit Advisors LLC ("OCA").
Outlook, Management Commentary, and Risks
- Fee Structure: OCA has waived its right to receive collateral management fees; however, this waiver may be rescinded at any time. If rescinded, the management fee payable to the Adviser will be offset by the collateral management fee attributable to the Issuer's equity or notes owned by the Company.
- Future Operations: Through April 20, 2028, proceeds from loans securing the Secured Notes may be used to purchase additional middle market loans under the direction of OCA.
- Regulatory Compliance: The Company acts as a retention holder to satisfy U.S., EU, and UK regulations regarding sponsor exposure to securitized assets.
- Risk Disclosure: The Secured Notes are privately placed and have not been registered under the Securities Act of 1933; they may not be offered or sold in the U.S. absent registration or an applicable exemption.
Investor Verification Checklist
- Verify the specific interest rate benchmarks applicable to the new Class A-R and Class B-R notes.
- Confirm the status of the fee waiver by OCA and the potential impact on the Company's net management fees if the waiver is rescinded.
- Review the attached Second Supplemental Indenture (Exhibit 10.1) for specific covenants and events of default.
- Assess the composition and credit quality of the middle market loan portfolio backing the Secured Notes.
- Monitor the Company's ability to originate eligible middle market loans to support the ongoing loan sale agreement through 2028.