Business Context and Reporting Period
Company: Owl Rock Capital Corporation (Note: Input metadata referenced "Blue Owl Capital Corp," but the filing identifies the registrant as Owl Rock Capital Corporation).
Filing Type: Form 8-K (Current Report).
Reporting Period: December 14, 2018 (Event Date) to December 19, 2018 (Filing Date).
Context: The Company, an emerging growth company, entered into a material definitive agreement to establish a new secured credit facility through a newly formed subsidiary, ORCC Financing III LLC.
Key Financial Metrics and Facility Terms
Debt and Liquidity:
- Maximum Principal Amount: $500 million.
- Availability: Subject to a borrowing base test based on asset value, interest spread tests, weighted average coupon tests, concentration limits, and collateral quality tests.
- Interest Rate: LIBOR plus a spread of 2.20% per annum.
- Undrawn Fee: 0.25% to 0.50% per annum on undrawn commitments during the Revolving Period.
- Make-Whole Fee: Applicable if undrawn commitments exceed 50% (initially) to 75% of total commitments.
Revenue and Profit: The filing text does not provide specific revenue, profit, or cash flow figures for the reporting period. It notes that no gain or loss will be recognized from the contribution of assets to the subsidiary.
Material Changes and Structure
New Financing Structure:
- Entity: ORCC Financing III LLC, a Delaware limited liability company and subsidiary of the Company.
- Counterparties: Lenders include Deutsche Bank AG (Facility Agent), State Street Bank and Trust Company (Collateral Agent), and Cortland Capital Market Services LLC (Collateral Custodian).
- Asset Contribution: The Company expects to sell and contribute loan assets to the subsidiary. The Company retains a residual interest in these assets.
- Use of Proceeds: Financing the origination and acquisition of eligible assets, including purchases from the Company.
- Security: The facility is secured by a perfected first priority security interest in the subsidiary's assets. These assets are not available to pay the Company's other debts.
Outlook, Risks, and Management Commentary
Term and Maturity:
- Revolving Period: Up to three years from the Closing Date.
- Stated Maturity: Two years after the last day of the Revolving Period.
- Repayment: Proceeds from assets must first pay fees, expenses, and interest; excess may be returned to the Company. Full repayment of principal and interest is required at Stated Maturity.
Risks and Covenants:
- Covenants: Includes financial maintenance covenants, limitations on incremental indebtedness, and customary events of default.
- Default Penalties: The interest spread increases by 2.00% per annum upon an event of default.
- Regulatory Compliance: Borrowings by the subsidiary are considered the Company's borrowings for asset coverage requirements under the Investment Company Act of 1940.
Investor Verification Checklist
- Verify the specific asset coverage ratio impact of the $500 million facility under the 1940 Act.
- Confirm the initial borrowing base availability percentage relative to the $500 million cap.
- Review the specific "interest spread and weighted average coupon tests" required to maintain availability.
- Assess the concentration limits and collateral quality tests defined in the agreement.
- Monitor the subsidiary's ability to meet financial maintenance covenants to avoid the 2.00% default spread penalty.