Business Context and Reporting Period
This Form 8-K was filed by Owl Rock Capital Corporation (trading symbol: ORCC) on April 26, 2021. The report details the entry into a material definitive agreement and the creation of a direct financial obligation. The registrant is incorporated in Maryland and its common stock is listed on the New York Stock Exchange.
Key Financial Metrics and Transaction Details
- Debt Issuance: The Company issued $500,000,000 aggregate principal amount of 2.625% Notes due 2027.
- Interest Rate: The Notes bear interest at 2.625% per year, payable semiannually starting July 15, 2021.
- Maturity Date: January 15, 2027.
- Existing Debt: The Company maintains a Revolving Credit Facility with $1.295 billion in commitments maturing September 3, 2025, and remaining commitments maturing April 2, 2024. The weighted average interest rate on drawn amounts is 2.1%.
- Derivatives: An interest rate swap with a notional amount of $500,000,000 was entered into to align liabilities with floating rate assets. The Company receives a fixed rate of 2.625% and pays variable interest based on 1-month LIBOR.
Material Changes and Use of Proceeds
The primary material change is the addition of $500 million in long-term unsecured debt. The Company expects to use the net proceeds from this offering to pay down existing indebtedness, specifically under its senior secured revolving credit facility, and for general corporate purposes. This transaction alters the Company's capital structure by replacing or reducing variable-rate short-term debt with fixed-rate long-term debt.
Management Commentary, Risks, and Covenants
- Redemption Terms: The Company may redeem the Notes at any time at a price equal to the greater of 100% of the principal or the present value of remaining payments discounted at the Treasury Rate plus 30 basis points. After December 15, 2026, the redemption price is 100% of principal plus accrued interest.
- Change of Control: Upon a change of control repurchase event (defined as a change of control combined with a below investment-grade rating by Fitch, S&P, or Moody's), the Company must offer to purchase the Notes at 100% of principal plus accrued interest.
- Covenants: The Indenture includes covenants requiring compliance with Section 18(a)(1)(A) of the Investment Company Act of 1940 and provisions for providing financial information if the Company ceases to be subject to Exchange Act reporting requirements.
- Financial Statements: This filing does not contain audited financial statements, revenue, profit, or cash flow data. It focuses solely on the debt issuance event.
Investor Verification Checklist
- Verify the exact amount of existing indebtedness paid down using the net proceeds from the $500 million note issuance.
- Confirm the current utilization rate and outstanding balance of the Revolving Credit Facility post-transaction.
- Review the full text of the Sixth Supplemental Indenture (Exhibit 4.2) for specific limitations and exceptions to covenants.
- Monitor the Company's credit ratings to assess the risk of triggering the change of control repurchase provision.
- Check subsequent filings for the impact of the interest rate swap on the Company's net interest margin.