UNITHOLDERS' CAPITAL

12 Months Ended

Dec. 31, 2019

UNITHOLDERS’ CAPITAL

Unitholders’ capital reflects the economic interests attributable to Class A unitholders, preferred unitholders, non-controlling interests in consolidated subsidiaries and non-controlling interests in consolidated funds. Non-controlling interests in consolidated subsidiaries represent the portion of unitholders’ capital attributable to the OCGH non-controlling interest and third parties. The OCGH non-controlling interest is determined at the Oaktree Operating Group level, after giving effect to distributions, if any, attributable to the preferred unitholders, based on the proportionate share of Oaktree Operating Group units held by the OCGH unitholders. Certain expenses, such as income taxes and related administrative expenses of Oaktree Capital Group, LLC and its Intermediate Holding Companies, are solely attributable to the Class A unitholders. As of December 31, 2019 and 2018, respectively, OCGH units represented 61,793,286 of the total 159,760,541 Oaktree Operating Group units and 85,471,937 of the total 157,133,560 Oaktree Operating Group units. Based on allocable capital of $1,301,066 and $1,997,745 as of December 31, 2019 and 2018, respectively, the OCGH non-controlling interest was $503,253 and $1,086,693. As of December 31, 2019 and 2018, non-controlling interests attributable to third parties was $0 and $5,661, respectively.

Distributions per Class A unit are set forth below:



Payment Date	Record Date	Applicable to Quarterly Period Ended	Distribution Per Unit
November 12, 2019	October 31, 2019	September 30, 2019	$	0.03
September 30, 2019	September 30, 2019	-	3.13
May 10, 2019	May 6, 2019	March 31, 2019	1.05
February 22, 2019	February 15, 2019	December 31, 2018	0.75
Total 2019			$	4.96

November 13, 2018	November 5, 2018	September 30, 2018	$	0.70
August 10, 2018	August 6, 2018	June 30, 2018	0.55
May 11, 2018	May 7, 2018	March 31, 2018	0.96
February 23, 2018	February 16, 2018	December 31, 2017	0.76
Total 2018			$	2.97

November 10, 2017	November 6, 2017	September 30, 2017	$	0.56
August 11, 2017	August 7, 2017	June 30, 2017	1.31
May 12, 2017	May 8, 2017	March 31, 2017	0.71
February 24, 2017	February 17, 2017	December 31, 2016	0.63
Total 2017			$	3.21

Class A Unit Issuance

On February 12, 2018, the Company issued and sold 5,000,000 Class A units in a public offering, resulting in $219.5 million in net proceeds to the Company. The Company did not retain any proceeds from the sale of Class A units in this offering. The proceeds were used to acquire interests in the Company’s business from certain of the Company’s directors, employees and other investors, including certain senior executives and other members of the Company’s senior management.

Preferred Unit Issuances

On May 17, 2018, the Company issued 7,200,000 of its 6.625% Series A preferred units representing limited liability company interests with a liquidation preference of $25.00 per unit. The issuance resulted in $173.7 million in net proceeds to the Company. Distributions on the Series A preferred units, when and if declared by the board of directors of Oaktree, will be paid quarterly on March 15, June 15, September 15 and December 15 of each year. The first distribution was paid on September 17, 2018. Distributions on the Series A preferred units are non-cumulative.

On August 9, 2018, the Company issued 9,400,000 of its 6.550% Series B preferred units representing limited liability company interests with a liquidation preference of $25.00 per unit. The issuance resulted in $226.9 million in net proceeds to the Company. Distributions on the Series B preferred units, when and if declared by the board of directors of Oaktree, will be paid quarterly on March 15, June 15, September 15 and December 15 of each year. The first distribution was paid on December 17, 2018. Distributions on the Series B preferred units are non-cumulative.

Unless distributions have been declared and paid or declared and set apart for payment on the preferred units for a quarterly distribution period, during the remainder of that distribution period the Company may not repurchase any common units or any other units that are junior in rank, as to the payment of distributions, to the preferred units and the Company may not declare or pay or set apart payment for distributions on any common units or junior units for the remainder of that distribution period, other than certain Permitted Distributions (as defined in the unit designation related to the applicable preferred units (each, the “Preferred Unit Designation”)). These restrictions are not applicable during the initial distribution period, which is the period from the original issue date to, but excluding, September 15, 2018 and December 15, 2018 in regards to the Series A and Series B preferred units, respectively.

The Company may redeem, at its option, out of funds legally available, the preferred units, in whole or in part, at any time on or after June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, at a price of $25.00 per preferred unit plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions. Holders of the preferred units have no right to require the redemption of the preferred units.

If a Change of Control Event (as defined in the applicable Preferred Unit Designation) occurs prior to June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, the Company may, at its option, out of funds legally available, redeem the applicable preferred units, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such Change of Control Event, at a price of $25.25 per preferred unit, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions.

If a Tax Redemption Event or Rating Agency Event (each, as defined in the applicable Preferred Unit Designation) occurs prior to June 15, 2023 in respect of the Series A preferred units or September 15, 2023 in respect of the Series B preferred units, the Company may, at its option, out of funds legally available, redeem the applicable preferred units, in whole but not in part, upon at least 30 days’ notice, within 60 days of the occurrence of such Tax Redemption Event or Rating Agency Event, at a price of $25.50 per preferred unit, plus declared and unpaid distributions to, but excluding, the redemption date, without payment of any undeclared distributions.

The preferred units are not convertible into Class A units or any other class or series of the Company’s interests or any other security. Holders of the preferred units do not have any of the voting rights given to holders of our Class A units, except that holders of the preferred units are entitled to certain voting rights under certain conditions.

The following table sets forth a summary of net income attributable to the preferred unitholders, the OCGH non-controlling interest and the Class A common unitholders:



	Year Ended December 31,
	2019			2018			2017
Weighted average Oaktree Operating Group units outstanding (in thousands):
OCGH non-controlling interest	79,084			86,390			91,643
Class A unitholders	80,045			70,526			64,148
Total weighted average units outstanding	159,129			156,916			155,791
Oaktree Operating Group net income:
Net income attributable to preferred unitholders ⁽¹⁾	$	27,316		$	12,277		$	—
Net income attributable to OCGH non-controlling interest	137,100			280,159			422,122
Net income attributable to OCG Class A unitholders	137,921			228,791			295,161
Oaktree Operating Group net income ⁽²⁾	$	302,337		$	521,227		$	717,283
Net income attributable to OCG Class A unitholders:
Oaktree Operating Group net income attributable to OCG Class A unitholders	$	137,921		$	228,791		$	295,161
Non-Operating Group income (expense)	(8,662		)	(632		)	144,143
Income tax expense of Intermediate Holding Companies	(1,736		)	(17,018		)	(207,810		)
Net income attributable to OCG Class A unitholders	$	127,523		$	211,141		$	231,494


(1)	Represents distributions declared, if any, on the preferred units.

(2)

Oaktree Operating Group net income does not include amounts attributable to other non-controlling interests, which amounted to $1,779, $2,659 and $2,662 for the years ended December 31, 2019, 2018 and 2017, respectively. As a result of the Restructuring, as of October 1, 2019, four of the six Oaktree Operating Group entities are no longer indirect subsidiaries of the Company. Accordingly, subsequent to that date, the consolidated financial statements reflect the Company’s indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I and (ii) OCM Cayman.

The change in the Company’s ownership interest in the Oaktree Operating Group is set forth below:



	Year Ended December 31,
	2019		2018		2017
Net income attributable to OCG Class A unitholders	$	127,523	$	211,141	$	231,494
Equity reallocation between controlling and non-controlling interests	306,015		80,106		23,151
Change from net income attributable to OCG Class A unitholders and transfers from non-controlling interests	$	433,538	$	291,247	$	254,645

Please see notes 14, 15 and 16 for additional information regarding transactions that impacted unitholders’ capital.