Business Context and Reporting Period
This Form 8-K filing by Owl Rock Capital Corporation (ORCC) reports a material definitive agreement entered into on August 2, 2019. The filing was submitted on August 6, 2019. The company is an emerging growth company incorporated in Maryland, with its common stock trading on the New York Stock Exchange under the symbol ORCC.
Key Financial Metrics and Debt Structure
The filing details the establishment of a new Secured Credit Facility with a maximum principal amount of $250 million. Key terms include:
- Interest Rate: LIBOR plus a spread ranging from 2.15% to 2.50%.
- Commitment Fee: 0.50% to 1.00% per annum on undrawn revolving commitments.
- Maturity: The facility matures on August 1, 2029, with a revolving commitment period of up to two years from the closing date.
- Collateral: Secured by a first priority security interest in the assets of the subsidiary, ORCC Financing IV LLC.
- Availability: Subject to overcollateralization, interest coverage, concentration limits, and collateral quality tests.
The filing does not provide specific revenue, profit, cash flow, or margin figures for the reporting period.
Material Changes
The primary material change is the creation of ORCC Financing IV LLC, a newly formed subsidiary, and the execution of the Credit Agreement and Sale and Contribution Agreement. Proceeds from the facility will finance the origination and acquisition of eligible assets, including purchases from the parent company. No gain or loss is recognized upon the contribution of assets to the subsidiary.
Outlook, Risks, and Contingencies
Management Commentary: The company intends to use the facility to finance asset origination and acquisition. The company retains a residual interest in the assets through its ownership of the subsidiary.
Risks and Covenants: The facility includes customary financial maintenance covenants and limitations on incremental indebtedness. Borrowings are considered the company's borrowings for asset coverage requirements under the 1940 Act. Assets pledged to lenders are not available to pay the debts of the parent company.
Unusual Items: The filing notes that the company is an emerging growth company and has not elected to use the extended transition period for new accounting standards.
Investor Verification Checklist
- Verify the specific overcollateralization and interest coverage ratios required to access the full $250 million facility.
- Review the full text of the Credit Agreement (Exhibit 10.1) for detailed default events and covenant restrictions.
- Confirm the impact of the new debt on the company's overall asset coverage ratio under the 1940 Act.
- Monitor the utilization rate of the revolving commitments over the two-year commitment period.