Business Context and Reporting Period
Company: Owl Rock Capital Corporation (Note: Input metadata referenced "Blue Owl Capital Corp," but the filing text identifies the registrant as Owl Rock Capital Corporation, trading as ORCC).
Filing Type: Form 8-K (Current Report)
Date of Report: May 28, 2020
Event: Completion of a $438.9 million term debt securitization transaction (Collateralized Loan Obligation or "CLO Transaction") via consolidated subsidiaries Owl Rock CLO IV, Ltd. and Owl Rock CLO IV, LLC.
Key Financial Metrics
Transaction Size: $438.9 million total issuance.
- Secured Notes: $252.0 million total ($236.5 million Class A-1 Notes at 3-month LIBOR + 2.62%; $15.5 million Class A-2 Notes at 3-month LIBOR + 3.40%).
- Preferred Shares: Approximately $186.9 million (186,900 shares at $1,000 issue price), purchased entirely by the Company.
Collateral Portfolio: Initial portfolio consisted of approximately $450.0 million par amount of middle market loans ($275.07 million sold by the Company; $174.92 million purchased from ORCC Financing II LLC).
Maturity: Secured Notes mature on May 20, 2029.
Use of Proceeds: Net proceeds intended to repay revolving loans under existing credit facilities.
Financial Metrics: The filing text does not provide clear values for revenue, profit, cash flow, margins, or overall debt levels outside of this specific transaction.
Material Changes
This filing reports a material definitive agreement and the creation of a direct financial obligation. The Company has entered into a new secured financing structure backed by a portfolio of middle market loans. The Company acts as the retention holder for the Preferred Shares to satisfy U.S. and EU securitization regulations.
Guidance, Outlook, and Risks
Management Commentary: The Company expects to use the net proceeds to repay existing revolving credit facility borrowings. The investment advisor, Owl Rock Capital Advisors LLC (ORCA), will serve as collateral manager and has waived its right to receive fees, though this waiver may be rescinded at any time.
Investment Period: Through November 20, 2021, proceeds may be used to purchase additional middle market loans.
Risks and Contingencies:
- LIBOR Transition: Interest rates are tied to 3-month LIBOR; a different benchmark will replace LIBOR upon triggering events.
- Regulatory Compliance: The Secured Notes are not registered under the Securities Act of 1933 and may not be offered or sold in the U.S. absent registration or an applicable exemption.
- Covenants: The Indenture includes customary covenants and events of default.
Investor Verification Checklist
- Verify the exact amount of revolving debt repaid using the net proceeds from this transaction.
- Confirm the current status of the LIBOR transition benchmark for the Secured Notes.
- Review the full text of the Indenture and loan sale agreements (exhibited in the subsequent Form 10-Q) for specific covenant details.
- Monitor the composition of the collateral portfolio as ORCA purchases additional loans through November 2021.
- Check if ORCA rescinds its fee waiver, which would impact the transaction's net yield.