UNITHOLDERS' CAPITAL

6 Months Ended

Jun. 30, 2023

Stockholders' Equity Note [Abstract]

UNITHOLDERS' CAPITAL

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 the holding companies through which the Company holds interests in Oaktree Capital I, are solely attributable to the Class A unitholders.

As of June 30, 2023 and December 31, 2022, OCGH units represented 50,916,930 of the total 160,115,921 Oaktree Operating Group units and 56,922,688 of the total 160,002,848 Oaktree Operating Group units, respectively. Based on total allocable capital of $898,911 and $1,017,192 as of June 30, 2023 and December 31, 2022, respectively, the OCGH non-controlling interest was $285,307 and $360,660. As of June 30, 2023 and December 31, 2022, there were no non-controlling interests attributable to third parties.

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”)).

The Company may redeem, at its option, out of funds legally available, at any time, in whole or in part, the Series A preferred units or at any time on or after September 15, 2023 in whole or in part, 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 Series B Preferred Unit Designation) occurs prior to September 15, 2023 in respect of the Series B preferred units, the Company may, at its option, out of funds legally available, redeem the Series B 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 Series B 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 Series B Preferred Unit Designation) occurs prior to September 15, 2023 in respect of the Series B preferred units, the Company may, at its option, out of funds legally available, redeem the Series B 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 and other non-controlling interests and the Class A common unitholders:

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Weighted average Oaktree Capital I units outstanding (in thousands):
OCGH & other non-controlling interests	55,107		60,676		57,950		60,727
Class A unitholders	105,009		99,231		102,139		99,184
Total weighted average units outstanding	160,116		159,907		160,089		159,911
Oaktree Capital I net income (loss):
Net income attributable to preferred unitholders (1)	$	6,829	$	6,829	$	13,658	$	13,658
Net income (loss) attributable to OCGH and other non-controlling interests	(13,955)		(13,151)		5,745		(16,153)
Net income (loss) attributable to OCG Class A unitholders	(22,874)		(17,812)		8,515		(25,661)
Oaktree Capital I net income (loss)	$	(30,000)	$	(24,134)	$	27,918	$	(28,156)
Net income (loss) attributable to OCG Class A unitholders:
Oaktree Capital I net income (loss) attributable to OCG Class A unitholders	$	(22,874)	$	(17,812)	$	8,515	$	(25,661)
Non-Operating Group income (expense)	16,539		(3,544)		24,079		15,158
Net income (loss) attributable to OCG Class A unitholders	$	(6,335)	$	(21,356)	$	32,594	$	(10,503)

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

The change in the Company’s ownership interest in the Oaktree Capital I is set forth below:

	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Net income (loss) attributable to OCG Class A unitholders	$	(6,335)	$	(21,356)	$	32,594	$	(10,503)
Equity reallocation between controlling and non-controlling interests	37,353		33,309		35,082		47,584
Change from net income (loss) attributable to OCG Class A unitholders and transfers from non-controlling interests	$	31,018	$	11,953	$	67,676	$	37,081

Please see notes 9, 10 and 11 for additional information regarding transactions that impacted unitholders’ capital.